The Ultimate Beginner’s Guide for Making PASSIVE INCOME in 2024

So you want to start getting some passive income?

Income that goes into your bank account without the constant grind of traditional work.

Traditionally, passive income was mostly associated with earning interest on money lent out. But now, with automation and technology, the options are much broader.

Picture this:

You can conceive an idea for a product, market and sell it, oversee its production, and have it delivered—all without much direct involvement.

Thanks to technology, we can now generate income streams that don't necessarily require constant hands-on attention. That's the essence of passive income in today's world.

How does passive income actually work?

You might have heard people claim that passive income is about making something from nothing, or that it sounds too good to be true.

The reality is, you can't conjure wealth out of thin air. Passive income isn't about magic; it's about strategy. There are many scams out there promising overnight riches through passive income schemes. Don't be fooled by them.

In truth, most forms of passive income require effort, especially at the outset. When you're building passive income streams, you're not creating something from nothing. Instead, you're investing either your time or your money, and then you need to find ways to sustain it.

RELATED: My Income Report: The breakdown of active and passive income

Here are some examples of various passive income streams you could develop:

Stocks with Dividends

Investing in stocks means lending companies your money, and they pay you dividends based on their earnings over time. By providing capital to these companies, you enable them to invest in growth opportunities, thus potentially increasing your returns.

Online Courses

In online courses, you share valuable information with students who pay for the knowledge they gain. Your income is derived from the perceived value of the content you provide.

Royalties

Authors and musicians earn royalties when others use their intellectual content. This passive income stream comes from the ongoing use of their creations.

Rental Properties

Investing in real estate involves purchasing properties and renting them out to tenants. While it can be lucrative, managing rental properties requires maintenance and upkeep.

Now, let's address the level of "passivity" in passive income:

One thing to note is passive income isn't entirely passive. Regardless of the method you choose, some level of effort and investment is necessary, especially at the outset. Whether it's time or money, you'll need to commit resources to initiate and maintain your passive income stream.

Your aim is to either develop an automated system or product that delivers value to your customers, or invest in assets that yield dividends over time.

In reality, what we commonly refer to as passive income might be better described as semi-passive income. Any endeavour, whether creating a system or investing, demands ongoing maintenance to ensure its effectiveness.

Regarding stocks, while they're often considered passive income, they're more accurately semi-passive. Initially, you invest in stocks and receive dividends throughout your investment period. However, it's important to note that the effort to earn the initial capital to purchase stocks and the ongoing management of your stock portfolio make them semi-passive rather than entirely passive.

Here are the three essential components of earning passive income:

1. Effort: You'll need to put in work to establish your passive income stream.
2. Risk: There's always a risk involved, whether it's investing time, money, or both.
3. Return: Your passive income's profitability depends on various factors, including market conditions and the quality of your investment.

Every passive income opportunity involves these trade-offs: initial effort, risk, and potential return. There's no guaranteed method that requires no effort or risk yet promises high returns.

The initial work you put in (effort), the chance of losing time or money when you begin (risk), and not knowing how well it will do or how much money you'll make (return) are all things to consider. No venture comes without some effort and risk, especially if you want a big payoff.

You have to decide if you're okay with taking a big risk for a potentially big reward, or if you'd rather play it safe with a smaller reward.

I suggest talking to a few different people who are already doing what you want to do. This way, you can see if that passive income idea is right for you.

When you're deciding, ask yourself:

• What matters most to you?
• Which part of the deal is most important to you?

How To Start Earning Passion Income This Year

Consider your priorities and determine which aspect of passive income is most important to you. Do you prefer higher risks with potentially larger rewards, or are you more comfortable with lower risks and moderate returns?

To get started with earning passive income:

 

STEP ONE: Choose Your Value Proposition

Decide which passive income stream aligns with your skills and interests. Understand how each option works and how you can deliver value to your customers.

Now, let's explore a couple of passive income options:

1. Affiliate Marketing

As an affiliate marketer, you promote products provided by others and earn a commission on each sale. Building a loyal audience is key to success in affiliate marketing, whether through organic growth or paid advertising.

2. Write and Self-Publish a Book

Writing and self-publishing a book involves significant upfront effort. Once published, your book can generate royalties for years to come with minimal ongoing maintenance.

3. Investing in Stocks

Consider investing in stocks that offer dividends to investors. Your primary effort lies in making the initial investment, followed by regular maintenance of your stock portfolio.

4. Investing in Small Assets

Another viable option with minimal hands-on involvement is investing in small assets like metals (gold, silver, platinum) or collectibles. While this approach doesn't offer immediate or ongoing paychecks, your investment will appreciate over time, eventually leading to a passive income stream.

5. Real Estate Investments

Real estate investments offer substantial benefits but also entail higher risks. Establishing a rental business requires considerable effort, but you can streamline the process by outsourcing property management. While overseeing operations is necessary, property appreciation over time provides a relatively passive income.

6. Creating and Selling Online Courses

Creating online courses demands significant initial effort and carries risks associated with time investment. However, over time, you can optimize your course for passive income generation. Platforms like Udemy and Skillshare offer access to a large student base, facilitating course sales. Consistent marketing efforts are essential to maintain visibility and attract students.

7. Selling Digital Products

Selling digital products, such as on Etsy, requires understanding platform algorithms for visibility. While the initial effort involves designing graphics or templates, automation can streamline product delivery. Once set up, digital product sales can provide a hands-off income stream.

Here are many types of online/digital products you can create. 

• Templates

People like to use templates as a time-saving tool to help them to do something. So if you have a program or system that you follow, create a template for it.

• Printables/Downloadables, such as:
  • To-do-lists
  • PDF checklists
  • Printable worksheets for homeschooling
  • Downloadable backgrounds for your PC’s and phones
  • Downloadable art – access to your art pieces to be printed and framed by your customer
• Swipe Files

Swipe files are typically used in the business-to-business space to have a structured way of performing a task. If your client or customer wants to follow that exact method, you can create a template for them to follow.

• Photography

Use your camera to take pictures. Graphic designers, bloggers, and website owners, etc., are always in need of high-quality digital photography.

• Subscriptions

You could set up a subscription service to generate recurring revenue where your target audience has exclusive membership to access your content. It can be used to access courses and select your digital products in a bundle, so long as you continue to keep delivering fresh and quality content.

RELATED: How to concept, create and sell Digital Products and Online Courses

8. Establishing a Niche Print-on-Demand Store

Advancements in technology allow for the creation of designs for merchandise without involvement in manufacturing or delivery processes. A print-on-demand store automates the production and shipping of products, making it a relatively passive income source once set up.

 

STEP TWO: Develop an Automated Delivery Plan for Value Propositions

You've heard quite a bit about this, and we've discussed what kind of value you could bring with each individual passive income stream, but now it's time to execute.

This step helps you avoid creating additional burdens and time-consuming tasks, ensuring that passive income initiatives align with your personal goals and interests.

I'm going to assume that your goal isn't to create a new job for yourself that may be harder and more time-consuming than the one you already have. Your goal is to create a passive income stream so you can have more choices and do more of what you love, right?

In order for you to have those two things, you need to create a plan of how you'll automatically deliver that perceived value to your customers. What production or sales systems can you use to automate your processes?

After identifying potential passive income streams, create a plan to automate value delivery.

 

STEP THREE: Execute Your Plan - Product Creation or Investment Purchase

Now it's time to actually take action by either investing time in creating a product or investing money in an opportunity.

Commit to your chosen path and make the necessary investments to kickstart your passive income journey.

 

STEP FOUR: Customer Acquisition (if applicable)

If you're purchasing an investment, then you get to skip this step and this hard work. Again, thinking about what trade-off you want: time or money. Creating passive income with investments means you need to have extra money to invest.

If you're selling a product, you're going to most likely need to find customers to buy that product. This can be the most difficult and longest part of the process. It takes time and effort to find your target market.

Here are a few ways you can increase your visibility and find your customers:

Learn to work with an algorithm – for example, if you're creating a digital course, you can add it to a platform such as Udemy, but you do want to ensure you optimise your sales page so it flows nicely with the algorithm and it gets recommended to the right students. This is the same if you're selling a product on Etsy. Etsy has its own algorithm you will want to study and work with.

Personally, I use Kajabi to manage my courses, memberships, content and marketing automation.

Pay for advertisements – this is often the quickest and most direct route to finding your target market, but it also is an upfront investment. If time is scarce, and you have indeed tested the conversion rate, putting in a low amount of money into advertisement consistently can fast track the success of your passive income digital products.

Use content marketing and organic ranking – the good news about this one is that it is completely free. However, it does require a lot of time and knowledge of your chosen platform. 

RELATED: How to decide on the right marketing strategy

STEP FIVE: Automate Maintenance Processes

Passive income streams still require maintenance.

For instance…

• You’ll need to manage your stock portfolio monthly to ensure everything is good.

• When selling a digital product, continued marketing is a must so it can have the best chance of being found. 

• If you own rental properties, regular management is important to ensure renters are taking care of the properties, and you’re in charge if anything needs to be fixed or updated.

Finding a way to automate the maintenance side is how you can buy back your time and create those choices you’ve been desiring!

Fair warning, though: Don’t try to do this too soon!

I encourage you to do things manually for at least a few months so you can learn what management is required and how to do the maintenance effectively. This will help you when you do decide to outsource the maintenance piece either to a system or to another person or team.

If you work through the processes manually yourself for a time, then it will be more likely things will not fall through the cracks. Give up that management too soon, and your systems may not be effectively in place to run a smooth ship.

When you’re ready to outsource the automation, ask yourself this question: Can it be automated by technology, or does it need to be delegated to a person?

Starting with One Passive Income Source

Avoid spreading yourself too thin by focusing on one passive income stream initially. 

Here's how to be effective at starting your passive income:

1. Start with just one passive income source.

2. Give it 100% of your available attention until it gains momentum.

3. Go all-in and do your best during the setup phase.

Each passive income opportunity requires a different level of effort and risk, so choose wisely based on your goals and preferences. Seek advice from experienced individuals in your chosen field to gain insights and evaluate the best path forward. You've got this!

FAQs

1. What Digital Products Are In Demand?

Here are some trending digital product ideas:

• Digital Planners: Just like paper planners, digital planners can be customized for various purposes and personalities.
• Music Sample Packs: With audio formats like MP3s, we can store and share audio content online.
• Video Content (Video Overlays): Video content is becoming increasingly popular, with predictions showing that it will account for 82% of global internet traffic in 2021.
• Photography (Lightroom Presets): These digital products give photos a unique look and feel.
• Online Music Lessons or Vocal Training: Various courses are available online.
• Professional Services: Virtual assisting, legal services, accounting services, etc.

2. Why Should You Start Creating Your Own Products?

As a new online business owner, creating your digital products offers several benefits:

• Cost Savings: You save money on inventory storage, packaging, and shipping costs associated with physical products.
• Recurring Revenue: You can continue selling the same products repeatedly, increasing your income without extra effort.
• Brand Development: Selling your products helps establish and promote your brand.
• Scalability: Digital products can be sold to a global audience without limitations.

3. How To Be Sure That Your Products Fit Your Audience?

While you can never be 100% sure, aim for a close match:

1. Problem-Solving Design: Focus on solving specific problems your audience faces in the digital format they prefer.
2. Audience Engagement: Stay in touch with your audience's needs and preferences to continuously deliver fitting products.

4. What Are The Benefits Of Digital Products Over Physical Products?

Digital products offer several advantages:

• Scalability: You can reach a global audience without extra effort or costs.
• Passive Income: Digital products require minimal effort after launch and can generate income continuously.
• Low Startup Costs: Compared to physical products, digital products have lower startup costs as they don't require inventory or storage space.