LIVING OFF DIVIDENDS & PASSIVE INCOME

A few of my readers have emailed me asking when I’m going to post the Passive Income numbers for June. Apologies for the delay; I’m going to be starting my full-time MBA at UCLA pretty soon and I’ve had to look for apartments in Los Angeles so I’ve been pretty busy since the beginning of this month.

As reported earlier, April was a been a record breaking month for me with total “passive” income amounting to $2,811.42. I haven’t posted May’s break-down but it was a lot lower at $2,330.00.

However, June’s income has broken all previous records and was a whopping $3,354.51! I’ve finally attained my goal of $3,000/month in passive (or semi-passive) income. Let’s hope I can maintain it!

This is a strong 19.6% jump against my previous monthly high in April. Since I’ve been neglecting my sites this month, I expect July income to again drop significantly. But the number of sites that I’ve created is increasing every month, so hopefully it’ll all balance out eventually.

I was so busy in May that I completely forgot to post April’s passive income summary. On the bright side, April was a been a record breaking month for me with total “passive” income amounting to $2,811.42. On the flip side, I’ve been so busy, I haven’t been paying attention to my sites and May’s income will probably be lower.

If you recall, the income for March 2008 was $2, 667.18, so this is $144 jump is a 5.4% increase. However, one of my stocks is a Japanese REIT, and it paid out a quarterly dividend amounting to about $230, so the $140 increase isn’t a real increase - it’s going to disappear for May. Besides, the jump from February to March’s passive income was 11.9%, so this isn’t as good. (In case your wondering why I’ve invested in a Japanese REIT, here’s a good posts on why Japan’s real estate is a good investment.)

I’ve been lumping in my online income with my passive income, but it isn’t really passive. It may not be very strenuous and it gives me geographic flexibility and I don’t have to show up for work every day, but there is some effort involved. Unfortunately I’m not as clever as Courtney Tuttle, who says he has a site that makes $3,500/month with no ongoing maintance. I’ve just had some limited success with Domain Parking, buts that the extent of my truly passive online income.

Simply put, my online income isn’t really passive. It’s a lot more passive than the website and seo consulting work I do by a huge margin, but its not as passive as dividneds or royalty checks.

So what are the best ways to earn really Passive Income?

Buying Cheap Domains

GoDaddy currently has a great promotion on .info domains. They’re currently selling for only $0.99 instead of the usual $9 dollars. That’s about 90% off the regular price, and I spent the past several days getting about 15 domains that I think I might be able to monetize in some form or the other.

People might feel more comfortable or might more easily remember .com domains, but if you’re targeting search engine traffic it probably shouldn’t matter very much. A lot of the domains have dashes in them (example Arts-Antiques-Artifacts.info, but again, for visitors coming from a search engine it shouldn’t matter too much.

I also got a few domains that I think are pretty cool like Discount Ipod.info, Discount Seiko Watches.info and Buy Cheap Paintball Guns.info.

Domain Parking

Finally I’m getting some traction with my passive income! After all, that’s what this blog is all about. The total for March 2008 is $2, 667.18, and I’m ecstatic to have broken the $2,500 per month barrier. If I can sustain it at $2,500 per month, thats $30,000 per year. While I’m not living in luxury, it’s definitely a great safety net to have. This represents a 11.9% jump from February’s passive income and it has been growing at a steady clip for quite a while now. Hopefully, I shouldn’t have a problem maintaining it.

Here’s the breakdown:

• Online Income: $1645.30
  • Adsense: $339.28
  • Linkworth: $456.70
  • TLA: $103.61
  • Kontera: $62.07
  • Direct Ads: $330
  • Prosper Referrals: $175
  • Amazon: $117.82
  • Domain Embarking: $60.82
• Savings Accounts: $133.10
• Real Estate Trust Deed: $0
• Direct Oil Drilling Investment: $270
• Dividends from Canroys: $517.71

I’ve finally broken the $2,000/month in passive income! Passive income for February 2008 was $2,383.55. Not bad considering I wasn’t even in the country!

Here’s the breakdown:

• Online Income: $$1399.29
  • Adsense: $416.22
  • Linkworth: $221.99
  • TLA: $95.87
  • Kontera: $51.36
  • Affiliate: $83.85
  • Prosper Referrals: $100
  • Direct Ads: $430
• Savings Accounts: $138.43
  
• Real Estate Trust Deed: $0
• Direct Oil Drilling Investment: $277
• Dividends from Canroys: $509.11
• Other Dividends: $59.72

As usual, I ignored any income from Prosper loans. I did however include the $100 in referrals fees. If you’ve been thinking of lending or borrowing money on Prosper, now is a good time to do it. They’re still offering a $25 incentive to new members.

Canadian government takes its 15% tax on the dividends from Canroys, so the income is after-tax. You get a tax credit for this amount in the US so there’s no double taxation.

I’ve been traveling for the past month so this post is a little late. I had already posted my online income which was $778. I finally got a chance to add up my monthly dividend income from my stocks, Canroys, CDs and savings accounts.

The grand total for January was $764.10 from a dozen different stocks. Its lower than it was for December because some of my stocks pay out quarterly dividends. But overall, the amount of dividends is trending up due to the Dividend Reinvestment Program (DRIP).

A DRIP allows you to re-invest your dividends back into the stock. You don’t have to pay a brokerage fee for this, so if you don’t need the income its a good way to put your make back to work. Not only that, but many companies will actually give a discounted share price on stock purchases made through DRIPs.

I started using Kontera’s pay-per-click (PPC) contextual advertising program in December. Last month I made $92.11 from it. The revenue is directly proportional to the traffic and also is also somewhat correlated to the type of content.

Finance-related content usually results in above average per-click amounts. However, content about Paris Hilton might pay 1/10th of the amount, but you typically get 10 times more traffic, so don’t fret if you niche is low paying. Just focus on creating good content. My experience has been that the per-click amount is lower than Adsense but its a good complimentary service that runs along-side Adsense, and it doesn’t violate Google’s TOS (terms of service).

Google used to prohibit publishers from using other contextual advertising programs in conjunction with Adsense, but they’ve recently eased this to allow programs that do not have the same look and feel.

Since I’m still in India, I’m not really sure what some of my income checks are for the month of January. But I do know my online income, so I might as well provide that.

Last month I made $568.55 in online income from various sources. January’s online income rose by 36.92% to $778.

• Adsense revenue: $350.99 ( up 46%)
  
• Linkworth: $151.98 (up 15%)
• TLA: $94.69 (up 32%)
  
• Kontera: $92.11 (up 114%)
  
• Affiliate: $63.73 (up 854%)
  
• Prosper Referrals: $25 (down 66%)

Even though Prosper Referrals were down, I referred over 30 new members in January. It can take between 60-90 days to get the referral so I’m optimistic that this number will be higher next month.

Adsense revenue was up nearly 50% and is now the largest individual contributor to my alternative income (both online and offline). While I don’t know if the increase will continue, I hope I can atleast maintain this level.

Micro-lending is one of my 20 passive income streams. I currently have 45 loans on Prosper.com, lent out at an average rate of 19.55%. Even though I’ve had a few delinquencies, my capital has grown 14.5% in the 15 months I’ve been a lender. I’ve learnt a few things about lending and how to protect your principle.

Here are the Top Ten Worst reasons to lend money to borrowers:

1. You think they’re hot!
2. You feel sorry for them.
3. They have a picture of a cute kitten or puppy (or supermodel) in their profile.
4. They’re 95 and need money for medical bills.
   
5. They’re a Californian real estate investor and are willing to pay 20% interest for a remodel.
6. They need $25,000 for college and are willing to 25% interest for it.
7. They’re terminally ill and need a new fridge.

My Passive income for December 2007 was $1,921.11.

Here’s the breakdown:

• Online Income: $568.55
  • Adsense: $240.10
  • Linkworth: $132.00
  • TLA: $71.73
  • Kontera: $43.04
  • Affiliate: $6.68
  • Prosper Referrals: $75
• Savings Accounts: $128.47
  
• Real Estate Trust Deed: $300
• Direct Oil Drilling Investment: $163
• Dividends from Canroys: $499.21
• Other Dividends: $261.88

As usual, I ignored any income from Prosper loans. I did however include the $75 in referrals fees. If you’ve been thinking of lending or borrowing money on Prosper, now is a good time to do it. They’re offering a $25 incentive to new members.

Adsense revenue was down from last month, but since I wasn’t posting often due to my traveling, that was to be expected. Hopefully I can boost my online revenue this year. Once I’m done traveling, I should be able to focus more on this.

I’m busy getting ready for my upcoming trip and also my business school applications so I’ll have to keep this short.

My passive income for November was $1,679.88. As expected it was slightly lower than last month. But some of the shortfall was made up by the purchase of some dividend generating stock in AAV and HTE in October. I also received a special 30% payout from the Korea fund, but I’m not counting that. I’m just counting the regular $13.00 dividend that it paid out.

Here’s a basic break down:

Dividends/Interest: $611.01

2nd Trust Deeds/Direct Oil programs: $424.62

Online income: $646.25

My online income also includes the $50 I received from Prosper.com referrals (sign up and get $25 free with a $50 deposit). It doesn’t include the interest I get from my Prosper loans but thats over $50 a month.

Read the full post (92 words, estimated 22 secs reading time)

Until recently, domainers used to park domains with nothing but ads on them. They tried to get traffic from mis-spelt URLs or people who’d directly type a URL in the location bar. There wasn’t any content to attract the search engines, so unless they were paying to direct traffic to their site, the number of eyeballs was pretty low. However, if they did a good job of providing relevant links, the user was likely to click on them, if nothing else then atleast to get away from their site. I had several sites parked with Sedo.com and so far I’ve made $0.24 over a 2 year period! Pretty lousy way to park domains.

However, a site called Domain Embarking is trying to revolutionize the way domains are parked. Instead of putting up a site with nothing but ads, they’ve come upon an automated way to ad relevant content to your site.

One of my near-term goals’ is to create $3,000 in passive income. So far I’m about half way there, with income from various sources like blog advertisement revenue, Canadian Income fund and stock dividends, real estate trust deeds and direct oil and gas drilling programs. Serial-blogger, Derek Beau, has already reached this target and his goal is to now make $10,000/month! Unlike me, he’s chosen to generate this income solely from blog ad revenue.

Over the past 2 years, he’s created 23 blogs on various topics ranging from golf to pregancy (apparently personal experience or expertise isn’t a deterrent!). He outsources the content creation using sites like Elance, and pays between $3-$5 per post. After waiting for a few months, during which time he lets the traffic build up, he begins to monetize it using various companies like Google, Text Link Ads, Kontera and direct advertizers . He’s making $3,000 every month and his eventual goal is to have 100 blogs pulling in $10k every month.

It time for an update on October’s passive income and online earnings. Last month’s total was nice $1,736.80. Plus I got another $100 for referring a friend to TDAmeritrade, so counting that its $1836.80. I’m not counting the income from Prosper since its rather difficult to manually go through ~50 loans and find out how much I got. Besides it keeps getting re-invested in more loans anyway.

Here’s the break-down (not exactly JohnChow.com style, but informative nonetheless)

1. Online Income : $704.96

2. ING Savings: $98.44

3. Real Estate Trust Deed: $300

4. Direct Oil Drilling Investment: $115.63

5. Dividends from Canroys: $ 447.67

6. Other Dividends : $102.7

Total: $1,736.80

Since I decided to kick the old job (which was a hard habit to break), I’m going to be more reliant on my passive income. Part of my passive income comes from Canadian Income Funds, some of which pay out over 16% in annual yields. They pay out the dividends on a monthly basis and after tax (which the Canadian Government takes out at source) it still works out to over 1% per month. This is about 3 times what I get in my savings account!

Also, being enrolled in the dividend-reinvest program (also called DRIP) my dividends are used to buy more stock every month without paying a commission. Any best of all, some stocks offer a discount to the prevailing market price.

Tomorrow is the last day at my job. I gave my notice 2 weeks ago.

No, I don’t have another job lined up.

No, I didn’t win the lottery.

No, I don’t have a back-up plan or any idea what I’m going to do next.

So why am I quitting? 

Because I don’t feel 100% committed. Not being fully committed isn’t fair to the company and it isn’t fair to me. Life is too short to be working at a job that you don’t love and aren’t willing to commit 110% too.

Besides, working for someone else will rarely make you rich. One of the reasons is that you get paid for the number of hours you put in. Having a finite number of hours is your limiting factor here. As an employee, you also pay the highest amount of tax since you have almost no tax deductions unlike business owners and the self-employed.