I admit it…
Every time I see a new get rich scheme out there on Facebook or CNBC I click that click bait!! I, like any other person, want to know how I can become a millionaire part time. After looking into these schemes or answering someone’s question on one of these schemes, I always come back to: what are you really trying to accomplish?
Typically these schemes work but take a lot of work which so for most people (including me), the answer is “I want to make money doing little to nothing.”
As ridiculous of a statement like that is, you can indeed make money doing nothing if you have some money to invest and won’t sell the principle.
The Math
My rule of thumb: if you have $400 you should be easily able to generate $1 of income off that $400 investment.
The math: $400 x 3% interest investment / 12 months = $1 a month.
The sensitivity for you math geeks: you would need $600 if you could only find a 2% interest investment or $300 if you could find a 4% interest investment.
Investing
Ok sounds like I need to call up that guy driving around the Lamborghini to find these investments….. WRONG!
All you need is a brokerage account and for you to decide what to invest in…. and no you don’t need $50,000 to open an account. I use Fidelity which has a lot of investments you can trade for free which I will talk about below…. but almost all brokerage companies around the world have no transaction fee ETFs to choose from.
Here is one example of stable investments I use often for building my stable income:
- Investment Grade Bonds like Grandma likes to buy….. but in an ETF format (eg big portfolio of bonds).
- $33 Billion is invested in this ETF.
- Ticker: LQD
- Yield: 3.3% at the time of this post.
- Pays out monthly.
- You can buy one share for about $110 and the price is very stable over the past 10 years
- On Yahoo Finance you can easily see monthly distributions a share….as can be seen the payouts (your $1!) are quite stable.
Wait Wait Wait…. Won’t the price go up or down like a stick?
Indeed any investment will move on a day to day basis. But if you aren’t selling the asset, you won’t recognize any gain or loss. Since you are using this investment for income you shouldn’t sell and shouldn’t get caught up in the day to day movements.
Income producing investments (Bonds, REITs, dividend stocks) typically move less on a day to day basis than an investment that pays out no interest or dividends (example Tesla stock).
I am a huge believer of a diversified income portfolio to reduce risk even further and we’ll talk about investments more in future posts.
Scaling This Up Example
If I wanted to pay for my $14/month Netflix subscription then if I could invest $14 x $400 = $5,600 I would essentially have my Netflix subscription paid for – while I did nothing!
Overly Simplistic but the $1/month is real
I made this post overly simplistic to drive home the point that making consistent passive income is possible even with very small amounts of money. Building real wealth that is completely passive either takes 1) a lot of work to get set up that you might not have or 2) capital… but that spiral can be built up over time.
Before you put a lot of time into a side hustle I would just challenge you to think of the energy it will take to accomplish that side hustle vs putting $400 a month a side to start covering some bills. Most people would be happy with a side hustle that pays some of their bills vs expecting to be multimillionaires of the hustle.
If you want to see how I have executed on this is practice read my related post here: Actionable Passive Income – An Ease Simple Scalable Diversified and Liquid Income Portfolio Starting at $25
