How to make $30-150 dollars a day making small investments

I’ve been doing so much research on passive income streams that I’m glad it’s a long weekend.  There are literally hundreds of different things you can do that will generate passive income!

A major franchise business or restaurant is a great example of a single source of income, but most need somewhere between $1-2 million in order to qualify. The advantage is your buying into a guaranteed (usually 6 -7 figure) income and business model. Another one is land lording. Buying a house  and renting it for passive income won’t be enough to retire, but a small apartment building might bring in enough to live comfortably.

The average american income is around $50k. After bills and expenses there is not much left to save, even in the best case of saving $25k a year on average. There’s tens of millions who are below the average income in America. Many people are living month to month, unable to save much or at all.

The truth is there are very few single things that you can buy into or invest in that that will give you a guaranteed steady income without first having millions of dollars in the bank. The good news is, it still may be possible to break free within a few years by purchasing lower value investments with lower returns, and amassing 3-4 of these over a period of five years.

There are a franchises that are much cheaper, like Vangaurd Cleaning, ReMax Reality, and Liberty Tax Service. The drawback is the return is not high enough to retire immediately- but it will boost your annual income. They start at $3K, so they could be a good in for some people that don’t have much spare cash. You can also sell them to other investors if invest and don’t think it’s right for you after a while, so that lowers risk.

It seems that the best thing to do is to set up multiple sources of passive income across time. You can’t afford much now. So, you have two options which you must execute in tandem. You must save your money for a long time, and invest in something big. Or, you can save your money for a while and make a series of smaller investments.

By doing this, you can more quickly expand your portfolio of investments. Let’s say your an average American who’s been saving your money for three years. After unforeseen financial impacts, the $75k you should have is in fact $52K. There’s still at least 50 investments you can make today on this list.

If you make an extra $3600 a year from one of those investments, you’ve added 14% to your annual base income. You’d now make $28.5k. Was your last raise that much of an increase?

Now, where did I get $3600 from? If you look each franchise on the list, you see that the net gains are often higher than that

I say $3600 because that is the first milestone you should set- try to make $10 a day via passive income. It’s very likely in the first year you will exceed this. The next goal is $20 a day, then $30, and so on. If you can make $100 dollars a day, you will bring in a considerable amount of passive income.

dollday

Assuming you have $50,000 now- or will soon. These two table show business plans based on making small investments. On the left, we assume $10 dollars a day for each investment. On the right, one $20 and three $30. You can make your own and mix and match daily net gains. Please note that investment income should be separate from savings. I deducted 20% for unforeseen expenses. On the right, if you notice, you will bring in $37,000 of passive income annually. That’s more than you make in savings. Two more years of this and you could quit your day job.

capture

Is investing in a Small Business VS a Franchise

A few weeks ago I made a post about investing in small franchises to add to your current income stream. Today’s posts goes a step further and explores the idea of buying an exiting small business that is not a franchise. No business is the same. There is often little or no documentation like that a franchise would provide when buying a small business. Buying a small business requires much more research and attention- but can be very rewarding. Another term investors use is investing in a ‘business opportunity’.

Similarities to Franchisees:

  • Potential to earn a living income
  • You can be very independent because you run your own business
  • Can vary in price from $30,000 to $10,000,000.
  • You’re usually also buying a clientele stream along with the business.

Differences from Franchisees

  • You don’t get a Uniform Franchise Offering Circular (UFOC). The UFOC is essentially a document that outlines the businesses performance history, profits, losses, etc. Some business can provide records, but not nearly as detailed.
  • Don’t have to deal with corporate rules or pay dues and fees.
    • And as such, you have the very real reality of managing the business with so support line.
    • As a positive, you have a lot more independence and control over your image and product/service.
  • There is no “Brand” per se, or at least not in most cases.
    • This provides the opportunity to build a brand, or to change it upon acquisition very easily.
  • You usually need to invest a lot more time in the image and upkeep of the business. Sometimes, you must even manage it full time yourself (which is a great option for some)
  • There is often seller financing.
    • Seller financing is great, because it makes it easier to negotiate the mortgage and down payment. In these scenarios you work with the seller directly as a lender instead of a bank. The catch is it’s a little riskier and you will want the contract reviewed by a lawyer.
  • They can be used as a “starter package” for a different business
    • You can buy out a small business to save money on buying various equipment they may already have.
  • Can vary in net cash flow, but you can often expect to make about 1/3rd the upfront cost of the business the first year. In some cases much more, or some less depending on the service. Franchises vary as well, but tend to have more stable profit projections with a lot of math to back it up.

Buying a small business usually requires more time and effort, but can often cost less money upfront. If you want to learn more about buying a small business I can’t recommend this guide enough: HBR Guide to Buying a Small Businesss. You will need to learn how to properly value the business as well as understand the market and clientele. Unless you have the assets to hire someone to properly manage your business, you better be prepared to figure it out for yourself- of risk losing it all. Often times, buyers will manage it themselves in the beginning and until they can train someone else to do it for them.

All in all, a small business is a good investment- but as an investor you need to be savvy and understand the product. Buying a small business is usually easier than buying a franchise, thus it is more accessible to potential investors.

I’ve considered recently what kind of starter businesses I could get behind. Pizza, I think, is my favorite. In high school and college I worked for a local pizza shop and I loved it. Usually, Friday and Saturday nights in the pizza kitchen were very exciting! Making pizza is actually very rewarding and fun. I even have a my own super secret recipes for delicious fluffy dough and sauce(s). Recently, I looked around Washington and found a few pizza places were for sale. I may jump in and just enter the restaurant business one day. I have the advantage of already knowing the business. That may be a quick way out of the 9-5 and on the road to independence. 🙂

The ethics of Advertisements and Passive Income

Despite ads being such a large component of today’s society, the ethics of advertising are rarely discussed publicly. Personally, I use Adblock Plus to block advertisements on the web on my home computer. I do this because I think most advertisements clutter up web pages and detract from the user experience. At work, we can’t install plug ins like that. From experience, I can tell you that advertisements can make it hard to find useful information on a page.

Furthermore, I detest how some advertisements try to illicit some sort of emotional response by attacking things like body image or personal hygiene. Millions of other sites though contain ads all over their user interface. Some desktop applications even have adds! You’ve probably seen a site like this below- three ads on the page and you haven’t even scrolled down.

adds

In my search for passive income streams, one that’s come up a lot is using Google Adsense or a similar service (clicksense) to generate advertisement revenue. Adsense will pay you per link click, usually 1-25 cents. I used adsense once before in college. I made a resource website for a Screenwriting Club and decided to try out adsense to see where it would get me. It made over $100 dollars in two months time just from students in the club using the page (and a few hits from other countries).

I went to the resource site one day at a library computer and I saw ads for diet pills and teeth whitening. I didn’t want the users of my site to see this kinda garbage! I refreshed the page to see more junk. Again, and again, and again! I logged into my account right there in the library and pulled the ads from my site.

Despite making a profit, I decided to stop using adsense because I did not feel comfortable with it ethically. Sure, it made me money. But it was at a heavy cost. I lost all editorial control over what adds were featured on my site. This meant that products or ideas that I did not endorse could be ‘calculated’ to show up as an advertisement on my site.

I am not 100% against advertising or endorsements through affiliate programs, but I don’t want to loose editorial control over my sites content either. I think advertising is important and crucial to the success of many business and industries. I appreciate creative and clever advertisements that work off of whit or humor to get the message across. Ads like these are rare though. It seems they only show up during the superbowl anymore. 99% of ads are useless junk.

There will never be an advertisement on this site that I have not personally approved. I refuse to make banner ads, popup adds, or to put adds in between paragraphs of text. I don’t want my users to have a bad experience. I would never endorse a product or service as an affiliate that I personally didn’t already think was awesome. I can’t lead people on like that. My goal isn’t to become an internet salesman, my goal is to be free.

I may consider a single sidebar add to help cover domain name costs, but it will likely be curated by myself personally and not by a service. I would want the ads to be relevant to the site, and actually lead the user to useful and helpful information rather than try to make a few cents off of a click.

There can be no denying that advertising on a website can make you passive income, but I personally have reservations about making money off of advertisements. Because of this, you probably won’t see any ads on my blog ever.  I will likely not make any passive income from advertisements, and that’s definitely a personal choice. For those looking for passive income… you can do online ads and you will make money… but at the cost of user trust in your site or service if you go overboard with it.

I would love to hear the communities thoughts of advertising and the ethics of it. How do you feel about advertisements on the internet?

How to make $30-150 dollars a day making small investments

I’ve been doing so much research on passive income streams that I’m glad it’s a long weekend.  There are literally hundreds of different things you can do that will generate passive income!

A major franchise business or restaurant is a great example of a single source of income, but most need somewhere between $1-2 million in order to qualify. The advantage is your buying into a guaranteed (usually 6 -7 figure) income and business model. Another one is land lording. Buying a house  and renting it for passive income won’t be enough to retire, but a small apartment building might bring in enough to live comfortably.

The average american income is around $50k. After bills and expenses there is not much left to save, even in the best case of saving $25k a year on average. There’s tens of millions who are below the average income in America. Many people are living month to month, unable to save much or at all.

The truth is there are very few single things that you can buy into or invest in that that will give you a guaranteed steady income without first having millions of dollars in the bank. The good news is, it still may be possible to break free within a few years by purchasing lower value investments with lower returns, and amassing 3-4 of these over a period of five years.

There are a franchises that are much cheaper, like Vangaurd Cleaning, ReMax Reality, and Liberty Tax Service. The drawback is the return is not high enough to retire immediately- but it will boost your annual income. They start at $3K, so they could be a good in for some people that don’t have much spare cash. You can also sell them to other investors if invest and don’t think it’s right for you after a while, so that lowers risk.

It seems that the best thing to do is to set up multiple sources of passive income across time. You can’t afford much now. So, you have two options which you must execute in tandem. You must save your money for a long time, and invest in something big. Or, you can save your money for a while and make a series of smaller investments.

By doing this, you can more quickly expand your portfolio of investments. Let’s say your an average American who’s been saving your money for three years. After unforeseen financial impacts, the $75k you should have is in fact $52K. There’s still at least 50 investments you can make today on this list.

If you make an extra $3600 a year from one of those investments, you’ve added 14% to your annual base income. You’d now make $28.5k. Was your last raise that much of an increase?

Now, where did I get $3600 from? If you look each franchise on the list, you see that the net gains are often higher than that

I say $3600 because that is the first milestone you should set- try to make $10 a day via passive income. It’s very likely in the first year you will exceed this. The next goal is $20 a day, then $30, and so on. If you can make $100 dollars a day, you will bring in a considerable amount of passive income.

dollday

Assuming you have $50,000 now- or will soon. These two table show business plans based on making small investments. On the left, we assume $10 dollars a day for each investment. On the right, one $20 and three $30. You can make your own and mix and match daily net gains. Please note that investment income should be separate from savings. I deducted 20% for unforeseen expenses. On the right, if you notice, you will bring in $37,000 of passive income annually. That’s more than you make in savings. Two more years of this and you could quit your day job.

capture

Why I sold all of my stocks… (and you should too)

This year is the first year of my life that I have ever had stock in a company. I didn’t go out and buy it though, it was *gifted* to me as a performance bonus which was nice. I was unable to access it for a long time, so I had a much time to look at the market and study economics (which I had little exposure to before).

As soon as I could access my bonus, it felt like a smart move to sell it so I could put it to savings because of what I learned about the current state of the stock market.

Right now, most Fortune 500 companies are at an all time high. The high value of the market is fine and dandy until you realize that’s also the reason why it’s hard to make any money off of stocks right now. The prices are so high, it’s difficult for the average taxpayer to move high volumes of stocks. All the common man can do is invest in a company, and hope that it continues to see a net linear growth over several decades. That’s not fast enough for anyone who is trying to leave the rat race before the end of their career.

It’s not a buyers market right now, it’s a sellers market- and that can be a very dangerous thing.

When you buy a single stock in a company, the overall value increases. If you buy 10 or so shares, you’d never see the impact of your trade. If you buy 10,000,000 shares- you will almost certainly see the value of the stock increase with your purchase. The inverse is true if you sell. If you sell your shares, it devalues the stock. Working with the same rules, selling low volumes doesn’t do much. Selling large volumes, however, can devalue a stock. If one or a group of individuals sells a very large volume of stock, it can trigger more people to do the same because they see the value of their precious stock depreciating.

Furthermore, we are overdue for a market crash. In 1999 there was the dot com bubble, followed by the 2008 housing market bubble. in 2017 right now, there is the central banking bubble- caused in part by the insane amount of debt from the first two crashes. Similar to the conditions before 1999 and 2008, the market has never appeared stronger.

I really like this graph because it clearly shows the prior two crashes next to what appears to be a third one on it’s way. Label A is the start of the dot com bubble, and B is low point from it. Similarly, C is the market value before the housing bubble and D is the resulting low point. E, on the chart is right now. This graph doesn’t mean 100% that the market will crash of course, but it points to a very disturbing likelihood of a future crash.

stocks-crash-4

 

For the record, I am not trying to bash stocks as a passive income steam. It’s definitely one! But I think the risks of crashes, lack of liquidity, and the average return on investment (~5% per year and slowing down (source)) make stocks an unattractive choice for someone trying to leave the 9-5 within 5 years.

For example: If invest $100000, after 5 years I would have ~$128000. That’s a little over $5k per year, which is about $400 a month. Granite, the average person (including myself at this time) can’t make a $100000 investment that will make them that extra $400 a month. But it does outline the potential for stocks to provide a supplementary income for some.

Only 54% of Americans have stock (source), and the average portfolio has about $12000 (source), which means that about half of Americans bring in about $40 extra bucks per month ($500 a year) on average. The other 46% doesn’t have any stock at all.

One last point I would like to make is the lack of return on investment for the amount of time spent researching stocks and markets- often looking for opportunities to make a lot of money day trading on volatile stocks. Some of my friends invest hours of their week trying to decide what to buy, when to buy, what to sell, and when to sell. They may spend between 5-10 hours each week at a minimum. If they have an average portfolio, at 5 hours a week, they may spend over 250 hours of their time just to make $500 per year. Basically, they make about $2 an hour.

In summary, Stocks are a source of passive income, but they are only an optimal source if you can move large volumes of stock. Stocks are risky and require time to maintain, watch, and trade which will impact how ‘passive’ the income really is. For someone living in the 9-5, I think it’s better to sell everything in your portfolio and save your money. Wait out until the next crash when stocks will be cheap, your investment will go much farther. That will be your time to strike.