Ask HN: What are the some passive income strategies you do beside your IT job?
Amazon FBA, Dropshipping etc. Please share your stories. Low cost S&P 500 Index fund. Very passive :) Almost the same thing... the ETF with the ticker SPY. When I researched this years ago, I concluded the costs were less expensive than any S&P 500 mutual find I could find. Not sure if that's still true or not. You can also invest directly into an index fund rather than going through an ETF. Depending on your situation, both have pros/cons. Many companies offer index funds, though Vanguard's seem particularly popular (possibly because they invented index funds, IIRC). They are also popular because the company is owned by the share holders of their funds. So huge dividends and salaries aren't going to employees or shareholders. VOO fees are 0.05% vs 0.09 for spy. But of course fees are effectively much higher if you are paying transaction fees. But vfiax (vanguard) or swppx (schwabb) can't be beat (.04 and .03) when it comes to fees. And it is pretty common for brokers to offer free Mutual fund trades or you can get an account directly with those brokers and trade for free. Don't forget iShares too, which are usually traded commission free for many brokers (I know for Fidelity and USAA...). IVV has an expense ratio of 0.04% and they have other really low cost ETFs too. I think there are some additional internal costs with ETFs that cause it to have lower returns over time. At least, I remember seeing some comparison graphs to that effect. SPXL if you want to play with leverage. Wait to see if the commander tweets 5 minutes before markets open before buying in on any given day, it will help. And very capital-intensive. Most people would benefit more from passive but labour-intensive ideas. If they're "labour-intensive" that's pretty much the definition of not passive. I suppose it's possible that you could invest significant effort into setting up an Amazon affiliates site or write a book or whatever and just let it run but most people aren't going to have a lot of luck with that. Generally speaking, passive investments require investing capital and then collecting returns from that capital. > If they're "labour-intensive" that's pretty much the definition of not passive. Generally it's understood that "passive income" on HN refers to income resulting from an initial investment of labor that continues to generate revenue with little to no additional labor input. By the wider definition, yes, you are correct. An initial investment - that investment can be labor or it can be capital or it can be both. In the same way you can say "work at Starbucks part time for a year and then invest 100% of that extra income into an index fund for passive income" rather than "work on a book for a year and collect book sales as passive income." That's fair enough. That said, it's generally hard to generate purely passive income by just investing labor. Software is somewhat the exception for this group but if you just write something and stop working on it, any income is probably going to decline fairly quickly. I don't understand, whose labor are we talking about when you say "labour-intensive ideas" if not yours? And if it's yours how is it passive? Mostly Passive: Real estate rental Not as passive: Amazon FBA: Run a side business selling products on Amazon. I have hired 1 part time employee now that works tasks I have outlined during the week. I work 1 to 1.5 days per week organizing the warehouse and custom orders. In the green after 3 years. It's also fun for me. What sort of products? Do you sell products you're making, or are you buying and selling? Probably buying and selling. There was a Planet Money episode on this, an entire industry of people who just buy things from Toys 'R Us (and other retailers without a significant online presence, esp on Amazon), and selling it on Amazon. Like some others here, I have an Amazon FBA business but I treat it as my full-time job, even though I've automated a lot of the grunt work and employ a VA for the things that can't be automated. I did, however, find a little unsolved problem on Amazon that sucks up seller's time, so I built a solution[0] for it with about a month of work, and now it generates >$2k/m with 1-2 hours of customer support work every month. Your label product is the best answer on this thread and ironically there are no comments. Knowing an industry, finding a need and building it is the ultimate passive income business. Don't know much about your market but I think you could increase prices to $0 / $20 / $75 per month. Nobody is gonna just dump their secrets into something like this :D But.. in case people don't mind. How feasible is it to make passive income by having a blog? I mean by having advertisements or amazon click-thru links.. is it worth the time to set up and use a blog to generate passive income? That's not passive. You have to keep writing content to keep people coming back. not very passive, but in some cases blog posts can be popular for years and therefor generate revenue for years (but not in many fields/topics) -> kind of passive in the long run I guess this might be true more for technical blogs, ie,. a dev blog explaining how to download a piece of software or repeat a case study discussed in the blog. For example, I was blown away by how useful & accurate this guy's medium blog was for setting up apache. https://medium.com/@JohnFoderaro/how-to-set-up-apache-in-mac... (just used this for a class, I'm not pushing anything for anyone) There's such a thing as passive blogging and there's such a thing as profitable blogging but they're mutually exclusive. You have to write a ton, push it hard across a bunch of different platforms, re-post old content to keep it fresh, keep up with SEO and social media changes, and most of the time you're posting on all your social media outlets (combined) a dozen or more times per day. It can be done part time and still be profitable, but it can't be done passively unless you're a genius in your fields and everyone is beating down your door to hear what you have to say (in which case you should write a book). >is it worth the time to set up and use a blog to generate passive income? I'd say the amount of time you'd need to spend monetizing & driving traffic wouldn't really make it passive. How much time do you think it would take to break even for hosting / domain licensing ? Simpler question, do blogs generate at least $100/yr? A really profitable blog isn't passive at all. You spend a lot of time creating content and optimizing things. You could potentially farm out the work but that applies to a lot of businesses. :) I have a technical blog/youtube and most of the "profit" is from having that on my resume. How often do you post to your technical blog / youtube channel? I'm in the process of looking at blogging tools to do something very similar. I'm kinda worried about having a history though in a few years that shows I only post during interview times :D. Eh, I don't think people will look that closely at the time. Probably more like "How long has it been since they last posted" at best. I don't post that often. When I get stuck on a problem because of poor documentation or poor explanations I just make a tut off that. Mostly focused on other things right now though. Making a video is a lot of work. Come up with a project, a script, rewriting your explanation, fill in your gaps in info, voice recording, video editing. It adds up. There are no secrets. Rental properties, managed by a 3rd-party professional company. This is an interesting idea. Are there any information sources you'd recommend to people who are curious about this strategy? Check out the Bigger Pockets website. The 3rd party managers are called Property Managers. Make sure you look at reviews to find a good one, there are many out there that will end up costing you more than you save. :) Yeah, BiggerPockets is a great resource for real estate investing. As with many businesses, it's all about finding the right people and building relationships. Feel free to message me if you'd like to chat more. Manage them yourself. It's not that hard. Otherwise the property management company eats up most of the profits. My properties are about 1800 miles away :P Being married isn't all that passive, but it is a great income strategy. Having kids is a terrible one. I would assume that a failed marriage is one of life's most financially and emotionally destructive events. So unless you are willing to put in the work that a healthy relationship requires, then it is certainly not passive. If you include kids in the mix, then, yes, much more expensive and the toll of a failed marriage much more significant. How is marriage an income strategy? Getting married is, without a doubt, by far the best financial decision I've ever made. I doubled my income and only very marginally increased my living expenses. I'm saving more money now that I ever thought would be possible, and that savings generates income in itself as capital gains and dividends which is reinvested and compounded. It's friggin amazing! After several years of marriage our passive income (dividends and capital gains) has become significant. That being said, I wouldn't advise doing it solely for financial reasons. :) You would? Woah, Whoops! Typo - wouldn't. Fixed, thanks. The tax benefits are also quite nice. The tax bracket thresholds basically double. My guess, he is talking about having 2 incomes instead of only 1. I guess one method is to marry a rich man/woman. I wasn't exactly blessed with good looks. That would not be a passive strategy for me, considering how much time I'd have to spend at the gym. Can I hire a younger, better looking guy to go marry a rich lady and send me back dividends? No, that would constitute sex trafficking these days. If he's skilled enough he can build a clone/android that looks better than him and sends it marry rich old ladies ;-) This message comes from 2080. Great if your better half is a millionaire... Are Amazon FBA or drop shipping still passive? Both of those still require significant time dealing with exceptions. No, not usually, that's more like "part time job" or "side hustle." Just like nobody (hopefully) will say driving for Uber is passive. People often don't know what "passive" means, this question gets posted here a lot and most of the responses are not at all passive. A lot of people mean passive = non-wage income, not so. If it requires ongoing time and effort to make money, its not passive. There's some grey/in between area though, real estate can be passive (1 unit with long term tenants) or a full time job (multiple properties, distressed properties in need of significant repairs, or something like AirBnB - unless you've got employees doing all the work). Same with stuff like writing, if the effort is already done and you just sit back and collect ad revenue or referrals, that's passive. If you're actively writing blog posts regularly, its not passive. As far as the FBA case, if you've hired someone to do all the finding deals, packing and shipping, it is pretty much passive; if you've got a white label product and you've set up your suppliers to ship regular shipments from China direct to Amazon's warehouse, its probably pretty passive at that point. Realistically, very few things are totally passive. Even index funds, probably most people's idea of totally passive, still take work -- taxes, reading statements, etc. For most people, I think passive is reasonably defined as less than a 2-3 hours a week. I probably spend that amount of time looking at my portfolio. Selling on Amazon or eBay is surprisingly streamlined. Exceptions occur, but they're pretty easy to take care of if you budget them into your margins and don't try to jerk buyers around. I sold a few hundred dollars a week on eBay and a "problem order" comes up once a week at most. Usually, it's just a full refund or a new shipment. Last time I read about passive income here on HN it was mostly non-passive side hustles being shown. Or stuff like ad revenue from apps or sales of books. Maybe passive now, but probably took quite some effort getting to there. It may be passive if the long tail is much bigger than the initial investment, but for most people I guess it's not. Well yes, there is generally no free lunch. Any “passive” income scheme requires either capital or an upfront labor investment. By that definition, no income is passive, because everything takes some effort to set up. Passive tends to mean earning money on rents from capital instead of your time/labor. The grey area is brokerage and arbitrage where you are earning money from risk. I created an app a couple years back that I still work on regularly. So it’s not super passive, but I only manage to spend a few hours a week on it. Generates around $1,XXX/month profit. It’s called Meta Meme, it’s in the iPhone App Store if you want to see it. I made an app a year ago. I did it in an afternoon with 0 experience in mobile apps, using Rails + turbolinks ios & Android. It's really crappy but it generates $150/month. Not bad for the time invested. That's an impressive result, considering the amount of time you put in it. I'm sure this site is filled to the brim with people who created dozens of apps and applications that never made a dime. ;) Would be happy if you share the link Care to share what the app is? The Vanguard High Dividend Yield ETF (VYM) has a 3% dividend yield and a minuscule 0.08% expense ratio. If you buy 500 shares of VYM, you can expect a passive income of $100 per month. For the lazy, this would require an ongoing investment of just over $40,000 currently. Just adding the math: Current price around $80 per share, so 500 shares = $40k ($40k*0.03 = $1200) I have 4 rental properties. Selling 2 though since they are too far from me (GA and OH). Each under $30K. Wow. Curious, how do you fund your purchases past the 1st or 2nd rental home? I'm finding it difficult to get loans. No-one talks about this issue. If by "passive" you mean a lot of fun, I play bass & gig around town as well as running a non-commercial internet radio station - goatradio.org. Being a musician / audio engineer generates a decent amount of cash. I know HN is rather negative toward cryptocurrency in general, but for me it's fun. I run a small mining farm in my basement. It keeps my sysadmin skills sharp and more than pays my electric bill. On a side note: none of this is really passive.. mining, real estate, and drop-shipping are all very active income streams. Unless you were born with a silver spoon, you probably won't find truly passive income. What equipment do you use to mine with? How re your returns? My farm consists mainly of rx 580 graphic cards. Due to depressed markets, my returns are just okay right now. Luckily my equipment has been paid off since December. To put things in perspective, a single 8GB rx 580 costs around $400 (if you're lucky) and only makes $0.80/day. During the peak at the end of last year, they were making well over $3/day each. Build a website https://toptalkedbooks.com/ use ROR and Big Query. Use AA to handle server cost. If you like reading, you can find most popular books in the past year here.
https://toptalkedbooks.com/hackernews/2018 I would say its easier to be focused than general for the small timer. I made a niche ERP integration with an app, then sold it for 150/monthly to 20+ customers. I've done other things like building a plugable CMS and making components but that focused approach I first mentioned was easy money compared to those. Please share the link of your product. This is just for enterprise customers where they wanted a snap-in mobile ecommerce app that integrated with their very niche ERP system you probably haven't heard of. It is just a software subscription agreement with no product site. I'm embarrassed to show on here anyway as its 5 years old now but you get the idea. My wife suggested I do this and it was low hanging fruit, meaning clients wanted it, there was no competition to build it for them as no one really knows that ERP so it was just a pretty easy step to decide. Peter Thiel said "competition is for losers" and I know what he meant in this particular case although on a tiny scale of very niche customers. I'm on duty a few times per week, it's not too active though. Doesn't qualify for passive and has a huge entry requirement, but a very good way of having a double income, since I'm mostly paid to sleep away from home. Like with the National Guard? Just veterinary emergencies :) I built the bulk of an Android app awhile ago and now it makes a nice passive income off of ads. I do end up making updates to it though since I love to use the app too, so it's not entirely passive I suppose Airbnb As a related one, considering Twisted Road (sharing site for my motorcycle). I was just wondering about something like this. how does insurance work? With Turo (I'd imagine this service is similar), the service or the customer has to provide it. The risk with these services is competition: the better it is, the more people start using it...and then the parent business takes a bigger cut (see AirBnB). Still considering it, but their approach as I understand it is to have customer verify their insurance with site. Can someone explain how they are using Amazon FBA? I generate some passive income from (by spending 1-2 hours a week): - stock & cryptocurrency picking - Calls with industry research firms - Earn.com How has the investing gone? Seems like 2017 was a good year, but 2018 has been a little more challenging. I have a large sum of money coming in later this year, and I'm thinking about investing it. Passive investment with an index fund is generally a good long-term strategy, though I strongly suspect we're in for a recession in the near future. I'd hate to lose 20-40% of my investment within a few months of putting it into the market. On the other hand, the amount of money I'll have on hand will be enough to do some things that most people can't. For instance, I'd have enough money to execute an option without trading on the margin on fairly large stocks, as opposed to selling the options contract, which seems to be the more common strategy. If I understand this correctly, that should enable me to be able to make small but reliable returns with relatively little risk. Hopefully I didn't mangle the terminology too badly. I'm researching all of this stuff somewhat frantically, and I'm new to it. I'll have to spend a couple months doing paper trades before I'm comfortable with putting real money into options. You might want to research Swan Global Investments for a strategy to reduce risk using puts to hedge. I'm reading through it now. This sounds like really good advice. Thanks for the great share! How are any of those passive? Passive in terms of time commitment and effort. I don't think there are truly passive income streams unless you have substantial capital to invest in the first place (eg: vanguards and rental property) I think scalable income is a more useful concept than passive income. What I mean by scalable income is when you can increase your income by investing more capital, but keeping time commitment and effort at the same level. In my view purely passive income is either some instance of rent-seeking, or simple risk-free return on economic growth. But even those require a minimal level of effort. this exactly. still selling your time for money, just at different rates. And I suspect on HN particularly very few of us will find a better ratio than in our day jobs... AI driven stock trading robots, the best hobby ever :-) No customers, no employees and no investors and truly location independent... That sounds pretty fun. But after you get the basic workings right, isn't it just a latency war with other trading bots (meaning the lowest latency gets in the most profitable trades)? If you had a uniquely good trading algorithm isn't it effectively just trading by hand but faster? And related question, if you're doing a lot of trades, wouldn't trading transaction fees eat you alive? Not really, because I am not into HFT, so latency is not a problem for me... (I don't have the money, 100s of millions for infrastructure to compete with the big boys)... Sure, I can do it all by hand, the key here not speed, but automation... I rather be fishing or drinking beer by my pool instead... Trading fees: 5$ fee on $50k/$100k position is frankly irrelevant for example... Have you been able to beat the index funds historically? Sure, double digits return per year on average... making money in the market with 6-7 digits account is easy, the challenge is to make similar returns with let’s say 100M+ account, but I am not there yet :-) Any book recommendation? I come from a "boglehead"-centric approach [1], stating that the market is so efficient that it's virtually impossible to beat it in the long term as a mere mortal, so one might as well just buy indexes and get the market return, hoping that in the long term capitalism will continue thriving. And that's what I've done, fully investing my high 6 figure (soon to be 7) liquid net worth into index funds. The only exception to the rule would be if one has some sort of technical advantage (e.g. HFT infrastructures) or "insider" information. Was curious to hear if you have any resources that in your opinion could make me change my stance? Thanks OK, here is one book for you: More Money Than God by Sebastian Mallaby https://en.wikipedia.org/wiki/More_Money_Than_God My message is this: do not settle for the average - everyone can be a doctor, lawyer, developer, speculator, you just need the drive and to put the hours... Passive investing for me is a big mistake, because it ignores the risk management, especially for small accounts (less than few millions), people just cannot afford to be losing money for extended periods of time, just look into Japan's Economic Bubble and Nikkei index, every passive investor in it is still at about 50% loss for almost 30 years and counting... To make money in the stock market, you have to have a system that makes money, not only on the way up, but on the way down as well... For me, personally, my money are too important to leave them to such a "buy and hope" investing strategy... i have a very lucrative program, i have already made about 200 dollars in about 4,5 days, here's the link: https://bit.ly/2HlmIhf How much does it cost to hire an FBA employee(s)? I have well over half a million in liquid assets that makes me passive income through investments, but I’m thinking of investing a portion of that into an FBA or drop shipping business, but keeping it as passive as I can. In the past I’ve never done it because I just can’t be bothered into putting part-time job effort into it.