Ask HN: Best Passive Income Method?

[NinjaX]

I am learning Python. I want to create some passive income streams while learning Python. I have free time available around weekends.I am working on few ideas of my own, but those will not necessarily generate income.

Which method of the following would you recommend?

ebook in a niche technical topic SaaS product that solves a niche issue mobile or web based game

[ksahin]

There is no "best" method for passive income. And I don't think "passive" income really is that passive either.

But, my experience: I made a really niche eBook, about Web scraping with Java: https://www.javawebscrapinghandbook.com

Writing the book was the easy part, I've been doing scraping for years. The most challenging part was ... marketing of course!

I wrote 6/7 blog posts about this subject. In each blog post, there is a paragraph that talks about the book. I shared those blog post to my mailing list and on Reddit/HN (I didn't get any upvotes on HN...).

Now I have ~10 000 visits a month on the blog, 80% comes from search engines. Out of these 10k visits, about 200 visit the book sales page, and I sell 10-15 copies a month for ~ $400-$500.

It is not that passive because I have to fight to stay on the first 3 links for terms like "java web scraping" so this mean regularly upgrading my content etc. If I don't do this, my rank will slowly decrease on SERP and the sales too.

I was 24 when I wrote the book, I'm not even a native English speaker, you can do it :)

If you go this way, test your idea by blogging around a subject, and you will quickly see if people are interested by this subject or not.

Good luck!

[cellis]

I think there's only one way to earn passive income reliably at this point. And it's not going to be easy ( otherwise, everyone on HN would already be doing it! ). Here it is:

  1) Learn how to interview for top tier companies in your free time. 
  2) Interview at those companies. 
  3) Work at those companies really hard, make $300k/yr. 
  4) Work for 10 years, save 200k/yr. 
  5) Invest in ? 
  6) You've now achieved purely passive income on a $2million principle. 

I haven't done it, but I know people who have.

[cellis]

And please, for the love of all that is pure, DO NOT try to build a game hoping to make money. ~ former game dev

[robertothais]

Taking into account average market returns[1] in a 60/40 stock/bond portfolio, one would only need a bit more than 7 years to reach $2 million saving $200k/yr.

In practice though, the expected return on such a short timeframe would be quite uncertain given stock market volatility.

[1] https://personal.vanguard.com/us/insights/saving-investing/m...

[lhorie]

If you work at a big bay area tech company, between a third to half of those 300k/yr are actually in equity (stocks), so step 5 is sort of already done for you. There's also ESPP that lets one buy even more stock at a discount, which is basically free money.

However, taxes and cost of living are also incredibly high, so realistically you're probably not going to be saving 200k/yr (though you could probably still save a cool 100k/yr without much trouble).

[napsterbr]

> web based game

I'll share my own experience here, which is: compared to SaaS products, games are easily 100x more work for 100x less guarantees of income. Maybe it has the potential of going viral and earning you 100x more income, but still does not make up for the risk.

Of course this is just my personal experience on the topic. If income were my main motivator, I'd focus on SaaS instead of games.

Good luck!

[ineedasername]

Sure, all else being equal this may be true. But as with most things, it depends on quality & implementation of the idea. If the OP has a solid game idea that they're even a little passionate about, that may count for a lot more than grasping for a niche SaaS product that might have an audience. Although if the SaaS projecy were itself to go viral, there's probably a much larger upside than viral indie game.

[nyxtom]

The best way I've found to have some "passive income" is to manage my finances better.

- Use a savings account that is completely disconnected from your checking account bank. Bonus if you find a high yield savings like Synchrony for instance (2.25%)

- Use a method for separating what you spend from what you pay monthly on mostly predictable billing amounts (bills that end up being the same each month). I have 2 checking accounts, one for spending and one for billing. I use schwab banking. The main banks like WF and others all charge fees. Fees that could be used for other things like gas or other small monthly expenses.

- Automate everything (savings, bills, spending)

- Apply financial minimalism where possible. Minimize unnecessary spending, increase spending on things you actually like, set goals associated with this and fearsetting for things that you know you probably shouldn't be spending money on. (Perceived net quality of life should improve)

- Take advantage of automated investment portfolio offerings (or do the research yourself and invest).

[derekp7]

One route to success is to take some other domain that you have expertise in, that most software devs aren't familiar with. Come up with an application that solves a problem in that domain, then market to those people.

Here's a simple example (this probably won't make any money, but it is good for illustrative purposes). If you look at an egg carton, there is a sell by date on there, but it doesn't list the date that the eggs were laid. Well it does, but not directly. There is a number on it which is the day number of the year (1 - 365), that represents when the eggs were laid.

So come up with an app, called "fresheggs", that just converts this number to a date, and will tell you how many days old these eggs are. Add location info to the app, and put in ads at the bottom that are coupons for the store you are in. You get paid when a user clicks on and uses that coupon.

[newsoul2019]

Here is a free business idea! I ran into a niche problem the other day.

If you have a family with X family members, and each person has a loyalty number for Y airlines and Z hotels, that starts to become a lot to keep track of. Wouldn't it be great to see all of your loyalty accounts on a single page? Then you could have cool graphs, growth rates over time, etc. Also a tool to make sure that all family members are getting credit for all of their miles/stays.

[AlchemistCamp]

Almost no income is "passive". Like a farming plot, it has a certain momentum, but over time it shrinks and becomes less productive if you don't continue tending it.

Maybe you can build things that you yourself want to use but struggle to find. At the very least they'll help you, but there's a good chance you'll build an audience and maybe a base of customers if you build in public.

[Jefro118]

An ebook will likely be much closer to passive income than a SaaS product. Neither are passive though - if you want to have a consistent stream of income you will have to continue doing work. And you will certainly have to do a fair amount of work to get it off the ground (this includes marketing and/or sales, not just making).

For SaaS, having a product that you can put on third-party marketplace, e.g. Shopify apps, GitHub apps, etc. might be your best shot at reducing ongoing work since the marketplace itself will do some of the marketing for you. You still have to do lots of work though.

Mobile or web based game will likely take a lot of work and return very little.

Aggregating useful content and selling access to it is one relatively quick way to go. E.g. there are bunch of people who have just aggregated contact info of press or VCs and then sold access to it. This will take a fair bit of work to aggregate all the info but it's still relatively quick (certainly compared to SaaS) and probably won't require much ongoing customer support given how simple the end product would be.

Ultimately if you are determined to find something which is "passive" you are more likely then not going to fail. By all means think about how you can compress the time and effort required and reduce the amount of ongoing labour by you, but starting from "I want passive income" isn't going to work.

[ghaff]

I'm not sure I'd ever recommend an ebook as a good passive income method. There are good reasons to write a book, including establishing credibility that leads to more revenue for consulting etc. But you're probably not going to make a lot of money from it.

[ineedasername]

Keep in mind that if there were an easy &/or universal solution to this question, then everyone would be doing it. As such, many of the "this worked for me" answers will probably represent some amount of survivor bias.

[thorwasdfasdf]

There are many thousands of indie developers and companies who have tried and failed. Even the world class gaming companies have had an extremely hard time producing games that make money, these days. Sure, there was a time when making money in games was easy: that was before 2011. If you have a time machine and can go back to that time, then you could make a lot of money. Barring that, I would say it's nearly impossible.

Stick to SaaS, go into a field that's completely unsexy and solve a problem. It's still insanely difficult, but your odds might be slightly better than winning the lottery.

[jawns]

One way to think of passive income is investing your time up front to develop a product for which you do not receive all of your compensation right away.

At my day job, I put in 40 hours of work and then get paid in full for those 40 hours shortly afterward.

In contrast, as an author of science-themed gift books, I invest a lot of time up front to research and write the books and a moderate amount of time to market them. And then the books have the potential to bring in recurring income over some indeterminate time horizon.

In one sense, getting royalty checks every six months for a book I wrote years ago feels passive.

On the other hand, if you have the choice between getting paid in full right away or getting paid over the course of many years, wouldn't you rather get paid quicker?

Ask lottery winners. Most choose the immediate lump-sum payment, even if the 30-year annuity is considerably larger.

So if you're looking for passive-income opportunities, please remember to take into account opportunity cost. Could you be doing something that gets you paid in full right away?

[DVassallo]

For me, the best form of passive income is income you get from an activity you would do anyway (on your own terms) even if you didn’t have to work anymore. I know, this does not exactly satisfy the passive definition, but it is probably the most attainable form.

[joeax]

My 0.000002 BTC: I've tried several side projects over the years, a productivity SaaS app, a dating site, monetizing an open source project. I eventually gave up on those and wrote a sci-fi novel that generated a sizable income stream for a while.

I will say that it's a crowded space and eventually your income will peter out unless you spend big on advertising. But if you say, crank out one novel per year, you could potentially achieve economies of scale and generate a sizable (salary-replacing) income stream.

[jammygit]

I never thought I’d read a software developer recommending writing as the path to riches.

Could you share more about getting your book published? I’ve written 1.5 novels but never tried to get anything published. What was the process like?

[joss82]

As a moderately successful saas founder, I'd advise you to take a series of increasingly better paid freelance gigs, then invest the surplus into dividend stocks.

A successful saas is a lot of work and not passive at all.

Good luck! It's lots of fun either way :)

[0xEFF]

None of the options are passive income. Passive income are from things like dividends, rents, and royalties. The closest item on the list is the ebook, but even then you'd be more in the role of a publisher which is very active on the marketing side.

[bshoemaker]

Save aggressively, invest in index funds. This is by far the most reliable, simple, profitable strategy you can implement.

[rpedela]

Games, books, and other entertainment forms only provide passive income if they are hits, and it is hard, if not impossible, to predict a hit. Tools are a much better path because you don't need to guess if people will like it since there is an obvious market. You just need to execute well and sell which is also hard, but not as hard as coming up with a hit.

In other words, more like Stripe and less like Angry Birds.

[deadmetheny]

There's no such thing. You either do work up-front and hope it sells, or you continually work on something to improve it and market it. Anyone telling you otherwise is selling you something, doesn't have any experience in what they're saying, or got extremely lucky (e.g. the bingo card guy)

[thrower123]

It's not exactly passive, but real-estate is where you want to go for a reliable, substantial, secondary income stream. Obviously, if you are in an insane market, it's difficult to get your foot in the door, but there are some options. One can typically get an FHA loan for multi-family properties of four units or less, if you are going to be occupying one of the units, which allows you to get in the substantially lower down-payment. Renting the other units will cover the bulk of the mortgage, and you also have a roof over your own head, and you should have enough slack to make extra payments. PMI is kind of a pain, but unless things do go over a cliff, within a couple of years you can build enough equity, and valuations will go up enough that you can refinance out of FHA.

[jfk13]

My guess (not having tried any of these three!) is that the best chance of achieving some kind of income would be the SaaS product, assuming you really can find a niche issue and provide (and market) a solution to it.

For an ebook on a technical topic: it may be pretty difficult to write something so compelling that enough people will be willing to pay money for it. You'll be competing against what people can find free with Google, on stackexchange, etc.

And mobile or web games: there are so many of them out there, do you really think you can stand out from the crowd? I bet the proportion that actually make a worthwhile amount of money is pretty small.

[thecolorblue]

I would vote for the Saas product but I am bias because that is what I have chosen for myself. Find a community first and then create something for them. If they need an ebook, write an ebook; if they need a game, make a game.