How To Make 50k A Year Without Working
Traditional employment has always been thought of as a much more secure route than trying to build a passive income stream. After all, your income stream could always fall apart and fail. As long as you show up to your job and do your work, you’ll be fine, right?
This is no longer the case. An uncertain economy, technology/automation, globalization, and several other modern trends have actually made employment fairly risky in many fields.
Believe it or not, building passive income streams is actually less risky than its ever been thanks to many of the same factors.
So now, building passive income streams is not that much riskier than sticking with your 9-5.
But when you consider that traditional employment at its core requires you to trade your most valuable resource, time, for your 2nd most valuable resource, money, then suddenly traditional employment doesn’t sound as appealing.
Don’t get us wrong: traditional employment is still viable, and the economy needs employees to function.
However, we can all agree that most people dream of eventually ditching their job and filling their days with activities they love, whether that be writing books or just lounging on the beach sipping pina coladas.
Those willing to invest their time and/or money can make this dream a reality by building one or more passive income streams that pay them a salary for very little work.
Commit to one of these methods if you want to make $50k a year without working a job.
1. Dividend-Paying Stocks
Dividend-paying stocks are one of the simplest form of passive income. You aren’t looking to actively trade, so there isn’t much of a learning curve here. Just invest your income regularly into dividend paying stocks, then reinvest your dividend earnings if you want to take advantage of compounding.
Of course, you’ll want to have basic investing knowledge, as well as an understanding of each stock or fund you’re investing in.
One important piece of information to understand is dividend yield. This is just the dividend payment divided by the share price, usually expressed as a percent. The higher the yield, the larger the dividend assuming the same price.
How Much Do I Need To Invest?
Let’s assume you have a dividend yield of 4%, which is a good but not amazing dividend yield. To earn $50k per year at that rate, you’d need $1.25 million socked away in dividend-paying stocks.
As you can see, investing in dividend-paying stocks is not the most conducive method to building passive income in a reasonable amount of time unless you invest early, often, and in large amounts.
But just imagine: the only work you ever have to do is check up on your accounts, invest more if you want, and collect your dividend checks.
Perhaps build wealth with one of our other favorite methods on this list then invest your passive income into dividend-paying stocks to create a higher dividend income much quicker.
Where Can I Start Investing?
Traditional brokers and financial advisors will cost you a lot of money in fees. On the other end, you have micro investment apps like Stash, which simplify everything for you but are more limited in their offerings.
Robo advisors are an excellent middle ground. They tend to have a much simpler and less expensive fee structure. However, they aren’t short on tools, investment guidance, and educational content.
One of our favorite robo advisors is TD Ameritrade. They have a massive selection of investment products, including dividends, and they don’t require a single penny to open an account.
Remember how we mentioned reinvesting your dividends to take advantage of compounding?
TD Ameritrade will do that for you with its Dividend Reinvestment Plans, or DRIP for short. They simply take your dividend earnings and stuff them back into the stocks you earned them from. Build your wealth on autopilot!
TD Ameritrade’s fees are bit higher than other robo advisors, but it makes sense when you consider the level of content and tools provided. (Update 2019: TD Ameritrade no longer charges trading fees)
And they still beat traditional advisors.
Another excellent robo advisor is M1 Finance. Like TD Ameritrade, they don’t require any cash to open an account.
However, M1’s fees are much lower. In fact, they charge no commissions ever, and the only fees you can get hit with are fees for inactivity, termination, and use of “irregular” services beyond the scope of M1.
M1’s especially good for dividend investing because of its automatic rebalancing and “pie investing” features. You simply choose the weight of each type of investment in your portfolio and M1 will automatically rebalance your portfolio with each new influx of cash.
Perfect for autopilot dividend investing.
Lastly is E-Trade. They have tons of educational content kind of like TD Ameritrade, but they also cost a bit more, kind of like TD Ameritrade.
Still, they have tons of investment options. As for accessibility, they have 3 trading platforms and 2 mobile apps. That should be enough to tell you how accessible E-Trade is if you’re willing to pay a bit more.
2. Real Estate Investing
Real estate is widely regarded as a great passive income tool. You do need some money to start, but not as much as you think. Online platforms like Fundrise let you pool your money with others to invest in larger projects.
But the real money is in your own properties.
Think about this: if you can earn $4,170 per month in profits (not revenues), that’s $50,040 per year. Divide that monthly amount by the number of properties you’re looking to own. Let’s say 5, as that’s a manageable number of properties without expanding your real estate business too much.
All you’ll need is $834 per month profit from each of those properties and you’ll be at $50k per year!
It takes a lot of cash to get to that point, but not as much as dividend investing. And once you get your first property, you can use your cash flows to scoop up more properties faster.
Within a few years, you could easily have 5 (if not more) investment properties funding your lifestyle of choice.
It will take more effort than dividend investing, though. But if you currently have a job, you can start your real estate investing on the side!
3. Starting A Business
Many dream of living the laptop lifestyle. Business has made achieving that lifestyle easier than ever.
Now, you could in theory start a brick-and-mortar business. If that’s what you want to do, more power to you. However, those require a lot more time and money than online businesses.
In fact, you could launch an entire online business within an hour! There’re plenty of business models; here are some of our favorites.
Blogs are a favorite among online entrepreneurs because they take so little time to start, you can work at your own pace, and blogs can be monetized multiple ways both actively and passively.
How do you pick a topic to blog about, you ask?
Well, you could either go for something lucrative or something you’re passionate about. You’ll succeed with either if you keep doing the work.
Your blog won’t earn you a lot (or anything) at first, but as you fill out your blog with content and start ranking in Google, visitors will trickle in.
Then, you can turn your blog into a passive income source through
- Affiliate marketing
- Info products
- Membership content
Combine all these with a year or two of consistent work, and you’ll be rolling in the dough.
It’s not uncommon for bloggers to earn 6 figures per year after a couple years of building the blog.
All that for writing about whatever you want!
Blogs can also serve as a secondary source of income within your current business if you have one already as well.
Start your own apparel business with nothing more than a design. Print-on-demand requires no inventory; whenever someone buys your apparel, your print provider prints your design onto a shirt and sends it to the customer.
Print-on-demand business have little startup costs compared to many other business models. In addition, they aren’t super complex. The hardest parts are finding a niche and then finding a way to get a design that your niche can get excited about.
If you can nail those two elements, you’ll be printing money on demand the same way you’ll be printing your shirts, the only difference being your bills will have presidential portraits on them.
Do I Need Money To Get Started In These?
Everyone’s first question after “what business/income stream should I build” is “do I need money to get started?”.
In the past, the answer would have been a resounding yes.
Back in the internet-less dark ages, the only way to create an income stream was by spending plenty of time AND money. Want to get into real estate? Better find someone to give you a loan if you don’t have the money. Looking to start a business? Again, get a loan or spend decades saving up the cash.
In today’s world, the internet has made all of these options much more accessible. Beginners now only have to choose between time OR money. No more dealing with both.
Having More Time
You don’t need a lot of money to start any of these if you have plenty of time.
- Dividend-paying stock investing – Most robo advisors let you start with very little money. Then, invest consistently over many years and you’ll have your income stream.
- Real estate investing – Again, plenty of online platforms make real estate accessible for cheap.
- Starting a business – Plenty of business opportunities, especially the ones we discussed, require little to no startup costs as long as you’re willing to spend more time getting them off the ground.
The “Back Against The Wall” Method
Humans can adapt to impressively difficult scenarios. Some of your best work is done when your back is against the metaphorical wall.
In terms of income, this usually means having no steady source of income such as a job. Your only other option besides success is failure (aka being broke).
But guess what? You have plenty of time. The whole day, in fact.
When you combine having your back against the wall with massive amounts of free time, amazing things can happen without spending a whole lot of cash.
Having More Money
Now, if you’re short on time or just impatient, you WILL need money to succeed.
What will you be spending that money on? A few things, actually.
For one, you’ll want to invest in education like online courses to cut your learning curve. This could save you many hours of reading blogs and watching YouTube videos.
Another thing you’d invest in is more advanced tools. For example, when starting a blog, you might invest money into paid traffic. You’ll get more visitors to your blog in less time, but at the cost of money.
Use Your Job To Your Advantage
Don’t get us wrong: traditional jobs are a great way to earn money, increase your wealth, and just pay for anything you have going on in your life.
If you already have a 9-5 or some other full-time work arrangement, you’ll have to put in hours before work, after work, or during lunch.
However, think of the positives: your job provides you a steady income, part of which you can invest into one of these methods. Doing so will speed up the growth of your business, but the rest of your income gives you a safety net as well in case something goes wrong.
However way you cut it, you’ll have to invest whichever of these 2 precious resources you have more of.
But the hard work and investment is worth it when you could be sitting on a mid-level salary’s worth of income without working a traditional 9-5 or some other job.