About Blog Hi, I’m the Passive Income Earner. I also go by other names, such as Canadian Dividend Growth Investor. I’m based in Canada and I’m on a journey to build a passive income with dividends. In this blog, I share my experience in personal finance and investing, including mistakes I made and lessons learned. Occasionally, I will also write about financial and investing concepts I learn. Follow this blog to know about my journey on passive income through dividends.
There is a specific tax definition of passive income, known as “passive activity” to the Internal Revenue Service. Passive income is any income you make without actively working or are materially involved. The IRS defines it as any rental activity or any business in which the taxpayer does not “materially participate.” Nonpassive activities, or active activities, are businesses in which the taxpayer works on a regular, continuous, and substantial basis.
Before answering this question, let’s quickly define income: Income is all the money that you earn through any means and streams. There are 2 basic ways to earn money: Passive and active income. Active income is where you sell your time for money - this is your regular everyday jobs. You come into office, sell your time for a certain amount of money per hour, and then at the end of the month you collect your paycheck. Pretty simple and almost everyone understands that concept. However, many don't accept that concept as valid, and see it as slaving off your time instead of putting it to good use and things you actually prefer doing.
I have posts that are heavily linked to Amazon and some that aren’t to keep things balanced out. My heavily linked posts are product guides or stuff I was searching for my kids. Some examples are: Non-toxic high chair, 20 non-toxic teething toys, and Gift for 2-3 year olds. My blog is “green” so a lot of my posts are about non-toxic products since this is what I personally look for.
Another way to generate passive income is to invest and be a silent partner in a business. This is very risky, but with risk comes the potential for high returns. For example, several years ago both Lyft and Uber were looking for private investors to invest in their companies. Today, they are worth billions - but you as an investor would only reap that benefit if they go public via an IPO, or get acquired. So, it's risky.
Eventually, I’ll have to stop blogging altogether. Don’t worry, it won’t be anytime soon. I still enjoy blogging, but I just don’t see myself blogging when I’m 70. That’s 27 years away so we have plenty of time left. I really don’t know what will happen to our traffic if I stop blogging completely and just repost old articles. I suspect the traffic will slowly drop and stabilize at some point. If you have firsthand experience, I’d love to hear about it. My optimistic guess is that traffic will eventually drop to 50% of the current level.
Similar to selling advertising, the goal is usually to rank for competitive search terms, but instead of selling advertising, you endorse different products your audience might be interested in, and whenever someone you refer buys, you get a commission. It’s kind of like the next generation of Amway, except instead of referring your friends and family to buy the products, you refer strangers who visit your website.
I wanted to specifically call out one particular strategy within equity investing that bears mentioning – dividend growth investing is when you focus on stocks that not only pay a dividend but have a history of strong dividend growth. When I was first building my portfolio of individual stocks, I focused on buying companies with a history of dividends, a history of strong growth, and financials that supported a continuation of both.
Jon, you always keep it real and I LOVE that about you and your writing! You are so right! There’s always an amount of work that goes into creating “passive income” or becoming a blogger who monetizing with services and courses. Thanks for being honest about how long it can take to truly master the required skills. Frankly, I’ve done my 4+ years of undergrad and grad school and what I’ve been learning in the last 2-3 years as I’ve dug deeper into improving my copywriting and blogging skills by taking classes with yourself and other trustworthy mentors is giving me the best foundation to help me build my freelancing business and ultimately step away from my 9-5. For me, it’s all about who I work for, under what conditions, when, and for how much, rather than a “no-work-at-all” lifestyle. That’s totally unrealistic. And I appreciate you, as a well respected “Guru” yourself, for saying so!
Get your basic blog set up. This involves choosing a niche (use the Adwords keyword tool to find out if people are really searching for information in the niche first), registering a domain name, getting a hosting account, setting up your basic blog installation (I recommend WordPress.org), and choosing a theme (design). Rather than go through these steps in detail here, you can follow my instructions on getting WordPress set up over in our 30 day marketing bootcamp series for freelance writers over at QueryFreeFreelancer.com.
There are so many great resources today at our fingertips to learn about the world of investing, business, and finance such as blogs, podcasts, and online courses. However, I feel the most tried and true method is still by reading good ol’ fashioned books. I’ve collectively spent a few hundred dollars to purchase these books, but I can tell you that they have resulted in countless dollars in savings and millions in current and future earnings. There really is no better return on investment.
Once people find success, what commonly happens is they don’t believe that they deserve it or they believe it was accidental, and that’s crept into my head a few times. It’s a very debilitating thing. You start to doubt and you stop working and you stop believing in yourself and you stop putting as much effort in. But I also have a great group of friends who help me with those feelings, and just realizing how many people’s lives I’ve touched and all the notes I get help. That’s why I have that large 5’x5’ space on my wall with notes on it saying “Thanks, Pat,” “Thanks, Pat.” I have a folder in my inbox just for testimonials of what I’ve done — it helps me remember that I’m actually making a difference, and it’s not accidental, this success.
Hey, readers. I need your help today. Please vote on the poll at the end of this post. My question is this – should I consider blogging income as passive income? In 2017, we are very close to being able to cover 100% of our expenses with our passive income, but we’re not quite there yet. I don’t count blogging income as passive income at the moment. If I count blogging income, then we’re there. I’d like your opinion on how I should count blogging income. Blogging isn’t really passive, but the income is. It’s somewhat difficult to categorize.
There are other ways to earn from your blog. For example, you could sell banner advertising. You could survey-based cost per action -- CPA -- ads (you're paid when users fill out a survey or complete some other action). You could sell video ads. Yo and I are launching FreelanceTheater.com soon, and we might eventually sell jingle ads or other audio ads in the audio plays there. Get creative and brainstorm some possible income streams for your blog that would work with your niche. There's a reason you won't see a lot of banner ads or even contextual ads here at AFW. Years of testing told me that they weren't the best ways to monetize a site targeting freelance writers. That testing also demonstrated that far better options were to incorporate job lead based income streams and promoting my own products for sale here. Don't simply assume the easiest option will be the right one for you.
As we know, Amazon has invested (and still is investing) heavily in the navigation / recommendation functionality of their shopping platform: there is not only Advanced search and faceted filtering, but also features like “Frequently bought together”, “Customers Who Bought This Item Also Bought”, “What Other Items Do Customers Buy After Viewing This Item?”, categories/tags, new releases, best sellers, various public wishlists, registries…
What if the manager of the Idaho investment center wants to invest $100,000 in new equipment that will generate a return of $16,000 per year? This would provide residual income of $4,000, which is the amount by which it exceeds the minimum 12% rate of return threshold. This would be acceptable to management, since the focus is on generating an incremental amount of cash.
Do you know of a successful business that needs capital for expansion? If so, you can become something of a small-time angel investor and provide that needed capital. But rather than offering a loan to a business owner, you instead take an equity position in the business. In this way, the business owner will handle the day-to-day operations, while you will act as a silent partner who also participates in the profits of the business.
Blogging is not passive. For various reasons, we have not kept up with our site. Traffic has dropped way more than 50%. It can be very lucrative as you know, but it does need a certain minimum level of effort to remain so, probably in the 20-hour/wk range. Now, all things considered, that probably isn’t that bad of a trade-off, but a trade-off nonetheless.
The paperback’s formatting could also be improved. I basically just messed around in LibreOffice on Mac to get formatting to work, but I wish I would’ve started with a tool like Jutoh, which is fantastic for formatting and publishing. My workflow was Google Drive exports to LibreOffice, and Google Drive just wasn’t good for editing once you cross 40–50 pages. In the future I’d like to format a better sized paperback.
eCourses – If I have a step-by-step process to share, I’m likely going to offer it as an eCourse. That’s something I’m working on right now. As it’s more intensive and structured than an eBook typically is I am able to put a larger price tag on this project. My funnel is getting a little smaller at this level, but there’s a high probability that many of those that purchased the eBooks are going to be interested in the eCourse.
I have a system in place to make sure it doesn’t happen. I have my wife who is helping us stay grounded and making sure my head doesn’t grow too big. But I also say to my audience, Hey, If you see me becoming somebody different from who you know I am or who I’m supposed to be, then catch me before I get off track. I’m not about buying a huge mansion, or really fancy cars. I’m more about the family and making it comfortable at home and going on family trips and creating memories.
An analysis of the firm's position in its industry and the structure of the industry will be necessary to justify one of these assumptions. The third scenario is the most realistic if we assume that over time, industry competition reduces economic profits to the point at which firms begin to leave the industry and ROE stabilizes at a long-run normal level. The strength of the persistence factor will depend partly on the sustainability of the firm's competitive advantage and the structure of the industry. The more sustainable the competitive advantage and the better the industry prospects, the higher the persistence factor.
Making legitimate passive income isn’t as difficult as you might think. Some of the best passive income ideas might take a little time to set up but can start cash flowing within a couple of months and will provide a consistent monthly income for years or more. The most important point is just to get started. You make exactly $0 on the passive income sources you never start.
Java Metals is expecting an ROE of 15% over each of the next five years. Its current book value is $5.00 per share, it pays no dividends, and all earnings are reinvested. The required return on equity is 10%. Forecasted earnings in years 1 through 5 are equal to ROE times beginning book value. Calculate the intrinsic value of the company using a residual income model, assuming that after five years, continuing residual income falls to zero.
It might all seem pedantic but I think the words we use to describe things are important. And calling a business passive when it really isn’t can set people up for disappointment and even failure. It’s not a fair description of the work involved. Sure, you might be able to lounge on a beach as money rolls in but only after you’ve put in many hours of work first and only with the knowledge that you’ll have to sit back down at the computer again at some point to invest further in your business.
I made guest posts on other blogs/college admission websites on topics like what makes a great application or how to write a great essay. I linked to my book, and get maybe 1 sale a month that I can attribute to these blogs. It’s not great for sales, but it did help my book get ranked higher on Google searches and I met and helped out some cool people, which is nice.
Jitendra's talent, skill, and style make him one of the most qualified digital marketing gurus in India, and in my opinion, shortly in the world. I know Jitendra from DomainX event , he was very active there and I was really impressed by networking & business skills he have. I decided to work with him and he delivers his best at his work. I really like his style of working.
Start Something That Matters – Book by Blake Mycoskie, founder of Toms shoes. It’s a great intro to the world of social entrepreneurship. For those who don’t know what Toms is famous for, they donate a pair of shoes for every shoe sold. In a nutshell, this book has strategies on building businesses, a heavy dose of inspiration, and ultimately makes you feel like it’s possible that your one idea could change the world.
There are many skills that an entrepreneur must develop and continually improve. Being in business for yourself is extremely rewarding, yet one must be prepared. There will be challenges to overcome, otherwise your business and dreams will die. Do not let that happen to you. Learn the skills that every entrepreneur needs to be successful in today's global economy. Start getting your information here.
But I hate the very idea of how the “kick back and do nothing” business opportunity is sold. *Residual* income and *Passive* income are not the same, so I agree with you there. I’d love to see a series that goes more in-depth into what kind of work each type of digital business needs, a kind of fantasy vs reality thing. (Mostly so I could have something to send to people when they ask me, as I’m not in business.)
Again, no leader worth her salt will be attracted to such an opportunity. And anyone you do hire to lead the value creation, if they have two brain cells, will see that she's the one adding all the value. Sooner or later she will simply find a way to cut you out of the value chain, either by requiring more and more compensation, or by going off and competing against you (and actively at that.) Why does she need you? You're not adding any value anyway!