What are your favorite passive income streams?

F

Free-quent Flyer

Blogger
For some reason it's fashionable among many travel hackers and personal finance hackers to think of things like residential real estate as "passive" income. I find that crazy. Whatever you think about the merits of residential real estate as an investment, it's anything but passive: occupancy, insurance, repairs, management fees, and other irregular expenses are constantly cropping up.

I have a much stricter definition of passive income: vehicles where your income is fixed/predictable month-to-month, and which require a maximum of one or two trivial, online upkeep activities per month.

So, here are a couple of my favorite passive income streams:
  • Recurring Serve loads. Even with Serve loads restricted to American Express cards, as long as you have a Fidelity Investment Rewards American Express, you can automate $1,000 in loads every month that require no maintenance except making a bill payment or transferring the money to a linked checking account. Profit: $20/month. Maintenance: 1 click/month.
  • Bank of America Better Balance Rewards. Make a single Amazon gift card purchase with the card each month, automate full payment, earn $25/quarter ($30 per quarter if deposited into BoA deposit account). Profit: $8.33-10/month (deposited quarterly). Maintenance: 1 purchase per statement cycle. Can hold as many cards as you can be approved for.
  • Mango savings accounts. Earn ~$24.34 per month when you have $5,000 deposited into a Mango savings account. Pay $3 per month for the prepaid account. Profit: $21.34/month. Maintenance: transfer money to prepaid account; spend.
What are your favorites (abiding by the fixed-income and minimal-maintenance restrictions)?
 
M

madage

Level 2 Member
  • Santander Extra20 Checking/Savings combo. Transfer $1,500 from Serve or RedBird to Santander checking, send $10 each to two CCs (automate), pull the $1,500 back to another account (automate) or pay the CCs used to load Serve/RedBird in the first place. Profit: $20/month (automate the Savings-to-Checking transfer for bill-pays).
 
Someone

Someone

Level 2 Member
Over the years there have been quite a few Fatwallet finance threads that started off like this one. The OP is mainly talking about relatively low-risk ways of earning a small passive income. Inevitably people start throwing out higher earning and riskier ideas, so I'll throw out a bunch of categories in hope that OP will clarify his focus:

- Bank deals (like above)
- CC Bonuses and MS (much more "work")
- Bonds (all flavors)
- Preferred stocks
- Real estate (using a mgt co)
- Common stocks/ETFs/Mutual Funds
- Annuities and other insurance products
- REITs, BDCs, MLPs
- Alternative direct investments (Bitcoins, startups)
- HYIP doublers (mostly ponzi schemes or outright scams)

If you want to keep it focused on low-risk, OP, could you let us know?

Personally, I like buy-and-hold on preferreds and reits for low-maintenance, though not exactly fixed income.

Set up is a little more involved, but you can also automate the requirements on a lot of reward checking accounts. I'm down to only a couple accounts now, but for a while I've been using a macro to do the required transactions by buying the right number of Amazon GCs. Of course the receiver (my wife) has to manually click the links in all those to add them to her account.

If you're looking for an RCA, MyConsumers(dot)org can get up to 5% APY if you also get and use their cc.
 
F

Free-quent Flyer

Blogger
@madage Good call, I forgot about Santander!

@Someone that Consumers account looks great, lot of maintenance but hard to argue with $1k/year interest on FDIC-insured account! As for your question, my goal with the thread was not low-risk but no-risk techniques, things where the passive income stream is part of the terms and conditions of a product, rather than depending in any way on market forces.
 
haserfauld

haserfauld

Level 2 Member
Passive income is simply income that is generated with little effort required to maintain it. Nowhere does it say it doesn't take any work. Comparing Serve loads and the like to owning/renting residential real estate is ridiculous, IMO. The closest thing would probably maximizing an uncapped 5x card, but even that's a lot of work and has limited life.

I live in Southern California. The condo I live in (renting) is worth approximately $300K (as of now), but I know my landlord bought it on a short sale 3 years ago for about $200K.

So assuming 20% down on $200K, he's got $40K tied up and a mortgage payment of ~$950/mo. Add in HoA fees, insurance, and he's out maybe $1200/mo all told. I pay him $1600/mo, so he's pocketing $400/mo in passive income. Not only that, but I'm buying his property for him, as the delta is going towards HoA fees and the mortgage. He could sell it today, take his $40K back out plus the ~$100K in capital gain, plus 3 years of ~$400/mo in passive income. You can have your $20 a month from Santander (and I do it too, so I'm not knocking it), but they are not at all comparable.

I think the problem is you're trying to redefine passive income as pajama income. If there's anything crazy going on in the passive income discussion with travel/personal finance people, it's lumping MS into the passive income category.
 
F

Free-quent Flyer

Blogger
I wasn't trying to redefine anything or step on any toes, I just wanted to clarify exactly what question I was asking ("what are your favorite risk-free, low-volatility, low-maintenance income streams?").

Real estate is a fine investment vehicle for people it works for. But the fact that your landlord has you as a faithful tenant and hasn't suffered any huge maintenance or market setbacks is just luck. Maybe smart luck, maybe dumb luck, either way it's just not related to the question I was asking (same with bonds, dividend-paying stocks, etc.).

I understand "passive income" may be a term of art in the FIRE and personal finance communities having to do with investment income versus wage income, I just don't consider investments that are illiquid or aren't guaranteed to retain their value, whether it's real estate or treasury bills, to be "passive" in a sense that's meaningful to me, although they may require no effort at all to hold.

As I like to say, quitting your job and buying rental property doesn't mean you've retired, you've just made "landlord" your job. And a quick glance at the thread here on filing taxes on rental income should suffice to show it's not a job that's particularly glamorous.
 
Mountainmanduy

Mountainmanduy

Level 2 Member
Free-quent Flyer said:
For some reason it's fashionable among many travel hackers and personal finance hackers to think of things like residential real estate as "passive" income. I find that crazy. Whatever you think about the merits of residential real estate as an investment, it's anything but passive: occupancy, insurance, repairs, management fees, and other irregular expenses are constantly cropping up.

I have a much stricter definition of passive income: vehicles where your income is fixed/predictable month-to-month, and which require a maximum of one or two trivial, online upkeep activities per month.

So, here are a couple of my favorite passive income streams:
  • Recurring Serve loads. Even with Serve loads restricted to American Express cards, as long as you have a Fidelity Investment Rewards American Express, you can automate $1,000 in loads every month that require no maintenance except making a bill payment or transferring the money to a linked checking account. Profit: $20/month. Maintenance: 1 click/month.
  • Bank of America Better Balance Rewards. Make a single Amazon gift card purchase with the card each month, automate full payment, earn $25/quarter ($30 per quarter if deposited into BoA deposit account). Profit: $8.33-10/month (deposited quarterly). Maintenance: 1 purchase per statement cycle. Can hold as many cards as you can be approved for.
  • Mango savings accounts. Earn ~$24.34 per month when you have $5,000 deposited into a Mango savings account. Pay $3 per month for the prepaid account. Profit: $21.34/month. Maintenance: transfer money to prepaid account; spend.
What are your favorites (abiding by the fixed-income and minimal-maintenance restrictions)?
Click to expand...
You could set up multiple mango accounts under your name as well. So it could be 42.68 a month from Mango.
 
haserfauld

haserfauld

Level 2 Member
Free-quent Flyer said:
I wasn't trying to redefine anything or step on any toes, I just wanted to clarify exactly what question I was asking ("what are your favorite risk-free, low-volatility, low-maintenance income streams?").
Click to expand...
Fair enough. I think we should just use the term pajama income then =)

I personally use RB, which is active, so no Serve for me.
I use Bing to supplement Amazon GCs every month.
 
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