There is so much content out there about passive income it is ridiculous – and most of it is applicable to the global market. But where is the Australian specific content?
How do you make passive income in Australia???
Now firstly I am going to be very specific and break down the passive income sources which as a fellow Australian I generate income through. These are very specific and some people would say they are the same however I disagree. Without further adieu….
Here it is!
Passive income sources Australia.
- Interest from high yield saving accounts – Generally most investors would already have this one covered off. If you are saving for a house deposit this is common option where investors would hold their cash. High yield saving accounts started to become more and more popular since the term deposit became less popular. The interest rates offered are on par with any bank returns. So save up some cash and put it into a high yield saving account. That is one passive income source ticked off.
- Dividends from shares – This is very easy and involves minimal capital to begin with. With as little as $500 (minimum marketable parcel of shares), you can invest in any shares on the ASX. There are however stocks which are not dividend paying, so if you are after passive income these may not be for you (capital gains are still nice though on the growth stocks). Generally listed companies pay semi annual dividends from around 2-5%. Once you invest, all you need to do is sit back and watch the dividends roll in. Now you have two passive income sources.
- Dividends from Exchange Traded Funds (ETF’s) – Similar to the shares listed above, you can buy ETF’s on the ASX for as little as $500 (minimum marketable parcel of shares). ETF’s are a marketable security that generally tracks a stock index. They are similar to mutual funds however instead of having to sign up to the mutual fund and fill in all the paperwork, you can easily buy and sell units on the ASX. Investors like ETF’s as they are highly liquid, very transparent and can have minimal management fee’s. An example of a popular ETF is VAS.ASX, which seeks to track the S&P/ASX 300 Index. After investing in an ETF you now have three sources of passive income.
- Dividends from Listed Investment Companies (LIC’s) – LIC’s are an Australian initiative similar to an investment trust or closed end funds where the shares are tradable on the ASX. A common LIC on the ASX is WAM.ASX. Once you invest into the LIC with the minimum parcel of shares of $500 you can sit back and watch the semi annual dividends roll in. This will generate your fourth source of passive income.
- Interest from term deposits ($1,000 minimum) – a Term deposit is where an investor put an amount into a bank for a specified period of time. Upon maturity the bank gives the investor back the cash (or rolls it automatically into another term deposit). Maturity lengths of terms deposits vary and so do the rates offered. Once you set up a term deposit, this will be your fifth source of passive income. Click here for my complete guide on term deposits.
- Coupons from government bonds – government bonds are virtually risk free, at least in Australia they are. To acquire a government bond all you need to do is jump on the ASX and look up Exchange-traded AGB’s. There is a multitude of coupon rates, maturity dates etc. which can be obtained. For example GSBE19 is an ABG that can be acquired, this has a coupon rate of 5.25% and a maturity date of 15 March 2019. The coupon is paid semi-annually in arrears on the face value. Minimum denominations are $1,000. Once you set up your government bond, this will be your sixth source of passive income.
- Sales from Red Bubble online print demand – For those creative artists out there, you can upload a piece of artwork on to this website and it will be publicly available. Customers can jump on the website and see your design on a t-shirt and then they can buy it. There is a standard margin, which is the default around 20% on a t-shirt. The design remains yours and you just get a monthly payment. Click hereto read my analysis of how to generate income through RedBubble. After spend a little time setting up some designs on RedBubble you will be able to generate a monthly payment into your paypal account and that will be your seventh passive income source.
- Interest from True Pillars P2P facilities – P2P stands for peer to peer. This is a modern take on giving loans to customers who want the money for various reasons. You can jump on the website, sign up, transfer funds via BPay and then set up the instructions on the investments. An example of a customer is a real estate service business acquiring furniture to furnish properties for sale. You can participate a portion of the total loan required i.e. $40K over 3 years. After the 3-year period is over, you can either roll the money into another loan or withdraw the money.
- Creating an eBook – Self-publishing on Amazon is a very popular creative outlet. eBooks are generally suited to those bloggers and youtubers out there who have a short book of content available. For instance say you wanted to right a book on how to generate passive income – you would do you research, write some content around 50 pages, get it reviewed and checked, a cover page and formatted and then it is ready to be uploaded online for sale. You can charge what you want for a book, whether it is $5 or $500 per book sale. The key here is you need to know your shit; no one is going to be buying copies of eBooks if you are ill informed. You also need to ensure you are creating value for the customer. They don’t want to be scammed into spending their money and for the money they paid to not be worth the product they have acquired.
- Invest in a Rental property – Purchasing a rental property is not something people can just go out there and do without much saving. You need to save up a deposit that could take you months or years to do. Once you have your deposit and acquire a property, the weekly rent paid by the tenants less any loan repayments will be passive income. Click here for my review of real estate investing. There may be other costs involved such as maintenance etc. that will need to be factored into the budgets.
There you are 10 Australian passive income streams which you can generate fairly easily. If you want a more comprehensive list then head over to here where I discuss 30 passive income ideas.
Disclaimer – Please note this is not financial advice and please seek professional advice before making any investment decisions.
Want to read more?
If you are like me and want to read all there is one generation of passive income, then follow this link through to my Top 30 Passive Income Ideas. Here I list out similar ideas to the one above, and go into detail explaining how to generate passive income through them.
I also have my Top 10 Passive Income Book list that I save you hours and hours of reading and take the very best lessons I learnt from each book.