Passive Income

The market has been defying gravity this summer, with the S&P500 up 49% since March. But most of the appreciation has been in what I consider lower quality stocks. Many homebuilders with doubtful prospects have doubled from their recent lows, while stocks that are somewhat recession proof like McDonalds, Walmart, Coca-Cola and Procter & Gamble have bounced a mere 15-20%.

According to Bloomberg, “companies with the worst earnings led the 45 percent gain in the Standard & Poor’s 500 Index since it fell to a 12-year low five months ago”. It might be a good time to sell some of your winners that have exceptionally well and either wait for a pull-back, or if you’re trigger happy, buy solid investment-grade companies.

Given the current economic environment with the US Dollar likely to devalue against foreign currencies and the high probability of inflation, you want to invest in a company with exposure to foreign markets, a stable business model that is non-cyclical and a history of growing dividends. You also want to avoid luxury brands or businesses that sell expensive goods.

Here are a few of the companies that I would consider looking at, along with their dividend yields.

  • Verizon Communications (VZ): 5.87%
  • Johnson & Johnson (JNJ): 3.21%
  • Procter & Gamble (PG): 3.28%
  • Colgate-Palmolive (CL): 2.41%
  • Unilever (UL): 4.39%
  • Altria Group (MO): 7.10%
  • Philip Morris International (PM): 4.61%
  • McDonalds (MCD): 3.55%
  • Walmart (WMT): 2.51%
  • Enerplus Resources Fund (ERF): 9.56%

While I don’t own any of these yet (except ERF), I do own some ETFs that hedge against dollar devaluation and inflation:

  • CurrencyShares Australian Dollar Trust (FXA): 2.04%
  • Morgan Stanley Emerging Markets Domestic Debt Fund (EDD): 7.45%
  • Market Vectors TR Gold Miners (GDX): 1.90%

If you are going to buy currency ETFs or currencies you might want to also check out some of the risk-free currency CDs offered by Everbank. At the very least, definitely subscribe to their free newsletter, the Daily Pfennig. It’s quite informative and very interesting.

ETFconnect.com is a great site to find out more information about ETFs.  Having some exposure to foreign currency and gold miners isn’t a bad idea. I’ve been worrying about the effects of the Federal Reserve printing money like its going out of style and the CEO of Coeur d’Alene (CDE), a silver mining company that I happen to own, predicts that Silver will jump 29% by the end of the year because of this.

Demand from investors seeking a store of wealth accounts for more than half of silver’s 23 percent price jump this year before today, Wheeler said in an interview in New York. The metal will reach $18 an ounce with supplies little changed and demand buoyed by purchases from exchange-traded funds, he said.

“We have this crushing new debt and dollar weakness,” Wheeler said today. “The outlook for precious metals is very positive, and silver will be No. 1.”

The U.S. government has pledged $12.8 trillion, an amount that approaches U.S. gross domestic product, in a bid to stem the longest recession since the 1930s. The spending will erode the value of the dollar and boost the appeal of silver and gold as alternative assets, Wheeler said.

“There’s a lot of anxiety out there over this debt,” Wheeler said. “Around the world, there are a growing number of investors who want protection. They’re going to want silver as part of their portfolio.”

If you believe any of this, you might want to increase your exposure to silver miners like CDE, SSRI or SLW, although these don’t pay any dividends.

Disclosure: I own ERF, CDE, FXA, GDX, EDD, physical gold and silver.

Summer is flying by really quickly. It seems like I just wrote about my $7,353 in Q2 online income and now its time for another update! July has been a stellar month and I managed to pull in just over $3,200 in online income.

As usual, Ebay was my biggest earner with nearly 33% of the online income. I’m glad I’m not dependant on only one source for the majority of my income, especially since I found out that one of my friends got booted from the Ebay Partner Network (EPN). While the real reason is a mystery, I can only guess it was one of the following:

  1. He wasn’t promoting related products on his blog. This tells the EPN that you’re not a serious affiliate marketeer and that you don’t know how to internet traffic conversion works.
  2. Some of the other sites were thin-sites. A site with no content and just affiliate links to products doesn’t usually rank well in the search engines and as a result gets no traffic. This also indicates that you’re a novice.

Ebay is facing problems increasing their revenues. They desperately need people to market their products for them. However, they don’t want people to sign up for the affiliate program and use it subsidise their own purchases.  If you make it seem like your internet marketing skills are non-existent there’s a pretty high likelyhood of their rejecting you. But you do have 60 days to try out BANS and get a refund if you don’t like it. If you don’t like BANS you can try this other Ebay plugin for wordpress that is pretty decent.

For more information read  my 1,000 word guide on how to make money from BANS

Anyway, here’s the monthly breakdown for July’s online income:

Direct Ads were a huge portion of the income as well. But this number goes up every July! Check out last July’s online income numbers. This July, the online portion is almost 40% higher while my dividend income is 40%! Speaking of dividends, I need to write a post about that!

My “other affiliate” is pretty low. It’ll probably be higher next month since I won’t be working and can devote more time to it. Lets see how that works out.

In the past year I’ve experimented a lot on different sites and I’ve found that Ebay’s affiliate program is pretty easy to implement. I’m also experimenting on new things, many of which just don’t work so I scrap them and move on. One of the things I did try a while ago was automated blogging. You create a site that pulls content from other sites and you put adsense around it. Not only did I get little traffic, the site was de-indexed from google and adsense blacklisted the site. Essentially I was warned that my adsense account might be shut down if I continued such blatant theft of content! While I don’t make much money from Adsense, it’s still $1000+ a year.

Anyway, let me know how you guys are doing and what seems to be working for you (or not!).

hp-DV6series-16-inch-intel-core-2-duo-laptop

Check out the new laptop I got courtesy of Ebay.com! No, I didn’t buy a laptop on ebay, but I did use the money ebay sent me to buy a really nice notebook. You can learn more about the configuration of the 16 inch intel core 2 duo HP laptop here. With the recession going on and unemployment soaring, its nice have someone sending me a few dollars now and then for my discrentionary purchases.

As I reported previously, I’ve made around $15,000 in the first 6 months of the year through various online income streams. Last month was no exception. I’ll report the exact amount later, but again ebay was a major portion of this number. I won’t know the exact amount until Saturday but so far it’s just over $1,000. I’ve outlined the steps to create ebay income, but if that’s too technical for you, you might want to check out this new program called NicheDevil that looks very promising. It comes with a 60 day refund policy so there’s no downside. If you are unable to make any money online with it, just get your money back. The creator is the same guy who turned me on to BANS which has made me $10,000 so far so I’m more than happy to throw a few dollars his way to check out the product.

Is anyone else making money selling real estate, sports cars or gold coins on ebay or through BANS? If so let me know your success stories!

Update: I bought NicheDevil and I set up a few sites with NicheDevil. While it took me considerably longer than the 36 seconds advertised it was a considerably easier than setting up a comparable BANS site. I also liked the automatic pulling of tweets, youtube  videos and images based on your target keywords. The only drawback was I had to get HostGator hosting. I used the online chat help and asked if they had any current promotions – they said they had a 20% discount with the code “Beach” so I used that to get Baby hosting which cost $95/year for unlimited domains. I still actually prefer Dreamhost but they didn’t support the installation of IonCube loader so I had to use HostGator instead (well, I didn’t have to but I’m too busy to figure out how to install it myself). I also bought a few domains from 1and1.com since they offer free private registration and currently have .com domains for $6.99!

Overall, it was a quick and easy setup. The sites look pretty good. I downloaded GIMP and made some minor modifications to the layout of the site (just background color and header image which I borrowed from someone else!). I’ll let everyone know how they work out.

Every month there are 673,000 searches for the term ‘make money online‘ and over a million for various combinations such as ‘earn money online‘ and ‘how to make money online‘.  Apparently there’s a lot of money to be made in this niche and there are tons of people who will sell you ebooks, CDs, DVDs and monthly subscriptions on how to make hundreds of thousands of dollars by pimping stuff online or through secret google-checks. The sad truth is that is difficult to make $100,000 a year but it is not impossible. With a little bit of effort I’ve been pulling in a little over $2,000 a month for almost a year. I wish I could devote more time to it, but with my MBA, job search and some part-time consulting (and now summer internship) I barely get any time to try new things. In fact, I barely get time to post on this blog either.

Here’s my breakdown for the 2nd quarter. I made $7,353.84 in online income I made between April 2009 through June 2009. For comparison, I made $6,760.85 in online income during the 1st quarter.

On average, I made just over $2,250 a month.  As usual, Ebay was the largest income producer.  Till date this year, I’ve made just over $5,000 from Ebay affiliate commissions and over $8,000 since I started last year. (click on the graph twice to see a larger image).

Ebay-build-a-niche-store-earnings

As you can see from the graph, the earnings (in yellow) have steadily increased each month (with a big surge before Christmas followed by a huge drop right after!). Read this post on How to make money from Ebay without selling anything if you want more information about starting your own niche sites.

One of my fellow blogtrepreneurs makes over $3,000 from his BANS sites so there is decent money to be made.  However, the few $100k/year guys I know make it from selling ebooks and other online products. From what I gather, that is the most likely way to make a real living from online marketing and sales. Towards that end, I’ve been working on a project to create and sell some online ebooks. Within the next several weeks, I divulge more information about it. Until then, all I can say is that the idea was motivated by this $7 ebook!

At periodic intervals, I post my passive income revenue and other articles about creating passive income. One method I’ve heard about was creating articles on HubPages.com. If you have decent writing skills but no technical expertise it offers a way for you to make some online income.

I was able to ask the CEO of HubPages.com and YieldBuild.com, Paul Edmonson some questions about his entrepreneurial experience and passive income.

How did you begin in online marketing?

I started in online marketing back in 1999 when I first started working on the search engine optimization strategy for MongoMusic. Since then I’ve started numerous sites that range from lead generation to niche content, been an SEO consultant and am now the CEO of HubPages.com and YieldBuild.  Both technologies are geared toward helping publishers optimize their online ad revenues.

How many sites, blogs, hubpages do you maintain?

I have made a few hundred hubs personally, but there are over 367,000 Hubs published now and more getting added every day.

What are your different source of online revenue?

HubPages revenue is driven by the YieldBuild ad optimization service that come primarily from optimizing AdSense, and Microsoft PubCenter through our service.

What are the most difficult challenges you face?

I think the biggest challenge of online businesses is getting to scale.  It generally takes time and several iterations to get a product or service fit to the market.  Generally, you won’t know how good a business will be until the product is fit to the market.  I think this process is the most difficult for every web based business I’ve bee apart of.

What advice would you give someone who wants to start making money online?

It starts with quality.  You have to make a quality product or service.  This take time and lots of hard work.  And.  You have to continue to improve and iterate.  If you are starting out online, I’d suggest make something extraordinary well, and keep iterating until it gets fit to the market.

How much money do you make through online residual sources?

Personally my wife and I have Hubs and a few sites that make about $2K-$3K per month, but our YieldBuild business will gross over $3 Million this year and is growing quite quickly.

Would you like to plug your company?

Yes, people should check out HubPages.com if they are interested in starting with earning revenue online by creating and sharing content. Make high quality Hubs and overtime, you will start to generate revenue.  For people that have sites, they should take a look at YieldBuild.com and try our ad optimization services.

While he mentions that he makes $2-3k from his hubs, he didn’t tell you that he has nearly 250 hubs. This must have taken serious effort. Creating online income, passive income or any sort of income for that matter isn’t easy. Its takes time and effort. Many people give up before they even get started. If you expecting to see quick results, you will likely be disappointed.

What online revenue streams do you have? What has or hasn’t worked for you?

As I’ve mentioned in how to make money on ebay, I’ve set up several Ebay affiliate sites to generate passive income. Typically you make a percentage of the sales price which ends up in the 4-8% range. However, when buying cars, you only get a fixed price which is currently about $100-$130. But if you can sell a few cars through your site every month, it soon adds up.

Well, someone finally bought a whole car (as opposed to spare parts or accessories) through one of my sites. And not just any car – an antique 1972 Rolls Royce Silver Shadow!

1972 Rolls Royce Silver Shadow

Of course, $130 in affiliate commissions isn’t exactly earth-shattering, but it’s the largest sales commission I’ve received from Ebay so far!  And coupled with the sale of an antique seiko watch, a few designer bags and cheap ipods, it almost pays the rent!

Several of my long time readers have asked me to post my online income. I didn’t realize that I haven’t posted the passive income and online revenue numbers since December. A few reader are just starting to make money online and are particularly curious!

So here’s a quarterly breakdown for online income only. I haven’t had time to calculate the dividend income.

Quarterly Online Income:$6,760.85

Dividend Income: No Clue

The largest segment was the income from Ebay which was about $1,875.  Over the course of entire 2008, I made a total of $3,332.55 from the Ebay sites, so this income has increased quite a bit.  The sites target people who want to buy online businesses, cheap real estate and timeshares, gold coins and other niches.

I also made an additional $3,800 from online marketing & SEO consulting!

Remember, this is quarterly revenue from January through March.

I just ran the totals for passive income for December and I found out that it was the 3rd most “profitable” month of 2008.  The other two were October and June.

Monthly Passive (alternative, online & dividend) Income was $3,276.07.

The total online income was $2385.20 which broke the previous record by ~$130.

Here’s the breakdown of the $3,276.07:

Online Income:$2385.2

Dividend/Alternate Income: $890.87

The largest segment was the income from Ebay which was over $900, probably due to Christmas. Over the course of 2008, I made a total of $3332.55 from the Ebay sites. Adding a storefront on this site has helped boost this income.  The store targets people who want to buy online businesses, cheap real estate and timeshares, gold coins and other income producing ventures.

In another post, I’ll list the total income for 2008 and a break-down by category.

I’ve been busy with Business School and it’s been an insanely hectic month. Forget about writing posts, I haven’t even had much time to sleep!

I just ran the totals for passive income for October and I found out I’ve broken my previous record for monthly passive income that I set in June.

Monthly Passive (alternative, online & dividend) Income was $3,454.99.

The total online income was $2160.67 which is lower than my record by ~$95. However, my investment in a Japanese REIT paid a quarterly dividend that pushed up my dividend income over the usual $1000/month to a total of $1259.18.

Here’s the breakdown of the $3,454.99:

Online Income:$2160.67

Dividend/Alternate Income: $1259.18

  • ING Savings Account: $111.18
  • Direct Oil Drilling Investment: $397.53
  • Dividends from Canroys: ~$412 (after tax deducted at source)
  • Other Dividends: $338.47
  • The affiliate income from Ebay was almost $650 last month. Year to date, I’ve made $2,220 from my Ebay sites. Adding storefront on this site has also helped my income.  The store targets people who want to buy online businesses, cheap real estate and timeshares, gold coins and other income producing ventures. I recently added a go-kart for sale page.

    Some of the other ebay affiliate sites are .info sites that I bought .info domains for $0.99 from GoDaddy and created them using BANS software, which automatically pulls the relevant content from Ebay. They’re all hosted on Dreamhost, for which I pay under $119.40/year for unlimited domains, 500GB of bandwidth and some couple of TB of data. Dreamhost is currently running a special, where you get four times the usual disk-space and bandwidth! Also if you prepay for 5 years you get $150 off.  They’re currently running a special where you get unlimited bandwidth and disk space at no extra cost for the next 11 years. Use code PassiveIncome to get $19.40 off your hosting or Dividends to get a free domain registration.

    Note: Setting up BANS on Dreamhost requires a little bit of tweaking. If you’re not very familiar with setting up websites then I strongly suggest using HostGator for your hosting. They cost about the same and have pretty good compatibility with the BANS software. But don’t ask me for support!

    If you want more info on how to generate passive income from sites, look at the 2nd half of this post (look for the section on Niche Sites). I also recommend  the secret cash plan ebook. It’s a primer on the different methods to create online income. It has a very good section on finding niche market segments. It only costs $20 and it has a money back guarantee.

    For more info on the other online sources of income, check out my previous passive income updates.

    But while my passive income is up, my stock portofolio has been almost decimated. While it’s actually update 20%+ from the lows of last month, its down 50% for the year. Luckily I barely have any leverage, otherwise the account would have been wiped out!

I made $2,884.13 in online & passive income for the month of September, 2008. After the somewhat lackluster income over summer, this was a welcome increase.

Here’s the breakdown:

The affiliate income from Ebay has been growing steadily. It’s more than doubled from August and the total revenue for this year is $1847.67. I think that’s a pretty good return for a little bit of effort (most of which took place in May). In July I added a storefront on this website which focuses on business, cheap real estate, gold coins and other income producing ventures. I recently added a Ferrari and Sports-car for sale page. I don’t expect to sell any Ferraris’ or Lamborghinis’ but I sure enjoy looking at them!

Some of the other ebay affiliate sites are .info sites that I bought .info domains for $0.99 from GoDaddy and created them using BANS software, which automatically pulls the relevant content from Ebay. They’re all hosted on Dreamhost, for which I pay $110/year for unlimited domains. Dreamhost is currently running a special, where you get four times the usual disk-space and bandwidth! Also if you prepay for 5 years you get $150 off.  Use one of the promo codes below at Dreamhost:

333373609023
986060012222
593944613024
436480227416
972055933830

Note: Setting up BANS on Dreamhost requires a little bit of tweaking. If you’re not very familiar with setting up websites then I strongly suggest using HostGator for your hosting. They cost about the same and have pretty good compatibility with the BANS software.

For a little more info on how to generate passive income from sites, look at the 2nd half of this post (look for the section on Niche Sites).

For more info on the other online sources of income, check out my previous passive income updates.

Last month was a massacre for my oil and gold stocks. One of them, Tortoise Energy (TYY) was trading under $6/share for a brief period and yielding 36%!. Unfortunately, I missed the buying window and it’s now trading over $15 again. TYY is an American MLP (Master Lease Partnership); dividends are counted as return of principle making them tax-free!

Anyway, its time to wind up this post. I have 3 midterms next week.