This might sound strange, but I don't like the term "passive income". It sounds like a scam. Probably some people actually want a scam, but I think there is a better way of putting it. Profit is roughly "sales - costs". Normally costs are scaled by labour. The higher the volume, the more labour and therefore the higher the costs.
You can categorise the shapes of these curves. In a really dysfunctional company, the amount of labour your need per unit will increase as volume increases. A good example of this might be some bus companies where the cost per rider increases as the number of riders increase -- you get popular and you go out of business.
Consulting companies tend to have a linear relationship. The more you sell, the more you have to do. However, the per unit cost doesn't really change based on volume. Manufacturing companies tend to have a less than linear relationship. The per unit cost decreases with volume. You get the "efficiency of scale".
With computers we can create services with a very nearly constant relationship between volume and labour. In other words, I do the work once and then there is no other cost to increase sales. Of course, from a business perspective, this is ideal. You do the work and then you can scale the business without having to invest more money.
The thing I dislike about the term "passive income" is that it implies that you are getting free money. It's not true. For this kind of constant cost business, you've front loaded the costs. The first one costs as much as the first million. In fact, you may be in the red for a very long time (or forever... "Any side projects, Games, OSS" ;-) ). For this reason, I'd much prefer (the infinitely less catchy) term "front loaded business". I guess it will never catch on, but I wish we could discuss this topic without having to always derail into get rich quick and "living the dream of money without work" schemes.
Passive describes the level of effort, not the investment. Usually passive income is rent-seeking.
Property management is a great example. I can buy a cheap house in a lousy neighborhood, make a modest capital investment, sign up with Section 8 and get pre-screened tenants with guaranteed cash flow. My marginal work output is very low - a few hours a month.
I used to lease a few acres of land to a farmer. The only work was meeting to have a cup of coffee and exchange the check and paying the taxes. :)
And your work per month could be contracted out, so you don't actually need to do any more effort than meeting with your account periodically to make sure you're making money.
Is that 80-100 or 800-1000? I have one single family rental and a new roof(hail damage), busted water pipe, and toilet wax seal cost me $5000 this year and that was with insurance covering 2/3 the roof) That was my profit for several years. Ie I don’t see how this is profitable to anyone.
It’s because most “gurus” don’t actually own and manage properties. The only way I can make a double digit cap rate in the hood is by doing all the maintenance and labor myself.
I agree that nothing is truly passive. Everything involves some form or another for maintenance and triming what I would call "entropy".
There are some lines of business that really is very passive, but those either don't have much of a moat or competitive advantage and can easily be squashed by something newer, nicer and better.
Yeah. It sounds like a euphemism to me. Like "I want to do something that's at best ethically murky because I'm trying to not have to work for a buck." It doesn't help that the only people I hear use this term are mercenary SEO types that litter the web with ad-loaded junk-sites in their free time.
Another way of stating it is you get paid for bringing value to the marketplace. Creating and delivering value is usually very expensive. There are ways to shift around the creation and distribution of value and there are certain notable edge cases that would allow people to nitpick my definition.
But by and large there is a certain physics to business and you can conceptualize it as having certain conservation laws.
Now if you're looking for the Quantum physics of business where those laws don't seem to hold and seemingly magical shit starts to happen and you discover the superfluid of value creation... Well let me clue you in a little. It's absolutely possible.
However!
The conservation laws still hold as what you're trading off to find this magical superfluid or superconductor of business is a very high search cost to find a viable configuration in which to run your operation. So the search cost to find a new, undiscovered, viable configuration or to find a known viable configuration or to obtain the resources to operationalize a viable configuration that has become known to you is so astronomically high in the worst case that it turns out not to be worth it.
Passive income is very expensive from that stand point.
tldr: it cheap to make you own prints, google it and go for it!
Imho:
Make your own graphic designs on your computer
Look for nice organic and/or fair produced Shirts (a small quantity should be enough to start with, dont you think?)
Than buy yourself a diy Kit für Printing Shirts
It really depends what 'passive' is defined as, but I can share some:
- Recharged - $2720 / month. I write a briefing once a morning about the technology industry, about 350 people pay to receive it + sponsor something without advertising or nonsense tech stories. Still growing! https://char.gd/recharged
- Write Together (new project, but hey) - $1,200 / month. I built a platform for learning to Write with others, based around building habits/streaks. https://writetogether.space
Now the thing is, both of these require maintenance, but not like a full-time job: I push code, write on them, etc. But they're not fully passive, so it's quite a specific difference -- still wouldn't trade working on them for anything, however.
It seems like he gets traction by posting quality content. I got hooked onto him via his excellent posts on switching from Mac to Windows and iPhone to Android.
Since, he's posted some good stuff on various Windows and Android gear. He seems fairly straight-up and calm with his opinions, which I appreciate.
No side projects. The little time I have outside of work and family, I read or browse hacker news before falling asleep. I did take vacation recently and play The Witcher 3, which ruined gaming for me.
I have about $200k spread thoughout some index funds and individual stocks that all pay dividends in my post tax accounts. I reinvest all that income and the taxes are kind of annoying to deal with, but’s it’s better than nothing.
I also have a high yield savings account. A big chunk of my total cash is tied up here because I’d rather stay liquid. I think the rate is now 2% annual or just north of. It gets me $300 a month. I just save it and let it grow, aside from taxes on the interest.
Putting money in holdings like stocks, funds, and other investments seems like the closest thing to “passive income” based on how I would expect “passive” to be defined. It’s getting paid to park money in something for some time. If it’s simple investing like in mutual funds and ETFs, then almost anybody could handle the level of personal resources that goes into maintaining that source of income which is mostly just checking the performance and filing taxes once a year (pretty much this could be accomplished with price notifications and something like turbotax).
I don’t know, maybe that kind of “passive income” is no longer cool or desirable.
Every form of passive income requires periodic blips of input, but the magnitude and frequency of those blips could vary a lot depending on the business. There’s some forms of passive income that are really like part-time jobs or require a full-time job worth of effort to launch something. These don’t seem very passive to me.
I see people preach on the internet how they found some golden opportunity that lead to raking in thousands of dollars on a monthly basis with minimal oversight. I’m sure instances of this exist, but frankly I think there’s a lot that is still unsaid about what was required to pull it off. There’s a group of people that are instead looking for the snake oil fountain that allows someone to live like their retired in their 30s but without doing any work. This is no longer “passive income”, and is instead just another “what’s the easiest way to become rich” search. The reality is that identifying and executing a high-ROI opportunity that recurring brings in money with low input is not as easy as following an A->B->C guide or else every market entrant would have like a 90% success rate and everyone would already be doing it.
If people genuinely want passive income, then financial investments or monetizing hobbies (to the extent it’s still enjoyable) seem like a good place to start for providing a good lifestyle/income balance.
"Investment income" is certainly a good example of "passive income." But it seems when investment income is touted as the only true form of passive income, it is forgotten that, in most cases, some outlay of effort was required to first generate the initial investment.
Likewise, many projects that require some initial effort upfront may eventually produce income with little to no continuing involvement. Passive income.
Capital One 360 is offering 60 month CDs at over 3% now. Just a fee of 6 months of interest if you withdraw early. Pretty liquid and would get you an extra $75/month of income if you just did half of your savings (+$150/month for all of it).
60 Month CD at 3.0%? Anybody signing up for that should not be allowed to manage money ever again. Look at the yield curve, you are getting (almost) nothing for locking your money up an additional 5 years.
I'm not a YouTube creator so not the target market, but this is something I could see myself using if I did create videos. Seems to add good value for the cost, although I don't know what the competition/landscape is like.
I did animation in college before switching to programming in grad school, so once I get everything running smoothly I plan to make new templates for fun.
Most of the competitors are SAAS and geared at agencies. I’m basically the low end of the market, but YouTubers just starting out don’t need multiple videos for $30/month.
"If your business idea is so fragile that can be blown away by competition, you might want to rethink your strategy."
It may not be that you "want to rethink your strategy," but if you stumbled into becoming a one man show for a super niche unrivaled business app, why talk about that on a forum of developers?
I inherited a house and condo from my parents. They are in California and purchased long ago, so the property taxes on them are ridiculously low (the condo, worth about 700K has a property tax valuation under 150K ... thank you California taxpayers).
I rent them both out I pay a management company to handle maintenance. I screen tenants myself, and so far I've been lucky getting tenants who stay for fairly long periods. I clear about 5K/month after maintenance fees, taxes and insurance. Its very little work.
A blog I wrote about 5 years ago on obtaining your licensing as a professional engineer includes affiliate links to a site that sells packages that help with the application process. It's a very niche area but earned me about $5k in 2018 and is what I consider passive income at this point (haven't contributed to the blog in years). That amount was about double 2017, so I'm interested to see how much growth is left.
Wrote the blog about 5 years ago, to a non-existent audience. The blog writing was simply to motivate myself to complete the application, which is an arduous process and, for me, was optional career-wise. At first I did things like create a Twitter account, follow people, tweet it out, etc, but that didn't work at all. I basically had negligible traffic for the first year at least. Then Google organically started picking it up because I had written useful content in an underserved niche - one of the things that got me writing the blog was searching for free help in the first place and not finding anything. Even after a couple of years, I was earning maybe $15/month in AdSense. Then the affiliate site reached out to me out of the blue, we tried some tests, and they failed miserably (no one converted). Months later he came back to me with an actual affiliate program, we tried it and it slow started to work and has scaled up to what I described above.
So to summarize, by far most of my time was spent writing the blog posts and watching my non-existent analytics. Nothing I actively did to market the site (and I did very little) worked. It was a project that didn't intend to make money, that ended up making money.
I trade options. I used to post the plans for free for people to follow but it was really time consuming, so I would post every now and then. Someone asked to see all my plans, so I created a script to read it via my brokerage account and post it to Discord/e-Mail. Now, I just continue buying and selling options when my system tells me to and it messages the channel. The most time consuming part is advertising which I sometimes do. I plan to automatically post free plans to different social media platforms (randomly) in the future and that would make it completely passive most likely.
For the past couple years I’ve been running a pet supply business focused on eco friendly and high quality toys, treats, collars, etc.
Originally started as a T-shirt company specializing in dog puns but expanded a couple years in. The T-shirts are all printed and fulfilled by a US company and I have the pet supply inventory at my house so it’s quick to ship. Not entirely passive but only takes about 5-10 hours each week.
Been gaining momentum recently so it’s been an increasingly better income source.
The only TRUELY passive income I have is a YouTube video, unedited, published in 2012 that generates me $500-$1,500 a year. I do absolutely nothing to the video to promote it. YouTube seems to recommend it every fall and it has been a nice little Christmas bonus each year.
Other than that, a few games I've published generate ~$100 a year without input from me. Everything else requires at least a little bit of my time on a regular basis and I wouldn't count it as passive.
I've co-founded (CTO) AlleAktien.de (https://www.alleaktien.de) 4 months ago, writing unseen high-quality and professional long-term stock analyses online. Capturing ~400 subscribers a EUR 20/month so far. The entire platform is in German, focussing on the Germany/Switzerland/Austria market :).
Disclaimer: it's a side-project, but not passive. Writing high-quality analyses is extremely time consuming (30-500 hours each) for ourselves, and our analysts - but it pays off in compound terms. I personally worked only on weekends for 4 months on this.
Before that, I was at MIT, UBS bank and McKinsey. Currently, I'm also looking for additional CTO co-founder opportunities globally (I'm co-located in SF and Switzerland) - please reach out to jakobm@mit.edu if you want to launch an own online product or course in a matter of days, and reiterate at an insane speed (only if you have a solid pitch or massive online followership, OR: if you know sb. who has such, there's a HUGE finder's fee of several 10k USD).
A self-managed portfolio consisting of various government bonds. Ever since I started working, I have been saving >30% of my annual income every year. Not accounting for the income from the portfolio or for raises since, this means that every year of savings, the portfolio can replace 1.2% of my annual income (assuming an effective yield of 4%). Been doing this for over 20 years now.
I started a sort of joke lifestyle microblog website and a podcast. Not exactly passive, bit doesn't take up more than a few hours a week. Hoping it takes off this year to generate more income than other things I've tried.
Ive started working on a themes site for static site generators and it's already done a few sales. I'm hoping it will be generating more revenue by the end of 2019!
I made an app called Phonics and Reading with McGuffey that made around 80k over the years (9) and had about 960k free version downloads. Its due for an update but so far I have not been able to repeat a success like it.
Not really. Look up lazy portfolios by Bogleheads. If you continue to invest it can grow for you. I mean not at insane levels but definitely a decent return for many.
You can categorise the shapes of these curves. In a really dysfunctional company, the amount of labour your need per unit will increase as volume increases. A good example of this might be some bus companies where the cost per rider increases as the number of riders increase -- you get popular and you go out of business.
Consulting companies tend to have a linear relationship. The more you sell, the more you have to do. However, the per unit cost doesn't really change based on volume. Manufacturing companies tend to have a less than linear relationship. The per unit cost decreases with volume. You get the "efficiency of scale".
With computers we can create services with a very nearly constant relationship between volume and labour. In other words, I do the work once and then there is no other cost to increase sales. Of course, from a business perspective, this is ideal. You do the work and then you can scale the business without having to invest more money.
The thing I dislike about the term "passive income" is that it implies that you are getting free money. It's not true. For this kind of constant cost business, you've front loaded the costs. The first one costs as much as the first million. In fact, you may be in the red for a very long time (or forever... "Any side projects, Games, OSS" ;-) ). For this reason, I'd much prefer (the infinitely less catchy) term "front loaded business". I guess it will never catch on, but I wish we could discuss this topic without having to always derail into get rich quick and "living the dream of money without work" schemes.
Property management is a great example. I can buy a cheap house in a lousy neighborhood, make a modest capital investment, sign up with Section 8 and get pre-screened tenants with guaranteed cash flow. My marginal work output is very low - a few hours a month.
I used to lease a few acres of land to a farmer. The only work was meeting to have a cup of coffee and exchange the check and paying the taxes. :)
He probably turns over something like $20M, and can use the portfolio to write off profits from other businesses.
Someone who bought their home before a price boom can often turn a profit because the rents follow the price to purchase (roughly speaking).
So if you acquired a bunch of properties in 2008 after there was a crisis, its likely that they're very profitable (month to month) now
There are some lines of business that really is very passive, but those either don't have much of a moat or competitive advantage and can easily be squashed by something newer, nicer and better.
Another way of stating it is you get paid for bringing value to the marketplace. Creating and delivering value is usually very expensive. There are ways to shift around the creation and distribution of value and there are certain notable edge cases that would allow people to nitpick my definition.
But by and large there is a certain physics to business and you can conceptualize it as having certain conservation laws.
Now if you're looking for the Quantum physics of business where those laws don't seem to hold and seemingly magical shit starts to happen and you discover the superfluid of value creation... Well let me clue you in a little. It's absolutely possible.
However!
The conservation laws still hold as what you're trading off to find this magical superfluid or superconductor of business is a very high search cost to find a viable configuration in which to run your operation. So the search cost to find a new, undiscovered, viable configuration or to find a known viable configuration or to obtain the resources to operationalize a viable configuration that has become known to you is so astronomically high in the worst case that it turns out not to be worth it.
Passive income is very expensive from that stand point.
Yes we get it. Stop fussing about the terminology.
All of the order processing and fulfillment is handled automatically.
I do no marketing or advertisement beyond social media.
It's pretty nice. Sometimes I sell meme shirts that generate $3k in a month if I'm feeling particularly clever.
I was able to bootstrap this business for like $12 for a domain name and a free trial of Shopify which gave me enough runway to scale.
Been doing this for over a year, I still basically do nothing.
https://odomojuli.store/
https://odomojuli.store/products/america
$990?
$400,001.00
“This is the most expensive t-shirt on the Internet.”
Imho:
Make your own graphic designs on your computer Look for nice organic and/or fair produced Shirts (a small quantity should be enough to start with, dont you think?) Than buy yourself a diy Kit für Printing Shirts
here is a link to amazon germany (sorry...): https://www.amazon.de/Siebdruck-Set-DIN-A4-selber/dp/B00OV0T...
where you can Print your own Shirts. Just make yourself familiar with screen printing and do it yourself. I think thats cool. :-)
- Recharged - $2720 / month. I write a briefing once a morning about the technology industry, about 350 people pay to receive it + sponsor something without advertising or nonsense tech stories. Still growing! https://char.gd/recharged
- Write Together (new project, but hey) - $1,200 / month. I built a platform for learning to Write with others, based around building habits/streaks. https://writetogether.space
Now the thing is, both of these require maintenance, but not like a full-time job: I push code, write on them, etc. But they're not fully passive, so it's quite a specific difference -- still wouldn't trade working on them for anything, however.
Since, he's posted some good stuff on various Windows and Android gear. He seems fairly straight-up and calm with his opinions, which I appreciate.
I have about $200k spread thoughout some index funds and individual stocks that all pay dividends in my post tax accounts. I reinvest all that income and the taxes are kind of annoying to deal with, but’s it’s better than nothing.
I also have a high yield savings account. A big chunk of my total cash is tied up here because I’d rather stay liquid. I think the rate is now 2% annual or just north of. It gets me $300 a month. I just save it and let it grow, aside from taxes on the interest.
I don’t know, maybe that kind of “passive income” is no longer cool or desirable.
Every form of passive income requires periodic blips of input, but the magnitude and frequency of those blips could vary a lot depending on the business. There’s some forms of passive income that are really like part-time jobs or require a full-time job worth of effort to launch something. These don’t seem very passive to me.
I see people preach on the internet how they found some golden opportunity that lead to raking in thousands of dollars on a monthly basis with minimal oversight. I’m sure instances of this exist, but frankly I think there’s a lot that is still unsaid about what was required to pull it off. There’s a group of people that are instead looking for the snake oil fountain that allows someone to live like their retired in their 30s but without doing any work. This is no longer “passive income”, and is instead just another “what’s the easiest way to become rich” search. The reality is that identifying and executing a high-ROI opportunity that recurring brings in money with low input is not as easy as following an A->B->C guide or else every market entrant would have like a 90% success rate and everyone would already be doing it.
If people genuinely want passive income, then financial investments or monetizing hobbies (to the extent it’s still enjoyable) seem like a good place to start for providing a good lifestyle/income balance.
Likewise, many projects that require some initial effort upfront may eventually produce income with little to no continuing involvement. Passive income.
I made about $13k off it, which sounds good but was really only about $20/hour.
Hoping to grow it quite a bit this year and then start offloading tasks. I don’t know if I can ever get it truly passive, but that’s the dream.
Most of the competitors are SAAS and geared at agencies. I’m basically the low end of the market, but YouTubers just starting out don’t need multiple videos for $30/month.
It's virtually impossible for one to prevent competition
If your business idea is so fragile that can be blown away by competition, you might want to rethink your strategy.
It may not be that you "want to rethink your strategy," but if you stumbled into becoming a one man show for a super niche unrivaled business app, why talk about that on a forum of developers?
I rent them both out I pay a management company to handle maintenance. I screen tenants myself, and so far I've been lucky getting tenants who stay for fairly long periods. I clear about 5K/month after maintenance fees, taxes and insurance. Its very little work.
So to summarize, by far most of my time was spent writing the blog posts and watching my non-existent analytics. Nothing I actively did to market the site (and I did very little) worked. It was a project that didn't intend to make money, that ended up making money.
Originally started as a T-shirt company specializing in dog puns but expanded a couple years in. The T-shirts are all printed and fulfilled by a US company and I have the pet supply inventory at my house so it’s quick to ship. Not entirely passive but only takes about 5-10 hours each week.
Been gaining momentum recently so it’s been an increasingly better income source.
https://www.casualfuriday.com
Other than that, a few games I've published generate ~$100 a year without input from me. Everything else requires at least a little bit of my time on a regular basis and I wouldn't count it as passive.
Disclaimer: it's a side-project, but not passive. Writing high-quality analyses is extremely time consuming (30-500 hours each) for ourselves, and our analysts - but it pays off in compound terms. I personally worked only on weekends for 4 months on this.
Before that, I was at MIT, UBS bank and McKinsey. Currently, I'm also looking for additional CTO co-founder opportunities globally (I'm co-located in SF and Switzerland) - please reach out to jakobm@mit.edu if you want to launch an own online product or course in a matter of days, and reiterate at an insane speed (only if you have a solid pitch or massive online followership, OR: if you know sb. who has such, there's a HUGE finder's fee of several 10k USD).
Https://accidentallyfasting.com