Well, team, welcome to 2023. I hope you guys had a great holiday period, hope you got to spend some time
with your friends and your family, and I hope you're gearing up for a really,
really big year ahead.
It's obviously the start of a new year,
and right now is a perfect time to revisit
your financial goals and update
them for the next twelve months.
And I'm sure for a lot of people, making more passive income is probably
high on the list,
especially with the reduction
in discretionary income we've all felt
recently due to, of course,
high interest rates and inflation.
So in this video,
I wanted to revisit the topic of passive
income and give you my take on the three
best ways to reliably generate
passive income in 2023.
All right, let's do it.
So, for this video,
what I've done is really taken the time
to think about the best,
but also the most realistic passive incom
ideas that are applicable
to most people for 2023.
And I've actually grouped them into three
different categories of passive income.
But before I start with the list,
I do want to temper expectations a little,
because what you tend to find online is
a lot of hype around the idea of passive
income, because it's obviously
a very appealing topic.
And people online love to use the sex
appeal of earning millions while sitting
on a beach,
and they like to try and clickbait
and sell courses and get themselves rich
by preying on people that think that
passive income is really easy like that.
I do hate to be the bearer of bad news,
but passive income is definitely not a get
rich, quick, earn millions, sipping peanut
clutters in the Bahamas kind of scheme.
In fact, in most cases, it can be just
as much work as actually going to work.
So the way that I like to see passive
income is not making money
while doing no work.
I treat passive income
as a model of income.
So you can have passive or active income.
Active income simply means you're trading
your hours for money,
aka you're going to your day job,
you show up, you work 8 hours,
and regardless of how much you get done or
how hard you're working,
you get paid for working 8 hours.
Whereas passive income, on the other hand,
is the model of income where you put
in a lot of work up front,
usually for nothing.
And then once you've completed
the project, it has the potential to earn
you money for a period of time out
into the future with low
requirement of active work.
So, book royalties are
the classic example.
You write the book, you make nothing while
you're putting in the hard effort, the
blood, sweat and the tears to write it.
But then once you finish it,
once you've released it,
really depending on how
successful that book becomes.
So please remember, passive
income is just a model of income.
It is definitely not easy and it's
definitely not a get rich quick scheme.
So with that said, what in my opinion are
the best strategies to generate
passive income in 2023?
Well, the first category
unsurprisingly is investing.
And this is by far going to be the most
applicable way to generate passive income
regardless of who you are or what you do.
it could be property or any
fixed income investment.
But I think for most people and know this
is an advice, this is simply my opinion,
I think for most people,
utilizing the stock market will probably
be the most applicable
passive income strategy.
Reason being is that it's obviously very
accessible, it's generally quite liquid,
So what do you buy it?
Well, of course I can't tell you
that because it is going to be different
for everybody and it's probably worth
seeing an advisor to help figure
out what is best for you.
However, some of the passive income
structuresthat are out there include
things like real estate investment trusts
that collect rent from a
portfolio of properties.
They pay out the rent as
a dividend to their shareholders.
You could buy bond ETF that receives bond
interest payments from, say,
the US government and then distributes
them out to the shareholders.
You could buy a dividend ETF,
which buys dividend paying companies,
and then distributes those
dividends as a dividend to you.
Or you could just buy a dividend
paying company by itself.
There are many different
options out there.
But always remember these two rules
of investing no matter what you buy.
Number one, make sure you understand what
you're getting yourself into,
because sometimes these investment
vehicles do get complex.
So make sure you really do your research
before buying and definitely get
help from an adviser if you need it.
And then number two, ask yourself,
is this passive income source stable?
Is it reliable?
If you don't know, don't buy it.
For example, say a stock has been paying
an $8 dividend every single year
and they make $10 in earnings per share.
Sounds great because they're literally
giving you 80% of their
earnings as a dividend.
Awesome.
But what if the company has a really bad
year next year and their
earnings drop from $10 to five?
Well, if they maintain the 80% payout
ratio, your dividend just
went from $8 a share to four.
Or probably,
what's more likely in that case,
the company actually cancels or suspends
their dividend until they've sorted
out what's going with their business.
Because remember,
companies don't have to keep paying
a dividend to common stockholders.
So if you're buying a dividend style
investment, just remember that it's not
quite as simple as buying an oil company
and just moving on and
forgetting about it.
You need to put in the hours to check
whether the company is financially robust
and managed well enough to continue
paying you those annual dividends.
And one resource I would definitely
recommend for this step is Seeking Alpha,
who are also the sponsor of today's video.
And the reason being,
with Seeking Alpha Premium,
you get very comprehensive tools like ten
years of financial data, news articles,
earnings call transcripts, et cetera.
But you also get ratings and analysis
on whether the company holds
up as a passive income source.
For example, if you just type in, say,
Johnson and Johnson,
you can scroll over to the dividend tab
and see the sector relative ratings
for dividend safety, growth,
yield and consistency.
And beyond that, you can actually click
on each one and get a detailed
understanding of how Seeking Alpha
themselves came to their conclusion.
Now, you don't blindly follow
this rating, definitely not.
But it does help you avoid making really
big blunders and it also helps you
understand what you need to be looking
for when we're discussing
reliable dividend stocks.
So this is all a part
of Seeking Alpha Premium,
which is normally $239 for twelve months.
However, because I've partnered up
with them, they're being very generous
and they're offering the followers
of my channel basically an annual
subscription to Seeking
Alpha Premium for $99.
So it's a very good deal.
If it's something that you're interested
in, you can check out the link in the
pinned comment and the description.
And of course,
thank you very much for seeking out,
for supporting the channel
with their sponsorship.
Anyway, that's definitely
method number one, investing.
And it's going to be the most applicable
passive income source for everyone.
But now I want to talk about two other
strategies to achieve
long term passive income.
And the first is by building
a social media audience.
Now this in itself is not passive at all.
This requires constant active work.
However, one thing I didn't even think
about when I started this YouTube channel
that I've since realized is that there is
an unbelievable power to unlock
passive income sources.
If you've built an online community,
if you have an audience, for example,
you can make YouTube videos,
you could write a book,
you could make an online video course,
you could start a podcast.
It's all very doable if you
have an online community.
Now, all of these ideas do take a hell
of a lot of work,
both to start and to maintain.
But as I said before, they do
follow the passive income model.
For example, look at this video
on YouTube, how to tie a tie by tiehole.
This was uploaded to YouTube twelve
years ago and now has 102,000,000 views.
And you know the crazy thing?
This channel doesn't have that many
subscribers and their last video
was literally three years ago.
That is crazy.
Here's another example.
How many creators do you see
releasing books in their niche?
Like everywhere?
The classic example is some like cooking
related social media personality then
going on to release their own cookbook.
Yes, obviously it's a lot of work and they
need to continue promoting it once it's
out into the world, but they
don't have to write the book.
Again.
Same story with online courses.
Say you run a woodworking Instagram page,
you can make a course detailing how
to make a chest of drawers or a chair.
Same thing.
Yes, you have to work hard
and you have to make the course.
Yes, you have to actively promote
it once you finish the course.
But the course itself, well,
once it's done, it's done.
So I really believe that this strategy can
genuinely unlock many
passive income sources.
And the best thing is when building
a social media presence,
the more you grow, the easier it becomes
to grow more and the easier
it is to make more money.
So realistically, I think if you can find
some sort of niche that you're really
passionate about, once you hit about maybe
50 to 100,000 followers,
that's usually the inflection point where
these passive income
sources become very viable.
And while every case is different,
in my experience this will probably take
you about two years of consistent posting
to accumulate if you're smart and you have
a good social media strategy,
but once you hit that inflection point,
it's off to the races.
So that, in my opinion,
is the second method to achieving
fairly reliable passive income.
It may not be for everyone,
but I do think that anyone can try it.
And if you're passionate about it,
then sometimes you can achieve
some pretty crazy things.
But with that said,
let's now move on to the last category
of passive income, which is again
very applicable to everyone.
But I will say this one is definitely
the hardest of the three and that is
to build your own business and then
transition yourself
to a passive stakeholder.
