How To Make Passive Income

You know, when it comes to building up your wealth and getting ready for the golden years of retirement, passive income is your secret weapon. It’s like making money while you sleep! Now, there are tons of ideas out there for passive income, but not all of them are gonna be your ticket to easy street. See, what works for one person might not work for another. It’s kinda like finding the right pair of shoes – gotta try a few on before you find the perfect fit, right? So, when you’re exploring those passive income ideas, remember it’s all about finding what clicks for you.

What Is Passive Income?

So, you’ve heard about passive income, right? It’s basically money that rolls in without you having to hustle for it day in and day out. Think of it as the cash flow you get from investments like annuities, bonds, or stocks that pay out dividends. It’s like having a money tree that keeps on giving! Now, compare that to active income – that’s the kind of dough you gotta work for, like your job or any side gigs you’ve got going on. With active income, you’re putting in the hours to bring home the bacon. But with passive income, you set things up and let the cash come to you while you kick back and relax. Pretty sweet deal, right?

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10 Passive Income Ideas To Build Wealth

Here are some passive income ideas that might just make your dreams a reality:

1. Content

Alright, let’s talk about a game-changer in the world of passive income: content creation. I’m talking about diving into platforms like Google, YouTube, Instagram, Snapchat, TikTok, and more, and turning your creativity into cold, hard cash. It’s like having your own little money-making machine! So, what kind of content can rake in that sweet passive income? Brace yourself, ’cause the options are endless:

  •  Creating and selling a digital course: Share your expertise and skills with the world and watch the dollars roll in.
  • Writing and selling an e-book: Turn your passion for writing into a lucrative side hustle.
  • Selling photography: Snap some stunning shots and turn your talent into profit.
  •  Designing a subscription app: Got a killer idea for an app? Get it out there and start earning.
  • Selling designs: Whether it’s logos, graphics, or merch, there’s a market for your creative flair.
  • Writing and monetizing a blog: Share your thoughts, experiences, and expertise and watch your blog become a cash cow.
  • Making and monetizing a YouTube channel: Lights, camera, action! Turn your videos into a money-making empire.
  • Making sponsored social media posts: Get paid to promote products and services to your followers.

Now, here’s the catch: while all these passive income ideas sound like a dream come true, they do require some legwork upfront. But hey, with a little hustle and determination, you could be well on your way to making money while you sleep. So, what are you waiting for? Get out there and start creating your path to passive income glory!

2. Dividend Stocks:

Alright, imagine this: you buy some shares of a company’s stock, and in return, they pay you a little slice of their profits every few months. That’s the magic of dividend stocks! They’re like the OG of passive income investments, and for good reason. Sure, you gotta put up some cash upfront to get started, but after that, it’s smooth sailing. Now, some folks say dividend stocks are less risky than those flashy growth stocks, but hey, every investment comes with its own set of risks, right? So, while dividend stocks might not be a guaranteed ticket to riches, they’re definitely worth considering if you’re looking to build up that passive income stream.

3. Dividend Index Funds & Exchange Traded Funds

Now, here’s a little secret for you savvy investors: dividend index funds and exchange-traded funds (ETFs) could be your golden ticket. These bad boys offer a more diversified approach compared to picking individual dividend stocks. Think of them as a mixed bag of goodies, spreading your investment across a bunch of different companies. Plus, the beauty of it is, you don’t have to spend hours researching and picking out individual stocks. It’s like hitting the jackpot without having to guess which numbers to play! Here’s the kicker: whether you’re investing big bucks or just dipping your toes in the water, these funds can cater to any budget. So, if you’re looking to beef up your portfolio without all the hassle, dividend index funds and ETFs might just be your new best friends.

4. Bonds

Now we’re diving into the world of bonds versus stocks. Bonds are like lending your cash to companies or even Uncle Sam himself, and in return, they pay you back with some interest. It’s kinda like being the bank, except without all the paperwork. Now, when it comes to safety, bonds often get the gold star. They’re seen as the reliable, steady-Eddie option in the investing game. But don’t count stocks out just yet! Stocks may be riskier, but they also have the potential for some serious gains. It’s like comparing a cozy savings account to a rollercoaster ride at the theme park – both have their perks, but it all depends on what you’re comfortable with. So, before you make any moves, think about your game plan, how much risk you’re willing to take, and what kind of returns you’re aiming for. After all, when it comes to building your financial empire, it’s all about finding that sweet spot between safety and profit.

5. CD Ladders Or High-Yield CDs/Savings Accounts

Now, if you’re all about playing it safe with your investments, you might wanna check out CD ladders, high-yield CDs, or even stash your cash in a high-interest savings account. These babies are like the cozy blankets of the investing world – they might not make you rich overnight, but they’ll sure keep your money snug and sound. With CD ladders, you’re basically spreading your cash across different certificates of deposit that mature at different times, giving you a steady flow of cash as they come due. And those high-yield CDs and savings accounts? Well, they’re like the cherry on top, offering a bit more interest than your regular old savings account. Sure, the returns might not be jaw-dropping, but hey, they’re perfect for folks who like to play it safe. So, if you’re the cautious type with a low-risk tolerance, these passive income options might just be your cup of tea.

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6. Useful Household Item Renting

Alright, listen up, because we’re about to spill the beans on a nifty little trick to turn your everyday stuff into a money-making machine. Ever thought about renting out your gear? We’re talking about those items collecting dust in your garage or attic – like lawnmowers, tents, power tools, you name it. Turns out, there’s a whole world of folks out there who need those things for a short time but don’t wanna fork over the cash to buy them outright. And that’s where you come in! By renting out your stuff, you’re turning your clutter into cold, hard cash. Now, don’t get me wrong, it’s not all rainbows and unicorns. Sure, you’ll make some passive income, but there’s also gonna be some legwork involved. Think managing rentals, keeping things in tip-top shape, and maybe even dealing with the occasional repair or replacement. But hey, if you’re willing to put in a little effort upfront, renting out your gear could be a sweet little side hustle. Just imagine – your lawnmower could be making you money while you chill on the porch with a cold drink. Sounds like a win-win to me!

7. Real Estate Investment Trusts

Meet your new bestie: Real Estate Investment Trusts, or REITs for short. Now, here’s the lowdown: REITs are like a magic portal that lets you invest in real estate without actually owning any property yourself. Pretty cool, right? So, how does it work? Well, REITs round up cash from investors like you and me and then go on a shopping spree, scooping up all sorts of real estate goodies – think office buildings, retail spaces, apartments, even fancy hotels. They share the profits with us investors in the form of sweet dividends. It’s like getting a piece of the real estate pie without having to worry about being a landlord or dealing with pesky tenants. Plus, REITs play nice with the stock market, so you can buy and sell them just like you would with regular stocks. It’s kinda like having your cake and eating it too, am I right? So, if you’ve ever dreamed of being a real estate mogul but didn’t wanna deal with the hassle, REITs might just be your golden ticket to passive income heaven.

8. Rental Properties

Now, if you’re ready to go all-in on real estate and you’ve got some serious cash to spare, snagging yourself a rental property could be the ticket to passive income paradise. But hold your horses, because it’s not all rainbows and sunshine. There’s a whole bunch of factors that need to line up just right for your rental property to start churning out that sweet, sweet passive income. First up, you gotta have a solid game plan. That means doing your homework, crunching the numbers, and making sure you’re investing in the right location. After all, ain’t nobody gonna wanna rent your place if it’s in the middle of nowhere, right? Next up, you gotta find yourself some good ol’ reliable renters. ‘Cause let’s face it, dealing with nightmare tenants is nobody’s idea of fun. And last but not least, you gotta stay on top of things like property maintenance, bills, and taxes. Because trust me, nothing kills your passive income buzz faster than a leaky roof or a hefty tax bill. So, while rental properties can be a goldmine for passive income, they’re not for the faint of heart. But with the right planning and a little elbow grease, you could be sitting pretty while your rental property does all the heavy lifting.

9. Annuities

How do annuities work? Imagine you hand over a lump sum of cash to an insurance company, and in return, they promise to dish out a steady stream of income to you like clockwork. It’s like having your own personal money fountain! Now, there are a few flavors of annuities to choose from, like fixed guaranteed, variable, and indexed. Each comes with its own perks and quirks, so it’s important to do your homework before diving in headfirst. But here’s the kicker: with fixed guaranteed annuities, you’re basically getting a rock-solid guarantee that you’ll never run out of cash flow. It’s like having your financial security blanket wrapped around you, keeping you warm and cozy for life. Sure, you gotta cough up some dough upfront, but some would argue it’s the safest bet for passive income out there. So, if you’re looking for a hassle-free way to pad your pockets with cash, annuities might just be your new best friend.

10. Life Insurance

Alright, let’s talk about a little something called participating whole life insurance – the unsung hero of passive income strategies. Now, I know what you’re thinking: life insurance, passive income? Bear with me, ’cause this might just blow your mind. Picture this: you snag yourself a well-designed participating whole life insurance policy. Now, here’s where the magic happens. Over time, the cash value of that policy starts to stack up, kind of like a secret savings account that grows on its own. And here’s the kicker: once that cash value reaches a hefty enough sum, you can start withdrawing it as passive income. It’s like having your own personal piggy bank that pays you to crack it open! But wait, there’s more. You can also roll that cash value into an annuity down the road, guaranteeing yourself a steady stream of income for the rest of your days. It’s like having a golden parachute to cushion your retirement nest egg. And here’s a little bonus tip: you can even use life insurance to “cover” other income-producing assets, like an annuity or a 401(k). It’s like adding an extra layer of financial security to your portfolio. So, if you’re looking for a sneaky-smart way to beef up your passive income game, participating whole life insurance might just be your golden ticket.

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How Taxes Play Into Passive Income

Now let’s talk taxes – the not-so-fun part of making money. Now, when it comes to those passive income streams, you gotta be smart about Uncle Sam’s cut. That’s where retirement plans like Roth IRAs and 401(k)s swoop in to save the day. Picture this: you stash your passive income earnings into one of these bad boys, and bam – instant tax advantages. It’s like giving yourself a little bonus come tax time! But hold your horses, because there’s a catch. Both Roth IRAs and 401(k)s come with their own set of rules and limitations. You’ve got annual contribution limits to keep in mind, and don’t forget about access restrictions and early withdrawal penalties if you try to dip into that cash before hitting a certain age. Talk about a buzzkill, am I right? But fear not, my friends, there’s a secret weapon in your financial arsenal: whole life insurance. Yup, you heard me right. A well-designed whole life policy can offer you more flexibility and options when it comes to your money. It’s like having a Swiss army knife for your finances, ready to tackle any situation life throws your way. So, while retirement plans like Roth IRAs and 401(k)s are great for saving on taxes, don’t sleep on the perks of a whole life insurance policy. It could be the key to unlocking a world of financial freedom and flexibility.

Using Life Insurance To Cover Assets

Alright, let’s talk about a nifty little trick called “covering assets” with life insurance – it’s like having a safety net for your financial plans. Here’s the deal – let’s say you’ve got an annuity, right? It’s churning out some passive income for you, but there’s always that nagging worry – what if something happens to you before you’ve received all that income? Enter life insurance to save the day! If you kick the bucket early, the death benefit from your life insurance policy swoops in to replace the value of the assets you used to buy the annuity. It’s like having a backup plan for your backup plan!

But wait, there’s more! Life insurance isn’t just for covering your behind in case of an early exit. It’s also your secret weapon against the wild, unpredictable world of market volatility. I’m talking about those roller coaster rides in the stock market that can leave you feeling queasy. With life insurance cash values at your disposal, you’ve got yourself a safety cushion for when the market takes a nosedive or inflation starts to rear its ugly head. It’s like having a financial superhero to swoop in and save the day when things get rough. So, whether you’re worried about leaving your loved ones high and dry or just want some peace of mind in a volatile market, life insurance might just be the ace up your sleeve in your passive income strategy.

Moving Forward

If you’re all about protecting your hard-earned passive income and ensuring your financial future, then we’ve got just the thing for you. At McFie Insurance, we’re all about crafting life insurance plans that offer top-notch protection, so you can hang onto more of that dough you’re bringing in. We’re talking about giving you the peace of mind to grow your wealth and live life on your terms. So, if you’re ready to take your passive income strategy to the next level and want to chat about how life insurance can help safeguard your financial future, don’t hesitate to schedule a strategy session with us. Let’s make sure your money stays safe and sound, no matter what life throws your way. Schedule your session today and let’s get started on securing your financial peace of mind!

John McFieby John T. McFie
I am a licensed life insurance agent, and co-host of the Wealth Talks podcast.
At age 14 I started developing spreadsheet models and software systems to help my Dad share financial concepts with clients. 
Skipped college at 17 recognizing the overinflated value and prices of most college degrees and built more financial software instead (see Still a strong advocate of higher education without going to college.  I enjoy making financial strategies clear and working through the numbers to prove results you can count upon.

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