Passive Income Ideas: Ways to grow your limited capital when you don’t have so much money

A lot of people don’t come from privileged backgrounds, so one of the main reasons they often cite for not investing in a passive income ideas are due to a lack of capital or limited money. Fair enough. But do you know that there are some passive income ideas that don’t need a lot of capital to get started? Of course, the more capital you have, the faster you potentially profit and learn from your passive income idea venture. But what are some examples of these ideas? I list a couple of them below for you to research and take action…

  1. Thrift Store Flipping

Thrift store flipping is one of the passive income ideas you can start exploring as most of the prices in the charity shops are at throwaway prices. In my previous blog post, “What I have tried for Passive Income: Thrift Store Flipping” I listed down products I have retrieved from my country’s local thrift store and resell them at good margins. A small budget of $50 for buying the goods from the charity shops is good for those with very limited budgets like students. It would be better if you had $100 -$500 for business capital. You can create a free listing on Ebay or Carousell to resell these products at market prices. If you had more capital, I strongly recommend subscribing to Terapeak, an Ebay research tool which you can access the Sell-Through Rate of a particular product you are researching to sell online. Ideally, you would want a product to have a high Sell-Through Rate of 80% – 90% in order to have a fast sale. Avoid products whose Sell-Through Rate is 50% or below as the likelihood of them being sold is much lower.

Pros of Thrift Store Flipping:

  1. Affordable capital outlay
  2. Good potential margins of more than 100%

Cons of Thrift Store Flipping:

  1. Need time and effort to sift through stuff in the shops and research on Terapeak
  2. Items bought may not be sold quickly or at all if not using Terapeak
  3. Lowball buyers may negotiate price of products at much reduced margins

 

2. Affiliate Marketing

Affiliate marketing can be another affordable means of making a side income apart from your day job. It involves promoting a product or service using an affiliate link from the vendor and when your prospect clicks on the link and buys the product, you get a commission. The initial work happens when you research the type of product or service you are going to promote for a company and later the design of a website or blog to promote the product. You are going to need search engine optimalization (SEO) to drive organic traffic into your website or blog. If you have additional capital, you can use paid advertising to drive traffic as well. But since we are talking about people with limited means, this article focuses on organic traffic. It is slow but free compared to paid traffic.

In my article of “Amazon FBA: Dan Vasiljevs Amazon Freedom Course Review“, I included an affiliate link for doing a review on the course that I purchased last year December. I wasn’t seriously expecting anyone to buy the course from my review since my honest review actually includes problems I encountered in the course. But I was pleasantly surprised when last week I checked my email and I was informed that someone actually purchased the course through the link. And the best part of it was that I did nothing to actively promote my blog to persuade people to buy. Technically, I left my blog to rot since this year March. The organic traffic just came and took action. The commission actually paid for this year’s hosting fees. Oh well, I guess passive income through affiliate marketing is possible…

Pros of Affiliate Marketing:

  1. Affordable capital outlay (to start a WordPress website, the personal plan is $5/mth, which is $60/yr)
  2. Once the initial work of product research and article writing is done, let the Internet do its magic (aka passive income).

Cons of Affiliate Marketing:

  1. It takes time to attract organic traffic into your website or blog if you are not using paid traffic (a few months to at least a year)
  2. Volatile earnings (the income you earn this month may vary next month)
  3. High competition from other affiliates since the barrier of entry in this industry is low (meaning lesser take-home profits)

 

3. Dropshipping E-commerce store like Shopify

Want to start an E-commerce store but don’t have so much capital? Shopify partners with Oberlo to offer entrepreneurs an online store with products dropshipped from AliExpress. Best of all, in the starter pack, using Oberlo’s service is free for the newbie businessman or woman. For Shopify’s budget conscious, the Lite plan costs just $9/mth, which is $108/yr. If you have more starting capital, you may consider choosing the Basic Shopify plan, which costs $29/mth ($348/yr). Shopify doesn’t leave the beginner entrepreneur on his own to figure how to make a profit – they have how-to guides on their website to teach you how to do product research, competitors’ analysis and more. For example, here’s the link on how to do product research on Shopify.

Pros of Shopify:

  1. Relatively low capital cost to start an E-commerce business ($9/mth for the Lite plan)
  2. No capital risk for purchasing inventory as products are dropshipped from AliExpress

Cons of Shopify:

  1. Compared to other passive income ideas, significant time and effort is needed to research products and suppliers, create product listings and marketing the products on social media like Facebook, twitter and Instagram
  2. Margins from AliExpress are lower as other risk-averse entrepreneurs are also using the same suppliers
  3. If suppliers from AliExpress do a poor job of manufacturing, packing and shipping the products to your customers, you get the blame as you are responsible for the quality of the products your customers purchase

 

4. Domain Flipping

Domain names are the Internet equivalent of brick-and-mortar real estate. Buying a premium domain name and then reselling it to an end-user or another domain investor (aka domainer) can yield potentially lucrative profits of more than 100% ROI (return on investment). Unlike traditional real estate, domain names are comparatively much cheaper to acquire and flip. The trick is getting a good premium domain and finding the right buyer. In my previous post,”Domain Flipping: Review of Super Easy Domain Flipping Profits – Easy for Newbies by Angshuman Dutta (Udemy Course)“, I mentioned a method where you can buy premium dictionary-word domains at a low cost. This is through Wish Canvas. After that, you need to hold the domains for at least 1 year before you flip them.

Pros of Domain Flipping:

  1. Relatively low cost compared to other passive income ideas like property flipping and stock market investing
  2. If flipped to the right buyer, the ROI are lucrative (more than 100%)
  3. Not much work and effort needed for this business compared to other passive income ideas like an E-commerce business through Shopify and Amazon FBA (ideal for busy people)

Cons of Domain Flipping:

  1. Like property, domains are relatively illiquid investments compared to those in the stock market (need to take some time to cash out)
  2. Domains need to be renewed yearly (or lose all of your investment when they expire)

5. Stock Market Investing

What?!?! You might say. I thought stock market investing is for the rich? I can hear you mumble inside your head. Before you close your attention to this, allow me to hear me out. It is true that in stock market investing, you need money to make money. But it is also true that the earlier you start investing, the less capital you need due to compounding interest. If you ask me honestly, I also don’t have a million dollar investment portfolio to passively spew out obscene amounts of cash for me to enjoy life to the fullest (and attract beautiful young ladies to be my date, okay just joking).

Pros of Stock Market Investing:

  1. A conventional way to make passive income (you are able to find more help and resources in this area of passive income than other ideas)
  2. After the initial research, stock market investing can be a pretty passive activity (ideal for busy people)
  3. Stock market investments are very liquid (you can cash out if you feel your investments have turned sour)

Cons of Stock Market Investing:
1. You need a significant amount of investment capital to retire on your portfolio (minimum 6 figures)

2. If you are relying on compounding interest to grow your capital, you need to wait for a very long time (about 20 – 40 years)

3. There is risk in losing your money in investments if you invest in risky assets like options, futures and stock.

4. Returns are very little compared to other passive income ideas if you are a moderate to low risk taker (long term average annualized return for stocks [the riskest asset class] are 9% p.a.)

These are some of the low-cost passive income ideas I have listed for your research. Which passive income idea are you most interested in? Come share and comment below!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s