warren buffett once said if you don't find a way to make money while you sleep you will
work until you die in this video i'll show you five ways you can make passive income so
that you can always have your money working for you even when you sleep if you want to achieve
financial freedom then you need some passive income streams to supplement your active income
stream like your full-time job or business contrary to its name building multiple passive
income streams does take a bit of both time and money so they are active in the beginning
however it is worth it in the end because it could become your ticket to financial freedom
by the end of the video you will know five different ways to create passive income
streams and how much time is required to create them also make sure you watch all the way to
the end because i will be giving out a bonus tip which is something very important to know
in fact it's something i wish i could tell my younger self when i was learning how to
invest and create passive income so if that sounds good to you let's roll the intro
what is going on my friends welcome back to my channel if you're new here my name is brian
and i love to talk about all things personal finance and investing so consider subscribing
to my channel and follow me on instagram if you want to see more content like this in the future
now let's start with the definition of passive income investorpedia defines passive income as
money earned from an enterprise with little or no ongoing effort involved but most likely the
upfront investment of a passive income stream took time and money oh that was a bit of a mouthful
now that last part is interesting because it's saying to make passive income you need both time
and money some require more time and some require more money because contrary to popular belief
passive income is not always 100 passive at least not at the beginning in order to create a passive
income stream you first need to be active at the beginning you will have to put in a bit of
time to create a foundation to make the income stream truly passive let me explain this with
an example think of passive income as planting an apple tree the end goal of planting an apple tree
is having free apples in the future so think of passive income as the apples now before you can
harvest your delicious apples you first need to plant the seed or the tree you need to dig a hole
put in the right fertilizer make sure it gets enough sunlight and water you basically need to
nurture it for a while before it's strong enough to produce apples for you so there is a fair
bit of work at the start the same can be said of passive income you need to spend time to research
or create a product or service that will provide you passive income in the future however the great
thing about passive income is once it's built then you can reap the benefits for a very long time
much like an apple tree now let's move on to the first method in our top five list the first way to
earn passive income is by investing in stocks that pay a dividend this can be individual stocks or
index funds in my opinion this is the easiest way for most people in this day and age of many online
brokers with low brokerage fees there is really no excuse for not investing the barrier to entry
has never been easier there is also so much free information out there that shows you how to invest
to buy individual stocks you need to look out for established companies that are dominant players in
their respective industries these companies have basically maxed out their growth phase and are
making so much profit that they will reward you in the form of dividends if you invest in them to be
extra safe you need to look out for companies that will continue to make profits under all
market conditions i'm talking about companies like coca-cola johnson and johnson and walmart these
are recession-proof companies that will continue to make profit no matter how the economy is doing
if you're in australia like me examples of good dividend companies include commonwealth telstra
and war wars these are companies that people will continue to use under any market conditions
most of these stocks will pay a dividend every three months you can look online how much
dividends a company is expected to pay by looking at the dividend yield the yield is calculated by
how much dividend per share is paid divided by the share price however just be aware that just
because the dividend yield is high doesn't mean it's automatically a good investment it could
be misleading sometimes if the share price has gone down over the year it means the dividend
yield is higher but that is not a good thing since you'll be losing out on the share value going down
so it can be quite risky if you invest only in one or a few stocks because if one of
those stocks go down in value then your stock portfolio will be greatly affected
also please note that dividends are not guaranteed and it's at the company's discretion how much is
paid out each quarter they could choose to stop dividends altogether during bad market conditions
in fact during the midst of the pandemic in 2020 many companies stopped paying dividends
since there was a lockdown and their businesses were closed so to reduce the risk that individual
companies bring a good alternative option is to invest in index funds but what are index funds
investorpedia defines an index fund as a type of mutual fund or exchange traded fund or etf with
a portfolio constructed to match or track their components of a financial market index such as the
s p 500 which tracks the top 500 companies listed on the us stock market so essentially if you are
investing in an index fund you are investing in a basket of many companies from a single stock
the most popular way to invest in an index fund is by buying an etf an etf can be purchased like
any other stock if you're living in the us one of the most popular choice would be vo which
is the vanguard s p 500 etf if you're living in australia like me the best option is probably ivv
which is the ishares core s p 500 etf buying index funds is such a popular method that even legendary
investor warren buffett recommends most people to buy them over individual stocks since they are
so passive by nature index funds won't typically pay as high a dividend yield as the other stocks
that i mentioned but they offer great diversity which in turn reduces risk the passive income
you'll receive is the dividend it will pay and the capital appreciation of the share price going up
in value over time in fact over the last 100 years the s p 500 has returned an annual compounded rate
of approximately 10 per year now that doesn't mean it will increase by 10 percent every single year
some years it could be 15 other years it could be negative 10 the point is over a long period of
time it has previously averaged it out to be about 10 per year in my opinion saving some money aside
every month and dollar cost averaging into index funds is the best way to create passive income
as it requires little work for the big reward it can bring in the future however i am not a
financial advisor so please do your own research when considering investing your money into stocks
another popular way to make passive income is rent from your investment property or your primary
place of residence investment properties can make you money from the price appreciation over time
you can also charge someone rent and live in this house these are two ways to create passive income
however it does take a large sum of money to get started in real estate and not to mention the time
required to manage any tenants or dealing with agents and given the high cost of real estate in
the current market i appreciate that this method is not feasible to some alternatively if you
currently own or have a mortgage on the property that you are living in then you can do something
called house hacking house hacking is a strategy where you rent out all the spare rooms in your
house and charge enough rent to cover the cost of your mortgage payment and monthly utilities
although i would also argue that this will take a lot of work and luck to get the right roommates
and whether it is truly passive income will depend how good your roommates are at paying rent on time
with that being said if you do manage to implement this strategy correctly then not only are you
creating passive income you are essentially living in your house for free another passive income
option is to offer your spare rooms on airbnb this will work particularly well if you live
in a location close to the city or near tourist areas you could rent out a room every month and
earn passive income from doing this i know of many people successfully doing this and once you
understand how airbnb works then it becomes easier to manage or if you don't want to own a property
but still want the benefits of real estate you can invest in something called reits which stands
for real estate investment trusts there are many types of reits which focuses on different property
sectors such as retail or shopping centres hotels and resorts or healthcare and hospitals
you can invest in these like stocks through a read etf which will pay you a dividend depending
on how well they perform if you're interested you can do some research online to see which wreaths
would suit your investing style the third way to make passive income is to start a youtube channel
if you run a successful youtube channel you can monetize it through google adsense which allows
you to put ads in between your videos which your audience will see advertising is a massive market
and there are many companies out there willing to pay big money to google who owns youtube to place
ads in your videos they will share a percentage of the fee to the content creators who post videos
on youtube now this will definitely require a lot of time at the start as a new youtube channel you
need to be putting out plenty of quality content to attract potential subscribers a lot of people
will get discouraged by the large amount of hours you have to put in for no money for at least the
first year it's not easy now let's look at my own youtube channel as an example for anyone wanting
to start their own i will admit it is a bit of a grind to research script film and edit my videos
but you know what i love talking about personal finance and i love video editing so for me even
though it's a lot of work it's also a lot of fun in order for me to monetize my channel i require
1 000 subscribers and four thousand hours of watch time in the last four months i predict this could
take me at least a year i'm quite confident in getting to 1 000 subscribers because i know
the value that i bring any videos that i make i spend hours on end researching and making sure
it brings maximum value to my audience i have a high expectation when watching other people's
youtube videos so it's only fair for me to live up to my high expectations with my own videos
i wouldn't ever put out a video that i wouldn't watch myself so if you want to help me reach
that 1000 subscriber mark earlier and be able to say you're one of the true brian invest ogs in a
few years time then i would really appreciate if you could please hit that subscribe button for me
so moving on to fulfill the 4 000 hours of watch time i will need to put out more quality videos
at the moment i'm currently working full time and i have a seven month old daughter to take care of
so i have to make the most of any free time that i have luckily i have a supportive wife and family
members who help me out and encourage me to pursue my youtube dream i'm very confident that
i'll produce enough quality content to fulfill both criteria i already have a year's worth of
good content planned out and to be scheduled for release so for me i plan to be on youtube for
the long haul before even starting this youtube channel i've been studying how to run a successful
youtube channel for the last five years i followed many great youtubers along the way and many of
them were small channels at the time and i noted how the successful ones got to where they are now
the main observation i noticed was consistency of course you have to put out quality content that
people get value from but the ones that i saw do well were the ones who were consistent with
their uploads the ones who only uploaded here and there were quickly left behind so this is
something to keep in mind if you are planning to start a youtube channel to stay consistent
as something which won't pay you for a long time you need to enjoy what you are doing
i think if you choose to start a youtube channel for passive income in the future then you need to
love the topic that you're talking about for me personally i love talking about personal finance
and investing and i like being creative with video editing so it's a win-win for me if i make some
passive income in the future then awesome but if not then hey at least i helped a few people
on their way to financial freedom which is the main goal of this channel the best thing about
youtube is once you monetize every single video you make will continue making you passive income
forever or as long as youtube is in business so you could be sleeping and there could be someone
watching your video on the other side of the world which makes you money and to me that is the purest
definition of passive income do something once and continue to reap the rewards for a long time
if you don't want to start a youtube channel because maybe you don't want to show your face
then maybe consider starting a blog or an instagram theme page the same principles
will apply with youtube you will need to put out quality content to attract new followers
you will then eventually be able to put up ads that will create passive income for you
there are also other ways to monetize your youtube channel blog or instagram page which leads me
to the next method and the next passive income method i want to talk about is affiliate marketing
affiliate marketing is an advertising tactic in which a company compensates a third party
to generate traffic to their company's product or services the third parties are referred to
as affiliates and the commission fee incentivizes them to promote the company i'm sure you've seen a
custom link to a product from your favorite youtuber or instagram page where they are
promoting the product and will receive a small commission fee if you click their link and buy
their product for example on my youtube channel since i love talking about cryptocurrency i have
an affiliate link for coinspot which is one of the cryptocurrency exchanges are used in australia
since i enjoy using the service i'm comfortable sharing my affiliate link which will give ten
dollars a bitcoin to anyone who signs up and i'll also receive ten dollars of bitcoin as a
commission fee so the way i see it everyone wins the company gets a new customer the customer gets
a freebie and a good service and i get a kickback for recommending it everyone wins if you want to
make some passive income with affiliate marketing then you will need some kind of audience so again
it will take some work up front without much monetary gain in the beginning some ideas include
starting a youtube channel a blog instagram page twitter account tiktok and other popular social
media platforms i would recommend building up your audience first before being too focused on
affiliate marketing because let's be honest no one will be clicking a random stranger's
link that they don't trust but once you build up a loyal audience base this can be very lucrative
depending on the niche you focus on for example if you start a tech youtube channel you can do
product reviews and leave amazon links to the product and since tech is generally a high priced
item the commission you receive will also be high you can also create a kit page using kit.co and
link all the tech gear that you use to shoot your youtube videos you can also create custom links
from amazon which will automatically be tied to your amazon affiliate account so when someone uses
that link amazon knows to conversate you you can also create an amazon shop and do the same thing
it's just that using the kit link will allow you to create links from other stores like walmart
and best buys all in one spot now i will say you need to have your audience's best interest in mind
you need to be ethical and only recommend products that you truly like and believe in
personally i would never recommend a product or put an affiliate link to something i've never
tried before or don't think it's a good product just to get their commission if you start linking
every random product that you find then your audience will just get annoyed and you'll lose
their trust so always be honest genuine and know that your audience is the most important key to
your success when it comes to affiliate marketing the last passive income method that i want to talk
about is selling a digital product like an ebook or online course for this method you'll need some
expertise in your niche for example if you're a chef you could write an ebook on food recipes
if you're in a personal finance niche like me you could write an ebook about investing or budgeting
if you're in the fitness industry you could write an ebook about workout routines and meal plans
you get the idea you can use the knowledge you already have to create a digital product of
course writing an ebook will take time like most of the method on this video it will take some work
however once you have finished the book there is no limit on how much passive income you can make
the best thing about a digital product is that you can keep selling the same product indefinitely
if you already have an audience from say youtube or instagram you can promote the product yourself
otherwise you can pay other influencers to promote your product for you and use the affiliate
marketing method that we previously talked about only this time you'll be the one paying commission
to the influencers who market the products for you if you do have an audience already you could
also sell online courses about your niche you can use platforms like thinkific and teachable which
makes it easy to host your own online courses so check out those sites if you're interested
in creating an online course again you'll need to put in time to create these courses because your
audience will be expecting quality content if they are partying with their money to learn from you
so you really need to give them a reason to be happy and give good reviews to their friends
because word of mouth is one of the most powerful tools when it comes to marketing think about it
if a friend personally told you a service is good you would believe them over a random online review
so keep this in mind if you want to sell digital products for passive income now for the bonus
tip that i promised at the start of the video the biggest tip i would give is to understand that you
don't need anyone's validation to do these things by nature humans seek validation from others be it
your family or friends growing up i was guilty of this i would always seek validation from my
friends before doing anything if my friends aren't buying stocks why should i they're not making real
estate investments so why should i or if i start a youtube channel or another side hustle what
if they laugh or criticize me if you're thinking like this then stop do not fall for this fallacy
you are the hero in your story everyone else around you are just secondary characters
you are the captain of your ship and you decide which direction you want to go
the hard truth is other people don't care and not in a nasty way they don't care because
they too are busy with their own lives and have their own self-doubts humans are quite selfish
by nature and most people are just thinking about their own lives first and rightfully so
so if you ever want to do something just do it if you want to gain financial freedom by joining the
fire movement then do it if you want to start a business and be your own boss then do it
if you want to be a youtuber and do things you're passionate about then do it i promise you the wall
will not end the next day because you decided to take the leap so to summarize the video the five
passive income ideas we talked about today are dividend stocks and index funds real estate income
starting a youtube channel affiliate marketing and selling a digital product each of these ideas does
require some form of active work before they can become passive income however if you can get them
right then it could be extremely rewarding for you i would recommend you try to implement a few
of these ideas because the more passive streams of income you have to supplement your active income
the closer you'll be to reaching financial freedom i hope you enjoyed this video and
if you found it useful please smash the like button for the youtube algorithm also consider
subscribing to the channel if you haven't already and follow me on instagram if you would like more
regular investing content so until next time my name is brian and i hope you make a lot of money
you