Building a source of passive income: How can I start?

The easiest way is to buy stocks that pay a dividend. If you want to focus on real estate try a REIT ETF. You can get started with a small amount of money and build your investment and income stream as you go.

If you want to buy physical real estate. One way to do it without a huge pile of money is to buy a duplex, live in one side and rent out the other side. Once you have built up enough equity buy another one and repeat the process. I know a guy who did this and wound up with about 8 four-plexes by the time he was 35 without spending much more that he would have spent on his own housing expenses.

The advantage of passive income, and the reason people urge you to get some, is that it is unlimited. Unlike working for an hourly wage, or a yearly salary, with passive income you don't have a cap on how much you can make a year. It's important to know that this is the benefit. Passive income isn't free, easy, or guaranteed; it's just not tied to a limited resource like hours per day you can work.

Generally, passive income results from one of two things:

• you put in a lot of work, for which you may or may not be compensated, and then you get money going forward even though you are no longer putting in that work, or not as much anyway, and the money isn't tied to how much work you're putting in now. Say, earning royalties on something you published. You may work at promoting it in the hopes of increasing your royalty income, but there's no 1-1 tie that if you put in 1 hour you will get $20. You might get TONS of money or you might get none.
• you put in money and earn a return on it. This might be a guaranteed interest rate (2% on a million dollars will get you $20,000 a year, but alas most people to whom $1500 a month is a lot don't happen to have a million kicking around) or more fluctuating like seeing an investment go up in value. You again don't have to put in work for the income to arrive.

(Some things are both: for example if you want to own rental real estate you'll need some money to buy it and you'll have to put in time looking after it and dealing with tenants. But nobody gives you $30 because you spent two hours dealing with tenants today. You get the rent independent of the time you're spending being a landlord.)

Looking for passive income that doesn't require work or money upfront is believing the people whose real source of income is selling "lessons" to people who want to be rich. You can make a LOT of money some times, but not for nothing. Not for knowing a secret or finding the thing most people don't know about. The closest you can get to what you appear to be looking for is to take something you like doing (a hobby) and find a way to be paid for it that is not $x for a hour of work. Selling things on Etsy. (This does not require a lot of money, and you shouldn't consider "opportunities" that do.) Publishing a book or a course. Monetizing a Twitch stream or a YouTube channel of activities you would do anyway. Then once you have a steady amount of money coming in, you can consider using that money to try to set up other passive income streams, and so on.

Some sources of passive income are:

• Owning a part of a company which generates profit (which hopefully will keep generating profit and not go bankrupt)
• Owning something you can rent to someone (which hopefully will stay in the shape that someone would want to rent it without requiring more money from you to maintain it than you get in rent)
• Owning an intellectual property others would (hopefully) pay to use.

Ownership in a company can be in form of stocks (which either increase in value or pay dividend) or in form of an inactive partnership (you gave money to someone else so they can start their business, but you do not actively take part in its daily affairs besides getting a part of the profit). If you decide to play the stock market game, then I would recommend you to not invest in individual stock but rather invest in an index fund. Yes, there are people who actually make money with day trading. But if you want to do that in a way which actually makes you money and isn't just gambling, then you need to spend so much time monitoring stock prices and business news that it's not really a passive income anymore. And index fund, on the other hand, is an asset you can just buy and then not think about until you need to turn it back into money. At which point it should hopefully be worth more than you paid for it (it might be less because the stock market is currently in a temporary crisis, but it usually doesn't take long to recover). If you want to use an index fund as a source of passive income, then you would invest $x in it, check on its value occasionally, and when it happens to be much more than $x, you sell so much of it that its value is back to $x.

Owning something you can rent usually means real-estate (but you might find other things you could rent out if you are creative). If you do not want to invest the capital to buy a whole apartment, then there are real estate funds. You basically buy a share in a real estate property (or a portfolio of many) which entitles you to a part of the rent it generates. This allows you to generate passive income through real estate with a lot smaller initial investment.

An intellectual property could be either something you created yourself or something you bought the rights to and which people would pay to use in the future. Examples could be:

• A song
• A book
• A stock photo
• A video
• An app or video game

There are websites for each of these which allow you to just upload them and then receive a part of the revenue they generate (in form of sales or advertisement).

The good thing about these kinds of passive income generators is that they are the only ones I could think of which allow you to generate a passive income without actually investing any money. You would invest your own time and special skills to create these assets.

But the disadvantage is that it usually requires quite a lot of skills and creativity to create intellectual property which is good and appealing enough to generate any passive income at all. And even when you happen to have those skills, then it is very difficult to predict how much income these assets will generate. They might for some reason become amazingly popular or (statistically far more likely) get just a handful of sales. It's also hard to tell if they will keep generating much revenue in the future. They could become timeless classics which generate money for the rest of your life or (again, far more likely) be completely forgotten a couple months after release.

I'll try to make it short...

• Become an escort.

• Make porn and charge a subscription for it (i.e. by opening an accoun with OnlyFans or JustFans for example).

• Become a Vlogger (i.e. YouTube videos) and blog about niches with high RPMs (revenue per thousand impressions).

• Become a Blogger, and monetize your website through ads and/or affiliate marketing.

• Sub-let property, paying landlords a low long-term rent, and renting it out for more (avoid having to buy property and requires very little capital).

• Build an app that people love to use and will pay a subscription for (easier said than done).

• Buy a property and rent it out (long term or on AirBnb), however, you'll need some capital upfront.

• Invest in the stock market (but you'll need a lot of money to generate an income with dividend yields so low) or inflation-linked bonds.

• Opening a savings account (but you'll need even more money with interest rates near zero!). Clearly, this isn't an option any more.