Over the last 12 years, YouTuber and money expert Graham Stephan has created a lifestyle where passive income covers his entire cost of living expenses. In a recent YouTube video, Stephan shared everything he learned so audiences are able to make their own passive income and amass enough of this income to quit their jobs.
1. Invest Your Money
According to Stephan, you can generate passive income by investing your money or by investing your time.
Those who choose to invest their money want to make sure their money works for them. Every dollar you invest should have a job. Your dollars need to find pennies and deposit them into your bank account. While this may seem like a small sum of money, Stephan said it adds up when you have hundreds or thousands of dollars doing this job every day.
However, there is one catch to investing your money for passive income. Those who want to scale up enough to earn a hundred dollars a day and quit their jobs will need to work hard and be patient. Stephan recommends utilizing your resources today to work smarter and more efficiently, which allows you to earn more money over time.
2. Invest in Index Funds
Index funds are an investment which covers a wide variety of stocks and markets. They are affordable to buy and allow you to own a small piece of the US equities market. You can choose from a wide range of index funds across international stocks, tax stocks and more.
Once you purchase an index fund, you can start making passive income in two different ways:
- The stock price going up and down in value over time. Long-term, Stephan said these funds generally trend upwards.
- Dividends. On a regular basis, Stephan said investors receive some extra money simply for buying and holding on to these index funds.
Those who want to use the strategy of investing in index funds for passive income, Stephan said, will get there through consistency and patience.
3. Invest in Dividend Stocks
Owning stock in a company entitles you to some of the company’s profits. A small portion of what a company makes is paid out to the investor via dividends.
To reach the point where you’re able to quit your job, Stephan said you’d need to invest $1,840,000 in Bank of America (the company he uses as an example) to make $100 a day in dividends. If you’re only after dividends, Stephan said other companies pay a much higher yield. This means you can make that $100 a day and invest a lot less money.
Per Stephan’s advice, those who choose to invest in dividend stocks need to pick their stocks wisely and invest in companies based on their long-term fundamentals.
Real estate investment trusts (REITs) means you’re buying stock in a company which has the sole purpose of going out and buying real estate. In exchange for giving them your money, Stephan said they will pay you back a portion of their rental income as a dividend.
If you want exposure to real estate without the hassle of finding a deal, Stephan said this is a really easy diversification option. The only downside is being unable to leverage your money like you can with buying real estate.
5. Owning Physical Real Estate
In Stephan’s opinion, owning physical real estate is the quickest, most effective way to build up your net worth.
Keep in mind, however, you’ll need to meet certain requirements to do it. Stephan said this includes having a credit score above 700, having a stable source of income and enough money saved up for a down payment.
6. Signup Bonuses
While signup bonuses aren’t exactly passive income, Stephan said it doesn’t require a lot of work on your end.
Here’s how it works. Credit cards and banks will give you a bonus for opening an account with them and meeting a few requirements. This bonus can be anywhere from $5 to $500. Stephan only recommends choosing this option if you intend to bank with this particular financial institution.
7. Make a YouTube Channel
While this tactic is often easier said than done, Stephan maintains making a YouTube channel can be a great way to make passive income if you treat it like a full-time job.
Some business tactics worth considering may include reviewing products, including affiliate links in the copy for your videos and building a library of evergreen videos.
8. Sell Skills on Autopilot
If you have a skill or service you can sell on autopilot, like writing eBooks on Amazon or building websites, Stephan said this can be another option for building passive income.
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