Have you ever heard the phrase that "you need money to make money?" This is certainly true for a number of reasons, mainly because of the power of passive or residual income. Making money from money is hard in the beginning, but once you get a steady stream of passive income coming in, it can be quite amazing how fast your money will grow! Here I will offer several ways you can get this process or model working for you right now.
How to Make Your Money Earn Money
First, you actually need to have the money to invest and grow. How do you get it?
- Live below your means. What this means is you're going to have to make some sacrifices and not buy as many "wants." Try to get as much money coming IN, and try to limit as much money going OUT. This is crucial.
For example, let's say you make $3,000 a month after tax. But your expenses are $2,800 a month. If you can find $300-500 a month that you can eliminate, then you should do it.
- Next, don't just save your money - invest it! Putting your money in a bank will earn virtually zero. In fact, with inflation at 2 percent a year, your savings will actually be losing value! That leads me to my next major point:
Make Investments that Provide Passive Income
What is passive or residual income? This is basically money that comes in every month that doesn't require your presence or your effort. Sounds too good to be true? It's not. There are many different forms of it which I will discuss below. Some require capital, some don't.
#1 Stocks That Pay Dividends - This is one of the most obvious forms of residual income. You purchase a stock, ETF, mutual fund or bond online and it pays you interest. For example, a $5,000 investment that earns 10 percent a year will provide you with about $500 a year in earnings - not too bad.
Then you can re-invest the earnings (dividends) and watch your money grow as fast as possible! Check out the best stocks that pay a monthly passive income.
#2 Buy Real Estate - I believe that real estate is a pretty good investment because of cash flow you receive after all expenses are paid off.
In most cases, you do have to put some money down to purchase the property (usually 15-25 percent).
However, with the right property, you should make it all back in 2-4 years.
Then you can keep putting your cash flow towards buying more and more income producing properties. You will also build a huge amount of equity in your properties, as your tenants pay your mortgage off. I've listed my favorite book on real estate below so you can learn more on how to invest in income properties that will pay you each month just for owning them.
Passive Income Real Estate
Amazon Price: $39.95 $21.22 Buy Now
(price as of Nov 29, 2015)
#3 Create an Online Business or Blog - You can create your own niche blog which focuses on a certain product or topic, then link to Amazon and get a comission each time someone buys the item. The best part about this is that once you write the article, it stays on the web and you make earnings passively for months or even years to come. Setting up a website is actually easier than most people think. Plus, it's free to create on Blogger and WordPress.
Then with the earnings you make, you can consider outsourcing your website to make it a passive income machine. You can hire bloggers and web developers to take care of all the business for you.
You can also consider blogging on revenue sharing website like this one. InfoBarrel is free to join and many people make pretty good amounts of passive income every month.
Amazon Price: $24.99 $5.98 Buy Now
(price as of Nov 29, 2015)
In conclusion, these are just a few ways on how to make money earn you even more money. Once you get the process started, it really takes a mind of its own. I wish you the best of luck creating your very own passive income streams!