How I Make My Passive Income

Jordan

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Do you remember what you learned when you were in high school?

I remember learning what poetry was, I somewhat remember learning about trigonometry. I definitely remember being forced to read a lot of old books.

Towards the end of high school I learned a lot about the various trades available to me once school was finished.
The Australian government at the time was pushing graduating students into trade careers such as carpentry and plumbing. They needed more men in the trenches erecting walls and unclogging drains.

We learned how to swap time for dollars, but not once did we ever learn how to plant a dollar and let it grow.

Recently I entered my 30’s, so as one does I reflected back on the last decade. As I looked back I really started to appreciate what my passive income had done for me.

It had allowed me to change careers multiple times and take big chances. I’ve lived without financial support from my family since being a teenager, but in spite of that I’ve never been desperate for cash.

Any time I wanted to change countries or change careers, I could always rely on my slowly building passive income to hold me up until things worked out and I had a paycheque again.

I’ve never found maintaining a passive income to be easy, but it’s not unattainable either. It just takes some planning, commitment, and a willingness to achieve what you want.

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1. Property

The first thing I did was buy a house when I was 21. I used the money I’d been saving for years as the downpayment. I didn’t live in the house, instead I had tenants and they paid me rent.

The house was very modestly priced and was in a good neighbourhood for rent prices. The trick was researching areas where rent was quite high, but home values were low. Working out the balance meant that my house was immediately positively geared and I had a passive income from day one.

Two years later I bought a second house and paid absolutely nothing. I used equity from the first house to pay the deposit and all the fees associated with buying a house.
I bought the house off someone who was very motivated to liquidate, so I got a great price. The rent was even higher than the first house, so my passive income increased a lot.

Since then I’ve been very aggressively paying back my mortgage, putting as much money as I can into it every year. By my mid thirties I aim to have no mortgage left, meaning 100% of the rent payments will come straight to me as income.

If you’ve saved some money and want to get into property yourself you can easily achieve this. Just make sure the rent being paid in the area you want to buy is much higher than what the mortgage and other bills will cost. Some Googling and an Excel spreadsheet are all you need.

2. Dividends

I’m a big lover of investing in ETF’s, shares and bonds. I really feel like I’m shopping in the mall when I get to jump online and buy into some of my favourite companies.

What matters to me though is whether they pay interest or dividends. It’s important to me that an investment gives me a distribution at least once a year, because it rewards my investment.

Dividends and interest payments are great ways to track a company’s progress and an indication of whether things are going well or poorly. But they’re also a great passive income that you’re missing out on if you’re not invested in companies that pay them.

I’m rewarded 4 times a year with payments of varying sizes and it’s wonderful because it’s cash that’s earned by my invested savings which continue to grow and thrive within the companies I’ve chosen.

Dividends are the real way of earning money forever because they’re not coming out of your bottom line, they’re paid to you as a thank you for trusting someone else with your money.

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3. Writing

The third way I make my passive income is through royalties. The best method for me is online publishing platforms, where 98% of what I write becomes nothing, 1% does ok, and roughly 0.0001% does really well.

My second best method is Amazon where I sell about a dozen e-books a month over a spattering of various genres and pen-names.

My final method is RedBubble where I have written a few catchy quips onto t-shirts and sell them to unsuspecting drunk people who’re scrolling the site late at night and have a laugh at my lame jokes.

Some don’t consider writing to be passive at all because of all the work you put it.

When thinking about it, I also wouldn’t consider the money I make in the first week after writing an article to be passive. I count that cash as payment for the time I put in.
But when the article continues to pay me for months after writing it, these payments must be considered passive.

The same goes for books. If a book takes 6 months to write, then earnings over the next year perhaps shouldn't count as passive. But if it's earning money 5 years later, that money is definitely passive because it has out-earned the effort you put into it.

If books and articles are earning money far longer than I can even remember writing them, they can’t be anything other than passive.

The passive income life

There are many more ways to make a passive income. Anywhere you can release your talents and earn a royalty for years to come is a passive income.

But as great as royalties are, perhaps the best and most reliable passive income of all is generated though investment.

We don’t all have talents that can make us more than a few bucks online, but we’re all capable of making a few bucks somehow. The smartest thing we can then do with those bucks is invest them somewhere safe..

.. Somewhere that pays a dividend of course.

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I’m a well travelled writer who loves nothing more than a well polished video game, an expertly crafted sandwich, and a hot mug of Milo.

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