Passive Income To Better Your Life
A lesson that should be taught in high school is how to manage your money. Unfortunately I wasn't taught that, nor was anyone I know. We're taught to go get a job, and work for every penny we'll ever make in our lives. There is a better way.
How To Start Making Passive Income
First things first, we need to start making passive income. We can do this in many ways and there are a ton of great articles out there where you can find how to make some passive income. The way I got started was with dividend stocks. I still use dividend stocks for long-term growth, but have also started selling cash secured puts (fidelity.com link) on stocks that I would like to buy.
Stock Passive Income
In the stock market money can be made, whether the prices are rising or falling. Here's a few strategies that I use to make passive income in the stock market.
- Buy undervalued stocks - Quite often you'll see a stock price tank for bad publicity or a bad miss in an earnings call. If you believe the price has fallen drastically more than it should have, this makes a great time to buy and hold this stock for years. This is a strategy that I use to pick up shares of stock for cheap and to hold.
- Sell Cash Secured Puts - This has become my main strategy for making money in the market. Assume stock AAPL is selling for $150 / share. If you want to own this stock, and you think buying it at $140 / share is where you become a buyer, then you can sell a put at $140. This comes with a premium paid to you for selling the put. A put is a type of option, and options expire. If the price never gets below $140, then the put expires and you keep the premium. If the price does fall below AND the person who bought the put exectues, then you'll own 100 shares of stock at the cost of $140 / share. You still keep the premium for selling the put. If the premium was $1.30 / share then you will receive $130 in premium. That would be close to a 1% gain. This price was based on a 2 week expiration. The premium (at the time of this writing) for 2 months away expiry is $5.95 or $595. That would be a 4.25% gain in just two months. There's always risk here, especially if the stock price falls well below the price you sold the put for and there is no hope of recovery for the stock.
- Sell Covered Calls - This is a strategy I use when I own at least 100 shares of stock. You can sell a call at a price you'd like to sell your shares for. If the price exceeds that share price, then you have to sell your shares at the call price. However, if it doesn't, then the option expires and you pocket the premium. Here's a video by Fidelity that covers this strategy.
Save With Credit Cards / Cash Back
There are so many ways to earn passive income by spending money. I hate even mentioning this other than so many people don't do this to save money. The more money you save, the more money you can invest. So make sure that you are getting the best rewards on your credit cards, PAY THEM OFF IN FULL, and enjoy the rewards.
Create Content
I do create websites that I earn a small profit from. Most of the work is done up front and the pay comes in later, sometimes years later. It takes a lot of work and this isn't a great no-work passive income strategy. You may not make anything, and that is a tough reality when getting into things like this. But just about anyone can create a website these days and share their wisdom with the world. If you do this I just encourage you to be a source of inspiration and hope and not another source of hate.
You can create videos, gain thousands of followers on a social media platform, create an email list, or even create a website. There is so much that you can do online I can't list it all here. Be prepared to put in a ton of work and not really reap any benefits for years to come. If you have the time, the drive, and the patience, this may be for you.
Traditional Bank Interest
This is my lowest earner, and one that I am really sad is so low. 0.01% interest earned on your money is technically passive income. However, it is not worth it. Safe? Sure. This is why crypto has taken my fancy over a traditional banking system. I do have money in a bank, and I do currently earn 1% interest on my money in that account. But 1% is just not worth anything when I am earning 9 times that in my stable coins. So, For me to earn $1,000 in passive income at my bank, I'd have to invest $100,000. With my stable coin, I only have to invest $11,112. Really hard to swallow that pill. If you are wanting to earn $100 / day or $36,500 a year on this you'd have to invest $3,650,000 in a traditional bank or $405,556 of a stablecoin earning 9% interest. Yeah, go banks? Now, most accounts now only earn 0.1% or 0.01% at the current date. So multiply those numbers by 10 or 100 to see how horrible this system is now.
Truly Passive Income
Other than the creating content section, this is truly passive income that I currently earn. I wanted to share this because I get asked a lot how I am earning more income. Keep investing until you reach your goals of daily income. Once that goal is reached, keep investing, but also start enjoying that hard work you put into this. Never stop investing, but also remember why we are investing. The goal isn't to die with the most money, the goal is to give us freedom. Freedom to live our lives without having to worry about debt or bills. Freedom to be able to afford a house, a car, and trips to spend time with those we love. Freedom to be able to help other people out, and to give freely.