Now generally there are two different types of incomes that people have in their lives the first type and the more common type is called active income which is when the money you earn is directly connected to your time in your labor usually in the form of a paycheck the second way is called passive income which is when the money you earn is not directly connected to your time and labor now most people have active forms of income in their lives but very few people have passive forms of income in their lives but we should all strive to
try to generate some forms of passive income because it makes our money in our time less connected and so in this video I want to talk about realistic ways that anybody can generate passive income in their lives because as I see it there are a few extremely realistic ways to generate passive income without putting in tons of effort and in this video I'm going to share six of those ways ways all which I have tried myself now the first way is index investing now index investing is the truest form of passive income in the world and to
put it in short index investing is where instead of buying a single stock like Amazon you buy a basket full of stocks under one ticker symbol that tracks the market index like the S P 500 Index investing is basically buying the entire stock market and over the last 100 years the market has an average return of 10 a year so if you have ten thousand dollars invested that's one thousand dollars a year in passive income which will compound over time to create bigger returns basically your money is making you money without you doing anything in
this form of passive income is something you can create in under an hour because all you have to do is open a brokerage account choose and buy index funds and hold for the long term and once you do that you don't need to do a single thing except continue to buy and hold for the long term and your money will be making you money index investing is the truest form of passive income there is in the world and literally everybody can do it now the second form of passive income is dividend payments now this is something that is related to
index investing but if you buy index funds more than likely you'll receive something called dividends and this is basically how dividends work some companies will make profits and choose to invest that money back in the company to grow while other companies will make profits and choose to use some of that money to invest in the company but also choose to give a percentage of those profits to the shareholders in a form of dividends Dividends are when you're receiving a percentage of the earnings without
really doing anything it's just a completely passive form of income and there are two ways that people go about receiving dividends the first is an active strategy by creating a complex portfolio consisting of companies that give large dividends the second is a more passive strategy simply by investing the index funds now there are pros and cons to both but I choose to go the index fund route because it's easier and it doesn't require a lot of work I just know that it's happening in the background but
it's important to know that index funds generally pay out dividends yearly while individual stocks pay out quarterly but of course do your own research before choosing which route to go but in my own portfolio of about sixty thousand dollars I receive about 750 a year in dividends just to be completely real unless you have hundreds of thousands of dollars invested it's not going to amount to any life-changing money but I'll take an extra 750 any day because that's 750 I don't have to lift a finger
four in dividend payments are another true form of passive income now the third form is Evergreen YouTube videos now this is a fun one that I'm learning a lot about right now for the most part YouTube is an extremely active form of income I mean every single week I brainstorm ideas non-stop write eight to ten pages of script film for four to six hours and edit for 10 to 16 hours there is nothing passive about that and the reality of content creation is that most videos you make will look like this where you have this huge increase in the
first week but then the video flat lines and you don't make any more money from the video most YouTube Revenue comes from actively creating new videos every single week however there is a way to generate passive income on YouTube and it's when you create a video that's something called Evergreen which is content that is always relevant it's the content that never goes out of style and continues adding value into people's lives and that type of content is the most profitable type of content
on this platform for example about two months ago I made this video where I spoke about how I manage my money on a low income and since posting it it has continued to generate about five to Fifteen dollars a day in income I'm making five to Fifteen dollars a day from a video I made two months ago because it's a good video where people are constantly interested in that topic and if you want to make money on YouTube you don't do it by click baiting people or making people panic but by simply providing value
if you make videos where people say my life is better because I watch this video They're Gonna Keep Coming Back YouTube is going to continue promoting your videos in your Evergreen videos are going to continue to generate passive income it's that simple putting it into practice is a whole nother story ladies and gentlemen it is a very hard thing to do but if you commit yourself to this platform in adding value into people's lives you can generate passive income on YouTube it's a hard thing to do though
but the fourth way to generate passive income is through a 401k employer match at my past job I was making seventy two thousand dollars a year and my employer had this crazy 401K match where if I just contributed two percent of my salary or 120 a month they would contribute 10 or 600 a month and that added up to seventy two hundred dollars a year seventy two hundred dollars a year of extra income that I'm making without doing anything it's passive income all I had to do was just contribute a tiny portion of my salary in order to receive
it it was literally the easiest thing in the world to do however so many people don't take advantage of these employer matches and are just leaving money on the table I mean if I decided not to contribute that small amount it would have meant missing out on seventy two hundred dollars a year or ten percent extra in my salary the 401K match is such an easy effortless way to increase your pay by five to ten percent if your employer offers a 401k match you should contribute the maximum to reach that contribution limit because that's
basically like just getting free money it's money that you don't have to work a finger for and the 401K match is a source of passive income that people often underestimate in the fifth source of passive income is high yield savings accounts if you look at most banks they have these things they like to call high yield savings accounts however that high yield is about point four eight percent which on a ten thousand dollar account is only 48 a year however other Banks like Ally or PNC have high yield savings
accounts with interest rates over 4.5 percent which on a ten thousand dollar account is 459 dollars a year and although that's not life-changing money that's an extra forty dollars that you're making every single month without doing anything it's completely passive all you have to do is move your money over to one of these banks that offer high yields and I think we should all take advantage of that because it's extra money that we're getting without doing anything and every single little bit helps now the
final form of passive income is frugal living now many people might say that living a Frugal life isn't passive income because by spending less you're not generating any money however you actually have a heart and let me explain how imagine two people both who make four thousand dollars a month now the first person lives a Frugal life and only spends two thousand dollars a month and invests the other two thousand the other person lives a materialistic life and spends all this money each month with nothing
left over Now The Frugal person is generating passive income in two ways the first way is that his money goes two times further because his lifestyle costs less and the second way is that his money grows quicker because he's able to invest more money the easiest way to make more money is by spending less I can tell you a handful of ways to make a dollar I've mentioned them in this video but I can tell you hundreds of ways to save a dollar and if you focus more on controlling the money going out rather than the money coming
in you won't need to make as much because your money will go further living a Frugal life and spending less is one of the most underestimated sources of passive income because if you can lower your spending you're going to have a lot more money left over and you could double your salary without even increasing your income and those are my six forms of passive income and with that muchas gracias.
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