Building a passive income cash flow machine is difficult, especially when you don’t know how (or where) to start.
However, if you want to retire, you’ll need a big cash flow machine to finance your retirement. As I have blogged about before, it’s hard to retire without multiple steady streams of passive income.
Like most things in life, the earlier you start the better!
I started my passive income journey about two years ago and have made tremendous progress. It hasn’t always been an easy journey.
In fact, it was pretty frustrating in the beginning because I wasn’t very successful!
However, hopefully my mistakes (and learnings) will help you down the road! Here are some steps that will help you build a passive income fast to retire sooner (rather than later!)
1. Save more than you earn
This is a very important step. If you are spending more than you earn, you’ll never reach passive income retirement. Cut out any unnecessary expenses and live within your means.
This doesn’t mean you can’t splurge with purchases once in a while. However, you should adjust your lifestyle to your passive income streams.
When you save more of your income, you can invest in passive income streams…which brings us to Step 2!
A big part of reaching passive income retirement is tracking all of your expenses and cash flow carefully. If you don’t know much money money is coming in (or out), that is a big problem!
That’s why I’m a big fan of Personal Capital. It’s a 100% free budgeting tool that will help you manage your cash flow and net worth.
2. Invest active income and into passive income
If you truly want to accelerate your passive income streams, invest all of your active income into passive income.
Converting active income into passive income is incredible. Unlike active income, passive income compounds. This is because the cash flow is recurring!
You can invest in a passive income stream and use that cash flow to reinvest into more passive income streams and the process reoccurs over and over and over again!
If you stop doing work, all of your active income streams will dry out. However, your passive income streams will keep coming in no matter what!
Invest your active income streams into passive income streams such as:
*Dividend stocks: Good dividend stocks will earn you a 2% – 5%. The best part is, great companies often pay and increase their dividend payments every single year. That’s like getting a raise every single year!
*Fixed income investments: While fixed income investments don’t have the ideal return rates, but it is better than doing nothing. Interest rates have gone up over the past year, but bonds still don’t yield much compared to stocks, real estate, and other passive income streams.
*Rental real estate properties: Real estate rentals is the classic passive income stream and it’s probably the most popular one as well. Most of the work is done upfront finding a property, negotiating the sales price, getting a bank loan, and finding tenants. Real estate rentals are a great channel to funnel your active income from!
*Peer-to-peer (P2P) lending: P2P lending can offer great risk adjusted returns. Just be careful about lending to people in the very high risk category.
*Real estate crowd funding: Don’t have enough money or time to deal with real estate rental properties? Well, consider real estate crowd funding instead! You can invest a smaller amount and gain access to properties all over the country from single family homes to multi family homes to commercial properties. If you want to go down this path, I would highly recommend RealtyShares.
Investing active into passive income is one of the fastest ways to accelerate your passive income streams. Eventually, your passive income cash flow WILL dwarf your active income.
3. Start a side hustle ASAP
Investing all of your active income into your passive income is a good start. However, everyone should also get a side hustle.
A day job doesn’t cut it anymore. If you truly want to retire early, getting a side hustle is a must. A side hustle will do wonders for your finances.
Don’t know where to get started?
Here are some simple ideas to get started:
*Start publishing Erotica: My erotica publishing business makes $1,500 – $1,700 a month in passive income.
*Publish eBooks: My investing eBooks make about $500 a month in cash flow
Online courses: Are you passionate or knowledgeable about anything. Make an online course then! My online courses make $500+ a month. Here are a few ideas:
- Yoga courses
- How to draw
- Managing social media accounts/social media marketing
- Using Microsoft Office (excel, word, powerpoint, etc)
- How to work out/lift weights
- How to build a website
4. Fail until you succeed
Building towards passive income retirement isn’t always a striaght road. Sometimes there will be bumps along the way.
In fact, you’ll probably fail a lot. I have a lot of side hustles that never went anywhere. I have a few etsy shops that never had a sale. And I have a few niche websites that never converted and never generate more than $20 a month in sales.
Fail! Fail! And Fail More!
Failure actually isn’t that bad. If you learned something important, that makes all the failure worthwhile. Keep trying and keep grinding.
Building a passive income stream just doesn’t happen over night. It takes years of hard work and grinding to make it happen.
Readers, how are you building your passive income stream? Do you have any tips for beginners to build passive income fast? Let me know in the comments below!