And those investments need to be diversified. We should be investing in at least 20% of our discretionary income. They also offer perks like tax-loss harvesting and automatic rebalancing, which helps manage risk.īut you can’t stick $100 in a Betterment account and call it a day.
You’ll just be asked a few basic questions to determine the correct asset allocation (generally, the younger you are, the riskier your allocation should be leaning more heavily weighted towards stocks over bonds).īetterment offers some of the lowest fees in the business, and your money will be well diversified. You can start right now – Betterment has no minimum to start. There are a few different forms of residual income, and while some of them require more skills or resources than others, there is at least one form that everyone reading this can do. There are only so many hours in a day, a week, a year, life, and even the most dedicated workaholics amongst us can’t spend all of them working.īut we like money and the things money can buy so we have to find ways to make money that aren’t dependent on the amount of time we dedicate to them.Īnother good argument for earning passive income is the very possibility that you will lose your job to automation and in the relatively near future.Ī McKinsey report, “Jobs Lost, Jobs Gained,” found that 30 percent of “work activities” could be automated by 2030, and up to 375 million workers worldwide could be affected by emerging technologies. We spend time cooking, eating, doing various chores, indulging in hobbies, seeing our friends and families, and all of the other tasks, some enjoyable, others less so, that make up our lives. “All told, this means that the average employed U.S. In 2015 (the last year for which this data is available), the average employee put in 38.7 hours a week and worked 46.8 weeks that year, according to a Pew analysis of Labor Department data. So how many hours does the typical American work per year? A big chunk of those hours is spent sleeping. You make money when you’re eating, sleeping, at the gym, and on vacation. When you hit upon a passive income stream, you’re making money no matter what else you happen to be doing. You’re only making income when you’re at work. Having a job that pays you by the hour is the polar opposite of passive income. What passive income really means is to largely divorce your time from your ability to earn money. At some point, there is some effort involved, and sometimes the amount of effort is considerable.
It’s not like you can recite an incantation, and money just shows up in your bank account. It’s not true that passive income is money you earn from doing nothing. It won’t happen overnight, and you’ll need a few different irons in the fire, not the least of which is a variety of investments, but if you want to make some extra money, we’ll give you some of the best residual income ideas that we use to make money. But it indeed is possible to make enough to improve your cash flow situation significantly or maybe take a job that you feel more passionate about, but that doesn’t pay as well as your current gig. Most of us are not going to earn enough passive income to quit work entirely. It’s a way to make money without actually doing anything! What could be better than that?īut is passive income really that simple? Can you really make money without doing any work? Is the only thing keeping all of us from quitting our soul-sucking 9-5 jobs finding that gold mine of a passive income idea? Passive income is the Holy Grail, the pot of gold at the end of the rainbow. There’s a pretty good reason for that obsession, though, and it’s not entirely down to Tim Ferriss. In fact, a pretty significant portion of the personal finance world seems to be positively obsessed with the idea of passive income. If you read, watch, or listen to any personal finance content, you’ll have heard of passive income.