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9 Passive Income Ideas - How I Make $27k per Week

2021-04-15 · Long video (solo, talking head or whiteboard) · Ali · recording, 30:01 · watch on YouTube

Topic: Business and entrepreneurship (also: Money and investing, YouTube, writing online and creators) · mode: List of tips or lessons · tags: His own numbers, His own products discussed, Family, Sponsor segment present

Ali rates nine ways to make passive income (index-fund investing, a YouTube channel, a podcast, affiliate marketing, digital products, online courses, a paid membership, an automated business and an app) on how hard each is to start, to reach $100 a month and to maintain, with his own income from each; he says no income is truly passive and get-rich-quick schemes do not exist.

What is said

The parts of the video and what is said in each (★ — how much it matters to the video).

00:00:00 — What passive income means, and why get-rich-quick schemes do not exist

  • ★★★ Ali says his nine passive-income sources generate around $27,000 a week for his business, with varying degrees of passiveness, after about eight years of building them up. — 00:00:00 · passive income

  • ★★★ Ali says there is really no such thing as passive income, since no money comes from doing nothing; by passive income he means money not directly tied to your time, such as royalties from a published book. — 00:00:29 · passive income

    “money that is not directly tied to our time”

  • ★★★ Passive income always takes a very long time to get going, Ali says: there is no way to get rich quick. — 00:00:58 · passive income

  • ★★ Ali warns that ads promising quick riches and commenters pretending to be him, offering crypto schemes over WhatsApp, are all scams. — 00:00:58

  • ★★★ Ali sees money as just a medium for exchanging value: the only way to make money is to provide value, and passive income means providing value in a way not directly tied to your time. — 00:01:27 · first law of making money, passive income

    “money is just a medium for exchanging value”

  • ★★ Over the years Ali has had many messages from people who signed up to get-rich-quick crypto, gambling or online-poker schemes; he says none of them ever work and people always lose money. — 00:01:27

00:01:56 — Plug for his new Skillshare class on side hustles

00:02:20 — Idea one: investing in stocks and shares

  • ★★ Ali calls investing in stocks the easiest way to make any kind of passive income, since savings left in a savings account earning 0.01% interest do little for you. — 00:02:28 · passive income
  • ★★★ For most beginners Ali recommends what he does himself, with the caveat that it is not financial advice: basically all his money in stocks and shares is in index funds. — 00:02:28
  • ★★ Ali explains that money invested in an S&P 500 index fund is spread over the 500 biggest US companies, weighted by size, such as about 2% each in Apple, Facebook, Google and Microsoft. — 00:03:13 · Apple, Facebook, Google
  • ★★ To start investing, Ali says, sign up to a stockbroker: Webull in the US, Freetrade or Vanguard in the UK, or search "best stockbroker platform" with your country's name; he rates starting one out of five. — 00:03:42
  • ★★ Ali says the S&P 500 rose by about 50% in the 12 months from 2020 to 2021, despite COVID. — 00:03:42
  • ★★ Averaged over the last 30 to 50 years, Ali says, the S&P 500 has returned roughly 10% a year, not adjusted for inflation. — 00:04:27
  • ★★ At a 10% average return, Ali calculates, making $100 a month from stocks needs around $12,000 invested in the S&P 500, giving $1,200 a year. — 00:04:57
  • ★★ With compounding at that 10% average, Ali says, $7,500 left in the S&P 500 for five years, or $5,000 left for ten years, would then make about $100 a month. — 00:04:57
  • ★★ Money put into a stock-market index fund, Ali says, should be money you will not need to touch for at least five to ten years. — 00:05:26
  • ★★ Ali rates reaching $100 a month from stocks three out of five: in the UK or US, with a median salary of around $50,000, $10,000 of savings is not that hard, depending on your circumstances. — 00:05:55
  • ★★ Ali rates maintaining stock-market income one out of five: once the money is in, you set it and forget it. — 00:06:24
  • ★★★ Ali's stocks and shares portfolio, invested since 2015 and mostly in the S&P 500 index fund, is worth around $350,000; at a rough 10% a year that is about $682 a week of passive income. — 00:06:24 · passive income

00:07:07 — Idea two: starting a YouTube channel

  • ★★ Ali rates starting a YouTube channel one out of five: you create a channel and upload videos filmed on your phone; making good videos, which is how you grow, is much harder. — 00:07:07
  • ★★ To be eligible for monetisation on YouTube you need 1,000 subscribers and 4,000 hours of watch time, Ali says, and on average it takes ninety-something videos to reach 1,000 subscribers. — 00:07:41
  • ★★ It took Ali six months and 52 videos to get his first 1,000 subscribers. — 00:07:41
  • ★★ Ali puts average YouTube revenue at about $2 per thousand views, though it varies massively, so $100 a month needs 50,000 views. — 00:08:10
  • ★★ As a rough rule, Ali says, a channel's average views per video equal about 20% of its subscribers, so at one video a week and with no evergreen content, $100 a month would take around 60,000 subscribers. — 00:08:39
  • ★★ In reality you make $100 a month well before 60,000 subscribers, Ali says: he was making $100 a month at around 10,000 subscribers. (hedged) — 00:09:09
  • ★★ Ali rates making $100 a month from YouTube four out of five: it is very easy to start but very hard to make compelling videos. — 00:09:09
  • ★★ Starting a YouTube channel is totally worth it, Ali says: a great skillset, really fun, with people to meet across the internet and the chance to learn talking to a camera, filming and editing. — 00:09:09
  • ★★ Ali rates maintaining YouTube income two out of five: getting the first 1,000 subscribers is much harder than keeping a channel growing, because by then you have landed on a formula that works. — 00:09:38
  • ★★ Ali made 70 videos before he started earning any money from YouTube AdSense. — 00:09:38
  • ★★★ Ali's YouTube channel makes about $12,000 a month, about $3,000 a week, from AdSense, most of it from older videos rather than new uploads. — 00:10:07

00:10:36 — Idea three: starting a podcast

  • ★★ Starting a podcast is generally easier than starting a YouTube channel, Ali says, but growing one is much harder because podcasts have no algorithm helping them grow; many grow through a YouTube channel. — 00:10:36
  • ★★ To start a podcast, Ali says, go on anchor.fm: you can use just your phone and pass it around between you and your friends. — 00:10:36
  • ★★ Ali has recently invested as an angel investor in Riverside, which he says makes it very easy to record remote podcast interviews. — 00:11:05
  • ★★ Podcasters make money through sponsorships and brand deals, Ali says, since there is no YouTube AdSense for podcasts. — 00:11:05
  • ★★ At $25 per 1,000 listens for a 60-second ad, Ali calculates, a weekly podcast needs around 1,000 downloads per episode to make $100 a month. — 00:11:35
  • ★★ Only the top 20% of podcasts in the world get more than 1,000 downloads per episode on average, Ali says, so 1,000 podcast downloads are much harder to get than 1,000 YouTube views. — 00:12:04
  • ★★ Ali's housemate Sheen started her own podcast around five months ago and averages about 400 to 500 downloads per episode. — 00:12:04 · Sheen
  • ★★ Ali is pretty sure that within six months Sheen, who has just launched her podcast's second season and started posting about it on YouTube, will easily make $100 a month from it. — 00:12:33 · Sheen
  • ★★ Podcast income is not really passive, Ali says: you must keep making episodes because the brand deals depend on them, though once you find a formula that works it is easier to keep going. — 00:13:02
  • ★★★ Not Overthinking, the podcast of Ali and his brother, makes around $625 a week from brand deals and its membership. — 00:13:02 · Not Overthinking, Taimur Abdaal

00:13:32 — Idea four: becoming an affiliate marketer

  • ★★ Affiliate marketing means selling other people's products for a percentage of the sales; Ali cites a figure that 48% of affiliate marketers worldwide earn $20,000 a year. (hedged) — 00:13:32
  • ★★ To start affiliate marketing, which he rates two out of five, Ali says sign up to a programme such as Amazon Associates and post your links on your website or social media. — 00:14:01 · Amazon
  • ★★ For a $50 product at 5% commission, Ali calculates, a 1% conversion rate needs 8,000 visits a month to make $100; Amazon pays only about 2 or 3%. — 00:14:30 · Amazon
  • ★★ Doing well in affiliate marketing, Ali says, takes a lot of upfront effort to build an audience or enough domain authority to get organic traffic. — 00:14:30
  • ★★ Skillshare pays $7 in affiliate commission for each referred free-trial sign-up, Ali says, so $100 a month takes 15 sign-ups a month, which is not that hard with an audience. — 00:14:59
  • ★★★ Ali's way to build an audience: create useful content, put it on the internet for free once a week and keep going for at least two years; he guarantees an audience and some income, but says almost no one sticks to it that long. — 00:15:58
  • ★★ Once affiliate income starts, Ali says, it is quite easy to maintain, especially with evergreen content that does not rely on current affairs or the latest news. — 00:15:58
  • ★★★ Ali's business makes about $11,000 a month (about $2,750 a week) in Skillshare affiliate income, and about $450 a month from the Amazon UK store plus a little more from the US and Canada. — 00:16:27 · Amazon

00:16:50 — Idea five: selling a digital product

  • ★★ Digital products such as an ebook, a download or an app are made once and sold many times, Ali says, usually with no cost for each sale. — 00:16:56
  • ★★ Traf, whom Ali follows on Twitter, sold an iOS 14 icon set for about $30 a few months ago and made about $300,000 in a few weeks. (hedged) — 00:16:56
  • ★★ Ali's YouTuber friend Oliur says he has made $700,000 from selling his Tumblr website themes since 2014. — 00:17:25
  • ★★★ The way to get people to pay you, Ali says, is to identify a problem they have, solve it and charge for it; do those three things and $100 a month from a digital product is very doable. — 00:18:08
  • ★★ The market for digital products such as ebooks, icon sets, apps and website themes is so competitive, Ali says, that you have to be genuinely really good to get people to buy. — 00:18:08

00:18:37 — Idea six: creating an online course

  • ★ Ali rates maintaining a digital product two out of five: it is much easier to maintain a product than to create it. — 00:18:37
  • ★★ Ali rates starting an online course two out of five: it is not that hard, though you need to know video and could film it on your phone; to make $100 a month the course has to be actually good. — 00:19:07

00:19:36 — Skillshare sponsor read

00:20:34 — Online courses on Skillshare and his course income

  • ★★ Skillshare is a great place to teach, Ali says, because you can teach without charging directly: like Netflix, the end user does not pay for each product. — 00:20:34
  • ★★ From his own figures over about two years, Ali says $100 a month on Skillshare needs about 1,700 minutes (28 hours) of watch time, such as 28 premium students a month taking a one-hour class. — 00:21:04
  • ★★ Skillshare has its own algorithm, Ali says, so a genuinely good class can rise to the top and get recommended even if its teacher has no audience. — 00:21:33
  • ★★★ If you have a valuable skill to teach, Ali thinks courses are one of the best ways to make passive income: they are fun to create and need few technical skills, as you can put them on Skillshare. — 00:22:31 · passive income

00:23:18 — Idea seven: a paid membership or community

  • ★★★ Ali's Skillshare classes make about $60,000 a month, around $15,000 a week and the bulk of his business's $27,000 a week; once a class is made he only replies to comments and occasionally plugs it. — 00:23:18 · Skillshare classes
  • ★★ A paid membership or community, Ali says, is generally a bad idea unless you already have an audience. — 00:23:18
  • ★★ Hannah Witton, with around 600,000 YouTube subscribers, has 626 patrons on Patreon, making £2,000 to £5,000 a month: about one in a thousand of her subscribers. — 00:24:15
  • ★★ Judging by Hannah Witton's and Matt D'Avella's Patreons, Ali says you need a big audience to make significant money from Patreon. — 00:24:15 · Matt D'Avella
  • ★★ Ali's friend Anne-Laure Le Cunff started Ness Labs in summer 2019 with no audience, wrote 100 blog posts in 100 working days, launched a $5-a-month membership in March 2020 and last month (March 2021) passed $100,000 in annual recurring revenue. (hedged) — 00:24:44
  • ★★ Ali rates making $100 a month from a membership four out of five: starting one on a platform like Patreon is easy, but you must provide $100 a month worth of value. — 00:25:13
  • ★★★ The Part-Time YouTuber Inner Circle, the academy's alumni membership, makes roughly $2,800 a week; it is not very passive, with three or four events a week plus co-working on Zoom twice a day. — 00:25:42 · Part-Time YouTuber Academy

00:26:11 — Idea eight: automating a goods or services business

  • ★★ Ali's eighth idea, which Tim Ferriss writes about in The 4-Hour Workweek, is a business selling goods or services whose work you delegate, outsource or automate so the income becomes reasonably passive. — 00:26:11 · Tim Ferriss, The 4-Hour Workweek
  • ★★ Oliur's Shopify store, selling his vegan-leather desk accessories and bags, took a lot of work to set up but is now run by a team of three, though he still spends about 10 hours a week on it. — 00:26:41

00:27:39 — Idea nine: building an app or website, and sign-off

  • ★★ Ali rates making $100 a month from a goods or services business four out of five: you have to provide value, which is hard and not as easy as putting money on a stocks platform. — 00:27:39
  • ★★ Ali was recently interviewed on the Indie Hackers Podcast, which he has listened to for years, about starting an online course like the Part-Time YouTuber Academy. — 00:28:16 · Part-Time YouTuber Academy
  • ★★★ Ali and his brother coded BMAT Ninja and UKCAT Ninja, question banks for medical school applicants, from scratch in summer 2015; BMAT Ninja made about $10,000 in year one and around $25,000 in its fifth year, 2020. (hedged) — 00:28:45 · Taimur Abdaal
  • ★★ Ali rates starting an app or software business five out of five: making an app is quite hard and mostly needs you to know how to code. — 00:28:45
  • ★★ Making an app is easy enough, Ali says, but getting people to pay for it is an entirely different kettle of fish; he rates reaching $100 a month four out of five. — 00:29:14

Threads in this video

Where the stories that moved here went next

Mentioned

Central: affiliate marketing · index fund · passive income · S&P 500

Also: People: Anne-Laure Le Cunff · Hannah Witton · Matt D'Avella · Oliur · Sheen · Taimur Abdaal · Tim Ferriss · Traf

Projects: BMAT Ninja (website) · Inner Circle · Not Overthinking · Part-Time YouTuber Academy · Skillshare classes · UKCAT Ninja

Works: Indie Hackers podcast · Productivity for Creators: How to Start a Successful Side Hustle · The 4-Hour Workweek

Organizations: Amazon · Apple · Facebook · Google · Indie Hackers · Microsoft · Ness Labs · Vanguard

Concepts: compounding · first law of making money · watch time

Places: India

Products: Anchor · Freetrade · Patreon · Riverside · Webull · YouTube AdSense

Also centred on affiliate marketing: How Much Money I Earn in a Week as a Doctor & YouTuber · How Much Money I Earn as a Doctor + YouTuber

Also centred on index fund: How to Invest for Beginners · Revealing ALL My Investments at 27

Also centred on S&P 500: How to Invest for Beginners · Revealing ALL My Investments at 27

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