In 99 out of 100 cases, it takes years to get rich. But since the media loves highlighting that one person who got rich overnight with a few passive income ideas, many of us have a screwed-up idea of how people get wealthy.
While we know that get-rich-quick schemes never work (otherwise they wouldn’t be called that), most folks don’t know that building wealth is not that complicated.
The problem with getting rich is that it takes time. And in this impatient world, people just don’t want to wait. They want to be rich now.
But if you decide to go against the grain and commit to building long-term wealth, you will inevitably become wealthy if you do one thing: Increase your net worth every year.
The best way to make that happen is to have multiple income streams. If you only have one or two income streams right now, that’s fine. With consistency and time, you’ll eventually get there. It doesn’t happen overnight.
If you’re serious about building wealth over time, you will accomplish that goal because you control your behavior. When executed well, the following passive income ideas will increase your net worth gradually.
1. Create and sell books
Let’s start with something you can create for free. Unlike an e-commerce website or baked cookies to sell at the office — a book is something you can do without spending any money. It only requires your time, attention, and a computer.
A book boosts not just your income, but your credibility as well. When you’ve written and published a good book, you instantly set yourself apart from the millions of people who don’t have a book.
You can introduce or pitch yourself as the “author of” so and so book. Not some random, unknown writer with nothing to show.
But books also generate revenue. Here’s a screenshot of the paperback sales of my books via Amazon.
As you can see, not much happened between 2015 and early 2018. It was only in the third year of continuous writing that my books began selling well. By June 2018, I had three books. Eventually, it came to a point where my books continued earning on their own.
The point is that it takes time to build a brand and become known. And by publishing multiple books, you increase the odds of having a successful one.
2. Offer online courses
People always want to learn. Whether it’s building an online business, writing, cooking, and so forth. There is always a demand for expertise. And we’re willing to pay for good information.
When you have the expertise, the best way to share it is through an online course. Why? Because you only have to create it once. Then you can sell it for years. That’s the definition of passive income to me.
Here’s a screenshot of my earnings from one of my online course launches. (I currently have 7 paid courses).
But my first launch generated around $1,500. That also took me three to four years to get to that level.
It’s not all about numbers though. This shows that we’re willing to spend money on valuable knowledge.
If you focus on helping your students, the money will come. I know that sounds stupid when you’re sitting at home with $0 of revenue.
Remember: People buy something because they think it will help them.
Online courses also help you to demonstrate authority in your field. Gordon Ramsay is a good example of that. He dominates the cooking world. And he doesn’t just have restaurants. He also has TV shows, online courses, and books.
3. Develop digital products or services
Online courses and e-books are digital products too. But I’m talking specifically about products that people use for things other than learning. This is a good passive income idea for those who prefer to focus on providing online assets.
This can come in the form of:
- An app
- Digital assets, like stock videos, photos, and so forth. It’s a great match for those photographers and videographers.
- For designers, selling templates.
- Artists are also switching to subscription-type of income streams. A good example is award-winning novelist, Chuck Palahniuk, who serialized his work in a paid newsletter.
With most digital products, we can make them, and, aside from a few updates and changes now and then, they’re pretty much self-sufficient.
There is no ceiling on how much one can earn. As long as people are buying (or subscribing), you’ll keep earning.
4. Buy rental property
Once your other income streams start gaining traction, you’ll eventually reach a point where you’ve got more cash on your hands. This is usually the best phase to invest in real estate.
That’s how I did it as well. I never had the ambition to become a full-time real estate investor. I’ve accumulated two rental properties over the years, and the income is good. And because I only have two tenants, I never have any issues.
That provides me with a good side income.
Just like books, and every other asset — passive income streams only thrive when they’re higher in number. If you’re renting out a single property, the rental income may not be much. But you also don’t need to be a mogul.
Everything depends on your personal goals and the current housing market. The investment needs to make sense financially. For example, I bought my condos before 2020.
I haven’t been interested in real estate since then because of the outrageous prices. Now that prices are coming down, I’m starting to get interested again.
5. Invest in index funds
You can become a millionaire with just 500 bucks a month. Yes, really. And it’s not a scam. It just takes a few decades.
Let’s quickly do some math.
- If you make an initial investment of, say, $2000
- Then you invest $500 of money you can miss every month in the S&P 500 index fund
- You keep investing that 500 bucks every month, whether the market is up or down
- And the index continues its average 10% growth per year.1Source: The Motley Fool
In 30 years, you would have invested a total of $182,000. If you didn’t invest that money, inflation would eat that right up and make it worthless.
But with the power of compounding, you would instead be retiring with a grand total of $1,021,862.94!
As you’ll notice from the graph, the hypothetical earnings are barely significant in the 4th or 6th year of investing. But things start shooting up after 10 or 15 years. It’s all about having a long-term perspective.
With the right investing strategy, you’ll avoid common mistakes investors do, avoid losing money, and consistently build up your wealth.
Getting rich is about staying the course
The passive income ideas I talked about aren’t “exciting.” They’re not hacks and they won’t get you rich in a few months. But they work.
And once you’ve put them in place, you don’t need to spend too much time and effort on them. This saves you the energy to do other things.
I often go back to a quote from the founder of Vanguard, John Bogle. In his book, Stay the Course, he said:
“The winning formula for success in investing is owning the entire stock market through an index fund, and then doing nothing. Just stay the course.”
A lot of income streams don’t look interesting in the beginning. They won’t make you rich instantly. But with consistency and time, you’ll get richer than you are now.