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So, you want to retire early or cut down on your work hours without cutting down your lifestyle?
Passive income earnings can get you there in simple steps.
Passive income for early retirement, semi-retirement or to work less is all possible today in various forms.
However, before you can get passive income and relax, you’ll need to do some work. This work requires time, commitment and money (in some cases).
Your reward will be more freedom to you while you travel, relax, follow your passions. In other words, you’ll get money to pay for your living expenses plus some discretionary expenses, thanks to passive income.
Anyone can create passive income earnings. Moms, college students, entrepreneurs, side hustlers, freelancers, millennials.
The earlier you start creating passive income assets, the more time you have to compound the benefits from it. So, let’s start.
I compiled a list of passive income ideas for you to start. Not all of these will be a good fit for everyone. I hope you can find at least one idea you can start now.
These income streams require the creation of assets, so you’ll need one or more type of investments. Money, intellectual property or physical property.
Heads up – If you have high interest rate personal debt, it’s better to eliminate it before investing. The savings you’ll have from not paying high interest rate is in itself a return on investment.
Who are these passive income earning ideas for?
- Early retirement enthusiasts
- Freedom hopefuls
Create Passive Income Earnings for Early Retirement
These passive income ideas require start up capital.
1.Invest in dividend ETFs, Mutual Funds and REITS
ETFs, Mutual Funds and REITs are financial instruments made up of different stocks. When you buy one of these instruments, you become part owner of the fund itself.
ETSs and Mutual Funds are made up of various sectors stocks, while REITS are made up mainly of real estate related services.
You earn passive income from dividend funds in the form of an annual yield (interest) and also capital gains (when stocks in the fund are sold at a gain).
In this category I like Vanguard Funds and if you’re a teacher there is TIAA CREF funds. Head over to their site to learn more about their investment philosophy and available funds.
2.Invest in Dividend Stocks
Buying dividend stocks for your portfolio and collecting those payments can make good passive income in your early retirement. Dividend stocks are among the least risky of all stocks.
You buy a number of shares and you’ll get dividend payments (kind of like interests) during the year. You’ll also can get stock price appreciation.
However, many dividend stocks companies return their profit to investors as dividends and may sacrifice growth. The key is to buy these stock at low prices to earn a higher yield (interest).
The website Dividend.com has a screening tool you can use to find stocks and their yields.
3.Become a Money Lender
Peer-to-Peer lending or P2P is a simple way to create passive income. Lending communities like Prospers and Lending Club link lenders to borrowers.
As a lender you’re are investing your money at a fixed interest rate. You can start lending small amounts of money.
So, you earn passive income with the capital you lend out ini the from of interest. P2P lending does have risk of default. The lending platforms screen out borrowers, but it’s just part of the business that some people will not pay back their loans.
At P2P platform you can earn 10-15% return in some deals, in others you can earn in the single digits.
Over time, after deducting defaults, you’ll probably end up with an average yield of 5-7%. That’s not a bad return considering that P2P lending carries lower risk than stocks.
4.Buy a Rental property
A residential, apartment or a beach rental property can make you passive or semi-passive income for early retirement.
The general rule for investing in rentals is that you should get at least 1% of the house value in rental income. So, if you pay$100,000 to purchase the property, you’ll need $1,000 in rent every month.
If you can get a property manager to manage it for you and still make a profit, this is passive income. But, if you have to do the managing you’re still sort of actively working for your income.
Create Passive Income Earnings for Early Retirement
These passive income ideas require time and some skills, but not a lot of money.
5.Create a Personal Blog and Monetize it
Blogging for money is a real business. If you’re a college student, a stay-at-home mom or just want to retire early, blogging can help you create passive income.
Creating a blog is flexible, you can do this at your own pace on your spare time. You can focus on your career and on making and saving money from your job, while you build a blog for future income.
Decide what you’re going to blog about and make sure you make it something that you enjoy. Everyone has a skill or a talent they can write or teach about in a blog.
Monetize your blog with ads, affiliate products or services, your own digital products. At the beginning you’ll have to work and build the blog. However, once your blog is established you can earn passive income from your monetizations.
6.Create a Website and Monetize it
You can create a website if you don’t want to write a blog. A website is less writing intensive. Websites are sort of like apps. They have one specific function.
On a website you’ll provide a specific service or a product. This site can be free, open to public or a membership site.
For example, this site Learn how to Become, has a map that you can click and find out what are the requirements by state to become a registered nurse. A site like this is not writing intensive, it’s more like an app. You just do the writing once.
7. Create a Course on an Online Platform
You don’t need a blog to sell an online course. Create a social media following and this can be the audience for your course.
Platforms like Teachable and Udemy are well suited for online courses.
Again, you want to create a course about something you are passionate about and want to teach it to others.
You can include videos, mini ebooks, checklists, workbooks on your course.
Other Passive Income Ideas
8.Rent part of your Space
Do you have an extra room in your house? Have extra space in your garage? You can rent these spaces using AirBnB, Home Away and VRBO platforms.
You can check the going rates for your space by checking the listings on those sites.
The key to generating income by renting your space is having good reviews and recommendations from clients.
9. Invest in heavy equipments and rent it out
An example of heavy equipment rented by businesses and individuals are cranes, mini cranes and lifts. Businesses don’t want to invest in these equipments and prefer to rent them out as needed.
This, of course is a capital intensive business, plus you need insurance and licenses. But, the rental income is in the 5 figure per month.
I actually know someone who owns a crane and rents it out. He doesn’t operate it, which makes it a passive activity for him. His crane is booked 90% of the year.
Final thoughts on Creating Passive Income for Early Retirement
Getting passive income to retire early or semi retire is doable. Decide if you want to invest some capital upfront or just a small amount of money.
Also, how much time and effort are you willing to put into your passive income pursuits.
Setting up passive income requires that you create an asset or buy it.
The key is to start creating your assets early. Whether you invest money into it or you put time and effort, you ‘ll need time to grow your income.
Disclaimer: Companies mentioned in this post are used for educational purpose only. These are not recommendations.
Related – Investing in dividend stock using a DRIP