- "If you don't find a way to make money while you sleep,
you will work until you die."
You know what the number one problem is with having a job?
It's the fact that you're only able to earn money
for those eight hours per day, five days a week,
in most cases.
But for the other 128 hours in a given week,
you're not able to make any money at all.
And this is essentially the definition of active income,
where you're exchanging your time for money.
So most people, if they're looking to make more money,
they think they have to work more hours.
And while this is a way to make more money,
it's kind of a lousy solution to this problem.
So sure you could go out there and get another part-time job
on top of your full time job,
or you can work crazy overtime.
But the question at the end of the day here is,
do you really want to be working 50, 60
or even 70 hours per week?
I would say most people would answer that with a no.
Now, I personally became obsessed with this idea of earning
passive income in my early 20s.
And I've built up a couple of different
passive income streams, and I'm now 25 years old.
So what I want to share with you guys in this video today
are my top five best passive income streams
to start out with in your 20s.
You're in a bit of a unique situation here
because you generally have a lot of time on your hands
if you don't have kids or a family yet,
but you probably don't have a lot of money.
And when it comes to earning passive income,
you either have to invest your time or invest your money.
So these are different passive income streams
that work well for people in their 20s.
So let's get into number one right now.
Alright, so the first passive income stream
to get started with in your 20s,
is earning interest income from your savings.
And I know this sounds like a boring one here, guys,
but this is a very important first step,
because if you're looking to earn passive income
through other means pretty much all these different avenues
require you to have some amount of capital saved up.
Now, the problem with most savings accounts is
they're pretty boring investments.
Right now you might earn around a 0.5% APY
for an online savings account.
And that essentially means if you have $1,000 saved up,
over the course of one year you might earn
about five bucks in interest.
Now, I actually just made an investment
in a really interesting online savings account called Yotta,
which essentially has prize-linked savings.
So rather than earning just a basic interest rate
of around 0.5% or something like that,
the APY is slightly lower, but you can actually win
up to $10 million.
So how this works is for every $25 that you deposit
into this account,
you get one ticket per week into a lottery-type drawing.
But the difference between this and the lottery
is that Yotta is FDIC-insured.
And essentially it encourages you to save money
because the more money you save,
the more tickets you get for the weekly drawing.
So if you guys want to check out Yotta,
there's a link down in the description below.
If you use it, you're going to get 100 bonus tickets
for the first week's drawing.
And you can also use the code Ryan
when you sign up to get those tickets as well.
And again, guys, full transparency,
I am actually an investor behind Yotta,
so if you do use that link,
it is a way to give back to me and support this channel
for putting this video together.
And again, guys, the whole point here
is not to become a millionaire from the interest
in your savings account.
That is just not going to happen,
unless you hit that jackpot, which is not very likely.
The idea here is to get into the habit
of setting aside money,
which you will need down the road to build
other passive income streams.
So starting out and building up a nest egg
and having money for other passive income streams
and investments is the essential first step.
So the second passive income stream I recommend here,
is compounded 401k returns.
And I know what you guys were thinking.
You're probably saying, "What a boring way
to make passive income."
But it's honestly one of the best opportunities
that you have potentially available to you right now
in your 20s.
Now, for those who are not familiar,
the 401k is an employer-sponsored retirement savings plan,
where you're able to set aside a portion of your paycheck
before you even touch it and invest it for retirement.
But what a lot of people don't realize
is that many employers out there still offer something
called a company match.
And what this means is that dollar for dollar,
they will often match the amount that you're putting in,
which essentially means they're offering you free money.
And even if your employer doesn't offer a company match,
it's still worth it to put something,
literally anything into your 401k,
And the general psychology here is the fact that
when you take it money out of your paycheck and set it aside
into this investment before you have the chance
to spend that money,
you are far more likely to figure out how to make ends meet.
Most people, if you give them the full paycheck
and then ask them to direct money towards investments
or savings, they're not going to be able to do that,
because basic psychology makes us want to spend that money
on stuff rather than putting it away and saving it.
So with the 401k, you're putting that money aside
before you have the chance to spend it.
So let me give you guys a scenario here
of how much money you could potentially have
from a 401k investment.
Let's say you started off at 20 years old
and invested in your 401k from age 20 to age 65
at just $100 per week.
Well, by the time you reached retirement age,
you would have a 401k worth around $1.8 million
from just $100 per week.
And that's simply assuming you take that money
and you passively invest it in the stock market,
which on average returns around 8% to 10% per year.
So I don't care if you just do 1% of your pay
into your 401k, do anything at all.
And trust me guys, it's an easy way to make passive income
and you're going to thank me later.
So the third source of passive income is becoming
an owner occupied real estate investor.
And again, as mentioned earlier, I said
a lot of these ideas are going to require you
to have some money saved up.
And that is why it is so important to build up savings
in your 20s, which will allow you to make
some of these other moves in order to earn
significant passive income.
So what I'm getting at here is,
rather than going out there and buying a single-family house
or renting for your entire life,
you eventually want to make it the goal to purchase
a two to four-unit property,
where you're able to rent out those other units
while living in one of them to offset the mortgage,
or in some cases pay the mortgage
and related expenses entirely.
And a lot of people out there say
that real estate is not passive income,
and you have to manage your rentals and all of that.
And while I do agree with them on that point,
when it comes to an owner occupied property,
it is pretty passive.
And I can speak from my own personal experience.
Because you already reside on the property,
you already have to mow that lawn or have it mowed for you,
and plow that driveway.
All you're doing is adding some additional units
and additional revenue streams to this property
that you're already maintaining.
So I do this with my property personally,
I actually have a three-unit property,
which also has a cottage and I live in one of the units
and I rent out the other units and the cottage.
And I would say, I spend on average about one hour per month
at most, managing these rentals and taking care
of random odds and ends for my tenants.
So it's very passive and essentially has allowed me
to eliminate my mortgage by earning rental income
from these tenants, which pays for the mortgage
and other expenses.
But again, like I said, you're going to have to save up
a lot of money in order to do this.
I was able to use the FHA loan,
which was a much smaller amount of money out-of-pocket,
but I still had to come up with $22,000 in order
to close on this property and get my foot in the door.
So again, that is why it is so crucial to begin saving money
for this type of purchase.
So the fourth passive income stream on my list here is
earning passive income from dividend stocks.
And this is honestly one of my favorite methods
for earning passive income.
And that's because you can potentially get paid
in two different ways from dividend stocks.
First of all, you can buy a stock at a certain price
and sell it for a higher price down the road,
also known as asset appreciation.
And the second way to get paid from dividend stocks
is those quarterly or annual cash payments.
And I love the fact that there's two potential ways
to make money with these stocks.
And the reason I'm bringing these up here
for people in their 20s,
is a lot of people make very risky investments at this age,
whether it be options trading, or futures, or Forex,
things like that.
And while this does work for some people,
for the majority of people making these yolo-type bets
means you're going to essentially blow up your account
and lose all of your money.
So I would encourage you, if you do have money to invest,
think about a strategy like dividend investing
or blue chip stock investing,
and rather than buying into these highly speculative,
high-risk investments,
consider something like dividend stocks
that are going to be a much safer return.
So I actually started out a dividend portfolio
earlier this year, utilizing M1 Finance,
which is a commission-free brokerage.
And I do have a lot of surplus income
from my different business ventures,
so I was able to direct a lot of money towards this account.
But since then I have built this up
to a $100,000 dividend stock portfolio,
which now, just from that portfolio
and me doing nothing at all,
I earn around $3,000 per year in dividend income.
And essentially what I do, is I take those dividends
and I reinvest them back into the portfolio,
which allows me to earn compound interest
where my dividends are earning me more dividends.
And again, this is not me investing in highly risky stocks
or anything like that.
I own companies like 3M, and McDonald's, and Intel,
which are time-tested, durable companies
that are profitable and consistent
and just may not have crazy growth,
but they pay consistent and reliable dividends,
which allows me to earn relatively safe returns.
And again, guys, it's not realistic to think
that you're going to be able to build a $100,000
dividend portfolio overnight,
unless you have a lot of money to work with.
But getting started with any amount of money
is all that matters here.
And with M1 Finance specifically,
you can open up an account with them
with as little as $100.
So if you guys want to check that out,
I will have a link down below to M1 Finance,
and full transparency, guys,
I am affiliated with them.
So I may earn a small commission in the process.
And I will also link up to my video series,
documenting exactly how I built this $100,000
dividend stock portfolio.
So the fifth and final passive income stream here
to start in your 20s is what I've done,
which has allowed me to earn the majority of my money.
And that is building different online businesses.
So I have my channel here on YouTube
that I've been working on since 2016.
And I'm also the co-owner of a personal finance blog
called Investing Simple,
where, basically on both of these platforms,
we create different content,
which we monetize through ads,
and affiliate links, and different things like that.
And again, this is something where you don't necessarily
have to invest a ton of money or any money at all.
It just requires a large investment of your time upfront,
and you generally don't make very much money
in the first year or so with most businesses that you start.
But now, I've been doing this for coming up
on four years, and I earn mostly passive income
from the different content I have out there on the internet.
So for example, one of the pieces of content
that makes money for my channel is an Audible review,
which is essentially a audio book service offered by Amazon.
So I made this video reviewing Audible,
and it took me about four hours total to make the video,
edit it and upload it.
And in the last nine months,
this video has gotten tens of thousands of views.
However, I am affiliated with Audible
and for every free trial I refer to them,
I earn a $5 commission.
And so far in 2020 alone,
I have earned $4,062 total from these Amazon bounties
or free trials.
And I've done a couple of different ones,
like Audible, and Amazon Prime, and things like that,
but altogether I've made around $4,000 from these videos
that took me a couple of hours to put together.
And so all I've done with my online businesses
is do exactly that but on a much larger scale
by having dozens, if not hundreds,
of different pieces of content all making me money.
And the idea here is to create this piece of content once,
and it continues to make you money 24/7, 365,
which is the definition of passive income.
So anyways guys, there you have it.
Those are my top five favorite passive income streams
to start in your 20s.
Again, you're not going to get there overnight,
if your goal is to make $1,000 a month, or whatever it is.
But the point is just to start,
because what you do have on your side right now
is a heck of a lot of time,
which can allow you to earn those compounded returns
year after year.
If you enjoyed this video, guys,
make sure you drop a like, subscribe
and hit that bell for notifications.
And as mentioned, if you want to check out Yotta,
the lottery-based or prize-based savings account,
or M1 Finance for dividend investing,
those links are down in the description below.
But thanks so much for watching, guys.
And I will see you in the next video.