By Deborah Jeanne Sergeant
If you have maximized the number of hours you can work — while also staying healthy and sane — and you can’t make more money per hour, the best way to increase your income for your retirement or other financial goals is to generate passive income: income for which you do not put in the same level of time and effort.
“To generate passive income, one first needs to bring in more money than they send out, then set aside the extra funds for future use,” said David Mirabito, senior financial services executive at Mirabito Financial Group in Fulton. “There are many vehicles for this: company retirement plans, individual retirement plans and non-retirement plans. Steady periodic investments can be essential. It is important because extra streams of income can make life more comfortable and allow the recipient to be adventurous and generous with themselves and their loved ones.”
Passive income typically starts with effort and time investment. There really is no get-rich-quick scheme.
“I don’t believe there are any easy ways to make passive income,” said Michelle Shauger, regional vice president for Primerica Financial Services in Rome. “Creating passive income requires work, sacrifice, dedication and commitment. Creating investment accounts that can pay you forever takes time and consistency. Buying real estate and creating cash flow positive income, takes capital and time.”
Investing generates little passive income over time if the initial amount invested is small. Some ways to generate more money to invest in a passive income stream includes operating a side business or holding an additional part-time job. Shauger suggested leveraging a hobby for passive income. For example, people who love photography and sell good quality images on sites such as Shutterstock.com. It takes a few moments to upload and label photos, but the site takes care of the sales. The same photo can sell multiple times without any additional effort, thus making it passive income. The best-selling photos are not what you’d think — pretty flowers or cute pets — but unusual subjects, such as areas hard for most people to access, like the kitchen of a five-star restaurant.
Creating other digital products, like e-books or lessons, works in a similar fashion. Focus on something you know a lot about and launch the products on the most appropriate platform. As you have time, you can market them, but even if you don’t, you’ll make money on them over time without a lot of effort.
Randy Zeigler, certified financial planner and private wealth adviser in Oswego with Ameriprise, advises using physical assets to generate passive income.
“Get your assets to generate return for you: investment dividends, rental income, either VRBO or some other rental property asset,” he said.
Anthony Pauldine, owner Anthony Pauldine’s Contractors, Inc. and Curtis Manor in Oswego, owns and rents properties, which he views as a good source of passive income.
“If you have to hire everything out for small repairs or management fees, however, this might not be for you,” he noted. “I’d also keep properties very local to you and not spread over counties or states away from your location.”
This kind of investment can take time — 10 to 20 years for those who finance it — but leaves a large asset for retirement.
“If you plan to hold three or more properties, I’d put them in an LLC and you can leverage this as a business loan or line of credit for future ventures,” he said.
Lodging or residences aren’t the only things you can rent out. Sporting goods, camping equipment, event tents, party décor and more can help you regularly generate cash without much time invested. Sites such as Friendwitha.com facilitate daylong rentals of items like sporting goods and camera equipment. If you have something you don’t use much but think others may want to use it, why not rent it out? Think of the items you could rent out as your money tied up in an object. Renting it out is making it work for you.
