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Creating Passive Income Streams

By Edited Jan 9, 2014 0 3

Would You Rather Get Paid Once, Or Repeatedly And For Years To Come?

When people get paid for the work they do, they usually get paid in the form of wages or salary.  It's direct compensation for the amount of work they have put in--a certain amount of money paid for a certain amount of time spent working, or for the completion of a specific task.  Once the payment is made, the cycle is over.  The worker then moves on to the next job, or puts in more hours with the same employer to earn the next paycheck.  This kind of income is called active income.

While this is the payment model that almost everyone lives by, there is another model available.  It's called passive or residual income, and it is incredibly powerful.  The worker does something for money, just as before.  This time, however, they may not initially receive any money for their work at all.  The idea is that through their efforts, they have created some kind of source that will make money for them in the future, whether they ever spend any more time working on it or not.

Creating passive income streams for yourself is a lot like the way that nature creates rivers.  High up in the mountains, water seeps out of the ground from springs.  These springs are often just a tiny trickle of water running down the mountainside.  There are lots of them, though.  As they flow downhill, they meet up and join together.  Soon they form streams.  Then the streams come together, getting bigger and bigger. Eventually, they form mighty rivers, like the Amazon and the Mississippi.  In the same way that nature forms mighty rivers from tiny trickles, you can build a steady stream of passive income for yourself by creating small trickles here and there that will add up over time.

Because so many people are so accustomed to the active model of income, they do not know how to create passive income sources.  While it is certainly possible to create very large sources of passive income, most people will find it much easier and less daunting to develop a few small ones first, to get an idea of how it is done.  Below are a few areas that make good starting points.

Bonds, CDs, Money Market Accounts, etc.

Probably the most truly passive source of income you will ever find is interest on loans that you make to others.  The idea of making a loan instead of receiving one seems foreign to most people.  That is, however, exactly what they are doing when they purchase bonds or Certificates of Deposit, or when they place their money in an interest-bearing account at a bank.  The problem with these sources of passive income, though, is that they require investors to have enough free cash to purchase or deposit.  People who are time-rich, but cash-poor should look elsewhere for opportunities.

Affiliate Sales

Many companies are willing to pay commissions to people who will go out and promote their products.  This business model has grown explosively over the last few years thanks to the internet, and the way that it has improved communications and marketing opportunities.   This kind of business model is good for both companies and their affiliates; the company saves money by not needing to hire as many salespeople, and the affiliate generally does not have to operate under the do-or-die sales pressure of a normal sales professional.

These affiliate programs are generally done online--that is, the affiliate creates a website through which they drive sales for the company.  With all of the advances in technology over the last few years, creating websites has gotten easier than ever, and anyone willing to put in a little effort can learn how.

Selling Advertising Space

Similarly to affiliate sales, selling advertising space has come within the grasp of average people through advances in the internet.  People who have websites can sell advertising within their site either directly to advertisers, or through context-based  ad placement programs like Google's AdSense.  Selling advertising directly to businesses is usually more profitable, but it requires a lot more work and a well-established, high-traffic website.  AdSense is a better option for most beginners.

Revenue-Sharing Sites

If the thought of creating a maintaining a website of your own doesn't appeal to you, there is still one really good option for making passive income online.  Revenue-sharing sites are websites that allow users to create content, which the site then publishes.  The site sets up contextual advertising that matches up with the user's content, and the site shares a portion of the advertising revenue with the user.

This is by far the simplest way to make money online, although it is usually not the most lucrative.  The biggest advantage to this system for the user, though, is how easy it is to just produce a little bit of content here and there during their free time, rather than having to undertake a full-blown project like creating a whole website for affiliate marketing.  It also allows people who have very little technical knowledge to create web content without having to learn about HTML, CSS, and the whole rigmarole.

So, where is a good revenue-sharing site to join? Well, right here at InfoBarrel, of course!  Authors on this site earn commissions when people click through the ads served up on their articles, which are provided by Google's AdSense program.  Signing up is very simple, and articles can be as short as 325 words (although the site highly recommends articles of at least 400-500 words to improve the overall quality).  Signing up only takes a few minutes. The sooner you start publishing your articles, the sooner you can start getting paid.

Remember that revenue from writing articles on this site may take a while to start coming in, and that you need to focus on targeting your articles at areas where advertisers want to pay for good keywords.  There are plenty of good articles here on the site about how to find good keywords, and always remember that your first priority after deciding on what to write about is to provide a good, quality article that people will want to read.



Mar 2, 2011 9:34pm
Don't forget informational products, such as ebooks and membership websites, is another great potential passive income stream!
Mar 3, 2011 2:27am
Definitely! The book "Moonlighting on the Internet" by Yanik Silver is definitely the best-known book about information product sales, but I personally find that "The Six-Figure Second Income" by David Lindahl and Jonathan Rozek is a much better book. I think I might just have to make my next article a comparison of the two. :)
Mar 10, 2011 10:02pm
Great information! I'm thinking about some type of blog or website; I like the idea of affiliate sales. But it's still just a thought and I appreciate all the information I get here on InfoBarrel.
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