Five Simple Ways to Create Passive Income

(”25¢ balls”; courtesy of adamantine)

As I explained in my previous article, Lessons to Teach Your Children (Part 1), passive income is a type of residual income where you make a strong initial effort to get the income started, but then do minimal work to keep it going. It’s income that is not linear to the amount of work that you do, so one hour of work can create an amount of passive income that falls within a wide range and can continue to provide income for many years.  You are not constrained by the number of hours that you put in, but rather the results you get depend on the strategy you use and the quality of the work you create, as well as the number of people you are able to reach.

The following five options for creating passive income are probably not going to create large amounts of income for you, but they’re a way to get started for those who don’t have lots of cash to spare and who are just becoming familiar with the concept of passive income.  As an example of starting out small and then gradually growing your passive income, Brian Lee from geniustypes.com–who started off making passive income by investing in bulk candy vending machines–explains the following:

“A quarter vending machine that offers three different types of candy can be bought for about $200 and the candy to fill it costs around $50. In a good location the machine can easily bring in around $25 per month. That means that you can pay off the entire asset in about six months or roll your profit into a second machine. After another six months, you can buy two more machines.

This may not seem like big money, but it is planting the seed for big money in the future. If you don’t have the money or credit for real estate, this is one way to turn a couple hundred dollars into a couple thousand.”

Become a Squidoo Lensmaster

Squidoo is a Web 2.0 site founded by Seth Godin which allows anyone to set up a single page—called a lens—on any topic, for free. Advertising revenue is shared with these content creators, and some of it is given to charity. Lenses can be about anything, such as ideas, people–Mother Theresa, Prince Charles, Brad Pitt, or even your grandmother–places, hobbies, sports, pets, products, philosophy, politics, and so on.

Squidoo lenses are made up of “modules”, and there are many different types of modules to choose from so that you can create interesting, informative, and attractive lenses. There are modules for making lists, adding Flickr photos, adding links, adding YouTube videos, creating text, and so on. As an example, you can visit one of my squidoo lenses: www.squidoo.com/100things (on August 21, 2008 this was one of the top 100 squidoo lenses). Also, here’s a lens that talks about one person’s experience making money with squidoo: “Are You a Stay at Home Mom (or Dad) Interested in Creating a Monthly Income?”.

Users who create lenses are called lensmasters, and squidoo gives 50% of its advertising revenue to lensmasters. In addition to getting a cut of the advertising profits from squidoo, you can monetize your lens by adding an Amazon module, an e-bay module, and so on. You can also add your own affiliate links to your squidoo lenses.

Some of the advantages of squidoo are:

• Squidoo lenses get indexed very quickly. It is not uncommon to make a lens and find it in Google search returns in 48 hours.
• Squidoo lenses often rank very high on Google.  Most lenses will climb to the top of the results for their keywords pretty quickly.  (On August 23, 2008 I did a google search for “100 things to do before you die” and my squidoo lens was the second result out of 2,420,000).
• In addition to being a revenue maker, squidoo is a great way to drive free traffic to your website or blog.

Making a lens is easy, it’s fun, you can make cash, and it’s free. Join squidoo right now, just click here.

Sell Use of Your Photographs

iStockPhoto.com allows you to contribute your photographs on their site and get paid royalties when others buy them. Just follow the instructions, upload your photos, and sit back and collect your checks.

Create a Store at Cafepress.com

CafePress.com is an online retailer that allows you to create and sell a variety of customizable products with zero upfront costs and zero inventory investment. Opening and operating a basic CafePress shop is free.

After creating a shop, the owner can proceed to select products and upload files, such as images to print on t-shirts, posters, mugs, bags, wall calendars, and so on. The shop is effectively managed by CafePress.com, and the shop owner only has to take care of customizing the products they want to sell.

Cafepress.com will do all of the following:

• Give you a free online shop to promote your products.
• Produce each item when ordered.
• Handle all payment transactions.
• Ship the products worldwide.
• Manage all returns/exchanges.
• Offer customer service.
• Send you a monthly check for your earnings on sales.

Write E-How Articles

Join E-How’s Writer Compensation Program, write How To articles about what you know, and make money.  Every month you can make money for every article that you submit.

Create an E-Book

Right now one of the best businesses in the world is information publishing, and you can take advantage of this trend by publishing an e-book. E-books are the perfect information product to sell on the internet because there’s no inventory, near-zero overhead, high profit margins, no printing costs, no shipping costs– e-books are delivered as an electronic PDF file over the Internet–, and they’re quick and inexpensive to produce.

Charlie Byrne from Early To Rise explains that it’s not really about selling information—these days people are bombarded with information all day long–, it’s about selling advice, ideas, original concepts, analysis, expert guidance, how-to pieces to help people solve their problems, and opinions people can trust.

Naomi Dunford over at the blog “IttyBiz” just wrote a four part series on creating e-books. You can read the first part of the series, “How to Make $12,246 in a Day, Part One: Finding and Wooing the Market for your E-book”, by clicking here.

How do you create passive income? Please join the conversation by leaving a comment below.

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Tagged as: passive income, residual income