[CuriousReader]

Hi guys,

I am interested to have some kind of passive income as some additional income beside my salary (my only source of income). There are tons of sites out there suggesting "make money from home", and most, if not all, of them would be a scam.

I have thought of part-time positions for extra money, but time-wise it would be difficult, unless I can find something that I can work from home, so I can work on evenings and weekends, but so far, I havent found anything in that area.

Do you guys have any suggestion? May be refer me to a website / book that has good resources on creating passive income? Or just some explanation of what kind of passive income alternatives are out there and how to build one.

Thanks!

 

[HaroldCrump]

I have wondered the same often as well and there are only two viable options I have come up with -
(a) investment income (via dividend, income trust, bond distributions)
(b) kick backs by being a "financial advisor" (commissions by selling insurance, mortgage and investment products, or trailer fees by selling mutual funds)

 

[brad]

The only truly passive income I've made was when I was a freelance writer: several of the magazines I sold articles to syndicated the articles and sold them on to other publications. The royalty checks for those subsequent publications would appear magically in the mail every six months or so. I had to do a lot of work to research and write the original articles, but the syndication really was passive income as I didn't have to do anything to make it happen.

 

[MoneyGal]

Harold - I wouldn't relate to income from commissions from the sale of financial products as passive income -- more like recurring income from a one-time event.

In order to get income from selling financial products, you have to be registered and licensed (and you have to take courses and write exams, both of which have fees), and you also have to pay a dealer (for your back-office fees) and buy insurance. If you stop doing any one of those things, the income will stop as well.

Maybe this is just a case of semantics -- but there is a relatively high barrier to entry to the "financial advisory" business compared to other passive income strategies. (I don't think there's a high barrier to entry for the financial services industry, and believe me, I am no fan of financial services commissions.)

 

[Cal]

Yep...most things involving passive income will involve your time.

If you find a rental property that allows you to, put $0 down, is always rented, and never has repairs, and always will produce an income despite rising interest rates. You still have to find tenants, to move in, pay on time, and to take the time to do minor repairs.

An actor or actress gets royalties, but still has to put in their time for auditions.

I think the idea to create what is called a 'computer', and to sell millions of them, making a small amount of $ for each one based on your creation has already been done.

In my opinion Haroldcrump had the best idea w 'investment income (via dividend, income trust, bond distributions)'

Especially in todays market...if we enter an L shaped market....it would be nice to at least get paid to hold those equities...and if they go up in value bonus.

 

[HaroldCrump]

Harold - I wouldn't relate to income from commissions from the sale of financial products as passive income -- more like recurring income from a one-time event.

I should have clarified further - I was specifically thinking of trailer fees, which keep coming and coming as long as your clients hold their investments.
Getting commissions via selling mortgages and insurance products require constant activity i.e. seeking clients, convincing them, phone calls, driving costs, etc.
OTOH, once the mutual fund sales have been made (assuming you have made enough of them), you can pretty much sit back and collect the trailer fee cheques as long as your clients hold their funds.

In order to get income from selling financial products, you have to be registered and licensed (and you have to take courses and write exams, both of which have fees), and you also have to pay a dealer (for your back-office fees) and buy insurance. If you stop doing any one of those things, the income will stop as well.

Agreed, there is up-front effort involved for sure.

Maybe this is just a case of semantics -- but there is a relatively high barrier to entry to the "financial advisory" business compared to other passive income strategies. (I don't think there's a high barrier to entry for the financial services industry, and believe me, I am no fan of financial services commissions.)

In your opinion, is that barrier more or less than barriers to entry to other sources of passive income mentioned here, such as collecting royalities from writing books/articles or building a solid portfolio of income investing?

Like you, I am no fan of run-of-the-mill mutual fund salespeople (I'm sure the tone of my response to the post above indicates some of that disgust).
But I see so many folks around me getting the CFA and other related certifications/licenses and start selling mutual funds and insurance products.
It seems much less effort than patiently building an income portfolio piece-by-piece over a long period of time.
But I could be wrong since I have personally not looked into acquiring those certifications/licenses.

-Harold

 

[MoneyGal]

H: I am a former licensed IIROC advisor in Ontario and I hold the CFP designation.

I really, really, really, really dislike the commissioned salesperson model for financial services.

One quibble: my issue with characterizing MF trailers as passive income (although I take your point that no further effort is required on the salesperson's part) is that the salesperson DOES have to continue to lay out funds in order to be licensed: specifically, licensing, "splits" with back office (or however the relationship with the dealer is structured), and insurance.

I'm not talking about getting new clients - just saying that if you want to continue to see commissions (trailer fees) from existing clients, you must continue to be licensed, and there are costs associated with that. See my point? (The commissions are paid to your dealer, who pays them out to you. If you leave the dealership because you are no longer licensed, then no more trailer income for you.) This may be just splitting hairs though.

The points you raise are interesting though. Warren Buffet has often said (I'm paraphrasing) that the reason he owns so much in the way of insurance business is to get the recurring dividends.

BTW, Britain has just moved to effectively ban hidden upfront sales commissions. I should start a thread on that!