Passive Income
Passive income is money you earn from little to no active work or involvement. While it sounds too good to be true, it is very possible to earn good money while not doing much. You just need the right mix of assets.
Let me show you how I generated nearly $8,000 USD over the past 30 days with little to no active work. I couple this with my active income and buy even more assets and the cycle continues and builds.
After I show you the income, I’ll provide a little commentary on each income source and then refer you to 3 trusted colleagues I reach to for further ideas when seeking guidance on building more passive income streams.
Passive income revealed
First context is important
Please do not compare your current passive income with mine. I’m 43 and I’ve been building this up since 2003. Also keep in mind I’m Canadian so the money you see is mostly paid to me in Canadian funds, but I’ve converted it to USD as I know most of my readers are American.
Also keep in mind the following assumptions
- All before taxes are paid
- All before expenses are paid
- Only leverage is on the rental
Time Period: Last 30 Days
Commentary on each source
Dividends – $1,554
Easily the best form of passive income. Lands in the account and its ready to be reinvested. I don’t have to do a thing to receive this income. The only problem is the capital requirements. What I mean is because I’m invested in broad based market ETFs, I’m only getting ~2.0% annual yields here, so it takes a lot of capital to get this $1554.
Additionally, the dividend this quarter was lower than I expected. This is in part because my international ETF’s pay semi-annual, so my total June and December payments are larger while my March and September total dividends are lower.
As I’m getting closer to locking in financial freedom and retiring from my full-time job, I am considering moving to more dividend focused ETFs to generate more income.
Rental Income – $1,170
My rental property brought in $1445 CAD for the month. This of course is the top number before expenses and interest. So yes, the positive cashflow is less. It comes in around $675 after paying these.
Ethereum Mining – $3,468
Surprise! Yes, I mine the cryptocurrency Ethereum. I got into this during Q3 2020 and I have 36 GPU’s generating a hashrate of 1970MH. I was extremely fortunate to buy most of these before the recent run up in prices, however I did buy some in Q1 2021 at the super expensive prices for scarce Nvidia RTX 3070’s and 3080’s.
I won’t put any more capital into this project because Ethereum is going proof of stake. While I will mine other coins after, I want to wait and see how this plays out.
Here is what my set up looks like
Image Caption: 6 Mining Rigs with 36 GPUs. Most of the GPUs are AMD 5700XTs.
Image Caption: Only miners will know what I’m showing here. But this is the Hive OS operating system dashboard. The mining rigs can be operated from a phone or laptop.
Image Caption: Payouts are made once my miners have made 0.100 ETH. These are my last 6 deposits. They happen automatically and are deposited into my ETH wallet.
If you have further questions, please reach me on Twitter. I’m happy to share additional details.
Ethereum Validating $629
Affiliate Links – $50
Covered Calls – $1,090
I sell covered calls to generate additional income. I sell these out of the money and try to capture and monetize the time decay as much as possible. I don’t talk about these on my twitter feed, or here on the blog, because in my mind they are an advanced trade and not for beginner investors.
However, they pay out very nicely. If there is enough interest from my readers, I will share in detail how I construct and carry out these transactions or have someone on who is an expert at them.
Quick Description
In short, for capping and limiting your upside, while assuming full downside risk, the buyer of the stock option pays you cash up front. They are sold with a future date in mind and if the stock is above or below that strike price then you either sell your shares below market value or keep them. In most cases, because I’m selling out of the money, these options expire worthless, and I pocket the entire sum.
Personally, I love the premium income these generate.
If all of that sounded like a bunch of market jargon, then you know why I don’t talk about them more! The takeaway is there is a method to make money on shares of stock and ETF’s you already own in addition to the dividends they pay.
$7,963 is Great, But I Have a Problem
My biggest problem is the Ethereum mining will get shut off in the coming year. This will happen when they move to proof of stake and so I need to find a way to replace this income!
My current plans are to get another rental property, increase my exposure to dividend paying stocks, start a YouTube channel, and continue selling call options on the stocks I own.
To learn more about these strategies I follow some trusted and terrific guys in Twitter and learn from them daily. I would like to introduce you to them.
The Alphas of Passive Income
These are the three Twitter accounts I follow close when I want to learn more about passive income. Each generate their passive income differently, so I get different ideas from each.
Not only are they Kings in their respective domains, but they also show you how they do it. This makes it easy for me to follow and better solve my passive income problem outlined above.
I value their level of disclosure. They share in detail what they do and how they make their money. This helps others see what is possible and just how things get executed.
I highly recommend you follow them on Twitter and begin interacting with all three.
(Click their banner to go directly to their Twitter profile page)
The Defensive Investor – @TD_Investor
TD has taken an initial deposit of just $50 back in 2018 and built a stock portfolio now worth over $600K. In just three years!! It now generates $20K in annual dividends plus additional passive income through covered calls. He shares his wealth building experience in detail, and I appreciate his transparency. He also shares his losses along with his wins which is exceedingly rare on social media. This makes him credible and I love following along.
Uncommon Yield – @UncommonYield
His name says it all – Uncommon finds the most unique ways to generate passive income and optimize financial systems. He shares his monthly income generated from passive sources and outlines how he gets them. What I appreciate is he writes incredible threads and posts on how to execute the systems yourself so you can do them too.
Your Friend Andy – @OhHaiAndy
If there is a nicer guy online, I haven’t met him yet. Andy is an incredible entrepreneur, millionaire, and passive income genius. Andy has 13 income streams and makes $22k a month off them. He specializes in YouTube channel creation and teaches classes on how to do it. If you’re interested in learning his methods, you need to start following him on Twitter very closely!
Passive Income is Powerful
Building passive income is incredibly empowering. On top of this, it is an effective method to build wealth and cover emergency expenses. When mixed with a monthly budget, you can easily measure how close you are to achieving financial freedom.
Once your passive income passes your monthly expenses you have achieved financial freedom. You can retire when you want!
6 comments
A+
Hi Stephen, that’s some impressive passive income!
Thanks for sharing.
Can I check on the ethereum validator:
32 ETH cost around 130K right now, you are generating roughly $600 a month from validations, so that would work out to 5-6% return per year? I understand that if the price of ETH goes up, so will your return on the initial investment, is that correct?
I’m currently investigating how to get into crypto a little more actively and I read your validator post as well. Sounds very interesting! But 130K is a large investment… I know you got it at a cheaper buy-in, so good for you for getting in early!
Yes, its currently generating at 6.4% which for many won’t be a good return but you’re right I got in at a lower price. I’m looking at $SOL now, and I can stake that at a much higher rate (9.9%) and the project has terrific potential too. Yes, at $130K it is a large capital outlay and real estate might be a better decision.
Cool view into how you generate passive income!
I’d note that the options aren’t strictly passive (though they’re not really a whole lot of work either!), unless you go with one of the ETFs you mentioned. Looks like a common expense ratio is 0.60%–I was expecting the expenses to be higher than that. Source: https://www.etf.com/channels/covered-calls
Still, I just go with low-fee index funds; VTSAX has an expense ratio of 0.04% and yields dividends; those who prefer real estate could go with VGSLX and get higher dividends with an expense ratio of 0.12%. Both are much, much cheaper than even the cheapest covered-call ETF. Similarly, FSGGX is 0.055% and includes stocks from all over the world (excluding the U.S.)
In the end, I suppose it’s really a style-preference. There’s no reason an investor can’t use both tools!
Overall, this post is a valuable resource. Kudos for sharing, and for generating passive income!
So cool to see these numbers. I never knew you trade options. That’s a really nice stream of income.
Looking forward to your YouTube channel. I know Andy is motivating all of us to get this going
Good luck with the mining replacements.
[…] So when I planned my early retirement withdrawal strategy, it was becoming very clear that a big part of the plan was to start to build up passive income. […]
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