I call the act of creating multiple passive income sources the DIY Annuity.
Residual Income Opportunities | What is an Annuity?
Think of annuities as the opposite of life insurance. Instead of insuring yourself against pre-mature death, you are insuring against the possibility of living too long.
When you buy a life insurance policy, you pay a small premium each year. If you died, your beneficiaries receive a large lump sum payment.
When you buy an annuity you pay the insurance company a large upfront payment, in exchange for receiving small monthly payments. These payments can be guaranteed until your death.
The problem with purchasing an annuity, is that they can be very expensive. You have to put up a large upfront investment, to receive enough income each month to live off of.
The solution is to create your own annuity by developing multiple sources of passive income.
The DIY Annuity
Annuities are a great concept. An investment that can guarantee residual income, provides piece of mind for its owner.
For those of you without $1,000,000 in the bank, it doesn’t mean you can’t have this piece of mind. A little thinking outside the box is all it takes to create your own annuity.
What Qualifies as a Passive Income Source?
There are many different definitions that I have heard of for passive or residual income.
In order to a passive income source to qualify for a DIY Annuity, the source have the following two characteristics.
- Little to no work on a month to month basis. As in little work, I mean less than an hour a week.
- No upfront investment. Sorry but popular passive income investments such as real estate and dividend investing are out.
Residual Income Opportunities & Ideas
The following is a few passive income sources available online today. This list is just to get you started.
Publishing an eBook or Educational Course
Write and create a book or course around your passions. You don’t need to be an expert in your topic of interest. Sometimes, people just like to learn from someone just a little farther ahead than themselves.
For example, I just found Everett Bogue’s Far Beyond the Stars. He blogs about being a minimalist. That is his passion.
In just a short period of time, he has built a blog and created a product around his passion. By no means does he consider himself an expert on living a simple life. Yet, he was still able to create and sell successfully a product online.
Another example of someone earning passive income from an eBook, is Pat Flynn from Smart Passive Income. Pat created an ebook around the LEED Test, which he took. Last month was a down month for sales, he only made $2,080.
Set up a Website and Create Timeless Content
Instead of going the product and blog route, you can put up a static website. If you don’t know the first thing about building a website, I recommend a service I used in the past called Site Build It (Foolishly, I took the site down because I wanted a blog).
Ad one quality page to your site per week, that’s around 50 pages a year. Keep on building that site and in just 5 years time you can have around 250 pages. There is a lot of potential to make money if you have a site with 250 high-quality pages on it.
Personally, I have always wanted to start a cooking website. I experiment enough with cooking, that I can easily post one unique recipe a week. Total time would be around 30-60 minutes per week.
There is a website, Istockphoto.com (There probably is a lot more sites that do this, but I have bought high quality photos from this site in the past) that lets amateur photographers submit photos to their site that other people can buy and use. You just need to submit the photo once and the passive income will start to trickle in.
While I don’t think you’re going to retire if you got into the custom T-Shirt business, it can be a source of passive income. A site Cafepress, lets users submit T-Shirt designs. If the shirts are bought, you receive a percentage of the sale.
Create WordPress Themes
Blogging is only going to get bigger. The demand for people looking for custom themes will also grow. If you enjoy web design, you can create custom WordPress (the blogging platform everyone uses) themes and sell them on a site like Theme Forest.
Write for Demand Studios
Demand Studios is a site looking for freelance writers to submit content, in which they will publish on the web. If you don’t want to bother with hosting your own website and just want to write, this can be an option.
A little warning before you start, I’m not familiar with Demand Studios terms with their writers, but generally there is a limit on how long you can earn income from one article. For example, if you’re article is published on eHow you can only receive income from that article for 5 years after its originally published. In the long run, you might be better building your own website.
Why Most People Don’t Capitalize on Residual Income Opportunities
If you have patience you will succeed.
Most people fail when they try one strategy for a week, switch to another strategy the week after, and then quit because no income has come in.
Those who succeed don’t throw everything against the wall and see what sticks. They do one thing very well and do it over and over again.
It’s a different mindset thinking that you might put in 12 hours today and receive no income for three months. But that’s the way residual income works.
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