I am not a fan of MLM companies, primarily because they use good advice to promote bad life decisions. Mostly, they use good advice to get you to throw friends under the bus for shitty product sales—and a commission that is easier earned begging for money on the street.
How do I know this? Well, I learned this the hard way when I was down on my luck as a young 20-year-old who often had to choose between making rent and eating that night. (Food won.)
As bad as MLMs are, the dead-eyed motivational speakers they bring to talk about selling stuff do have some good advice from time to time. One of the best tidbits of personal finance advice I ever heard from one of these guys was the importance of passive income.
Passive income is money you make without having to work for it—and no, I don't mean that in the illegal sense of the word. Passive income makes the money work for you, and is most commonly done via investments, royalties, or equity increases.
Active income, such as the money you earn from a job, has a maximum amount you can earn. After all, the number of hours you can work is limited by the amount of hours in a day. You also have to take into account things like your social life and being able to sleep.
Realistically, if you want to make a lot of money and stop living in a paycheck-to-paycheck cycle, then you need build passive income. Here's how you can make a ton of money while you sleep.
Invest in the stock market using apps.
The classic way to make passive income is to invest in the stock market, and unlike the old days, you don't need to have a ton of money to start investing these days. In fact, quite a few apps will allow you to kickstart your passive income with as little as $5 to start.
There are a number of great apps you can try out. Here are my picks, and why they rule.
- Stash. Stash is a personal finance app that allows you to buy ETFs for as little as $5, sets up recurring investments for you, and also helps teach you the ropes of investing. If you are brand new to investing, or just don't have the time to put too much time into researching stocks, Stash is the best option.
- Robinhood. Gone are the days of charging fees for investment transactions. If you are well-versed in the stock market but don't want to deal with high minimum investment amounts or high amounts of fees, Robinhood is a good choice.
- Acorn. Acorn is a lot like Stash, but unlike Stash, Acorn rounds up all the small transactions you make through the day and deposits the difference in an account that you can invest in.
Write a book, or create online art for royalties.
The cool thing about being creative is that there are a million ways to make money using your creativity. Here are some good ways to get started on this venue:
- Writers can write books and get passive income from their royalties. Amazon's book market is infamous for this.
- Voice actors and musicians can get royalties from music clips they make, or even voice clips they make.
- Graphic designers can get royalties from cars with their designs on them and tee shirts with their designs on them thanks to sites like Zazzle.
- Photographers can get royalties by shooting photos for stock sites.
Consider investing in real estate via specialized platforms.
No, I'm not going to pitch a "program" or a "process" for you to undergo, nor will I tell you to be a landlord. That actually takes a lot of hard work, and often can end up pretty terribly if you have the wrong people leasing out your property.
A better option would be to invest in a real estate fund or to use a program like Fundrise to create a portfolio with professionally-run real estate investments from around the country. This allows you to plunk down as much money as you want, get a good return, and also prevent yourself from losing it all.
Or, become a private lender.
Bank loans are getting harder to get every day, and independent platforms are popping up to help people get the cash they need. Platforms like LendingClub allow you to play the role of the bank by investing in different loans.
With LendingClub, you get paid interest and principle as the loan gets paid. Most people find that they get around a 9% to 10% annual return from their portfolios, so it's definitely a good option.
Surprisingly, LendingClub doesn't take much money to invest in it. Most portfolios will allow you to invest in $25 increments.
Start up your own Roth IRA.
Most working-class people can and should get their own Roth IRA started up. Roth IRAs allow you to save up money that can be withdrawn tax-free when you're 62, and are based on the stock market. More importantly, it shields your savings from future taxes, which in turn means that you don't have to worry about Uncle Sam eating up your retirement fund.
Since most people will not be able to survive on Social Security alone when they're 62, a Roth IRA is a must. That being said, you should probably talk to a tax advisor or a professional to find out if it's a good move for you.
Churning is what super-frugal people call using credit cards for cash back rewards or credit card points. When you're smart about it, you can earn a ton of free rewards or cash, just by spending on the stuff you already buy.
Generally, the best way to do this is to choose a credit card that has rewards or cash back points that work with your lifestyle, and to use your card to pay off everything. Then, at the end of the month, clear your credit card balance.
Since every charge adds points or gets you cash back, you end up getting free money for little to no work on your end.
Become a business silent partner.
In many ways, being a silent partner is a lot like investing in the stock market—but this time, it's with a single, privately-traded company. A silent partner is a person who invests in a company in exchange for equity in the business.
As the business grows, so does the equity. A silent partner doesn't have to do any work in the business's day-to-day running, and can sell their portion of the equity for a certain amount of money. Also, they get a share of the profits, too.
Generally, this isn't a good choice for beginners. Moreover, it also involves a lot of money and there are many scam artists out there. So, if this is the route you want, you might want to learn the ropes from someone who's done it before.