BuzzTV

September 2015 Passive Dividend Earnings

I’ve been putting capital to work over the past couple of months in an attempt to really earn money in pajamas. Stock pay dividends on a regular basis no matter what I do. I could watch TV, sleep, and eat all day long, every day, and the ownership stakes that I’ve paid for in my companies would still pay out. Last month, I gave my first dividend earnings report. I earned a whopping $0.64 from a small dividend from Apple (AAPL). This month, a couple of great companies paid me for owning a small sliver of their operations. My dividend earnings  for September were:

WalMart (WMT): $0.69

McDonald’s (MCD): $1.29

These companies paid me $1.98, which adds up to just more than $0.03 per day. That might not seem like much, but with any luck that will add up to a dollar per day over the relatively near future. That $1 will then multiply to $2, and then $10 each day. All that’s needed is time and more capital to put to work. The best thing about this money is that it comes in without my doing any additional work than the work that I put in to get the initial capital to invest. It’s like a snowball that’s adding a little bit each quarter going forward.

With my earnings from August added in, I’ve now reached $2.62 in dividends this year. I’ve already earned my first dividend for October, as Coca-Cola (KO) has already paid out their third quarter dividend. I should also get a dividend from the Bank of Nova Scotia at the end of the month. October should be another record-breaking month, even though I’m not likely to pay for much more than the dollar menu at McDonald’s with my earnings. From this point forward, my income should start really picking up, though. Passive income is the best income.

BuzzTV

Recent Stock Purchases

Last week, I decided to use some money that I’d come into to buy some more stocks with my Loyal3 account.  I had a total of $75 to invest, along with my first $2.62 in dividend income.  I’ve decided to reinvest dividend income so that I can keep the dividend snowball adding additional dividend income, which is a great way to passively earn money in pajamas. As I’ve stated many times before earning money from home is a great thing. The more dividends I can amass over time, the more money I will make in pajamas.

Because you can only purchase whole dollar amounts from Loyal3, this meant that I had a total of $77 to invest. I have positions in five companies through Loyal3, so I decided to pretty much invest an equal amount in each. The exception to this was my position in Kellogg (K), which I just opened with a $25 investment. Therefore, I had $15 going to McDonald’s, Wal-Mart, Apple, and Coca-Cola. I decided to reinvest my dividend income into Kellogg to help this investment catch up in terms of my total capital outlay. My purchases added the following amounts to my positions:

Loyal3 91815 purchase

While this might not seem like I’ve added a great deal to any of these stocks (and that would be a correct assessment), it nonetheless is just another brick in the dividend wall that should help with my expenses as I age. My goal is to supplement any pensions, 401k accounts, and social security payments that I might get. My additional estimated annual dividend income from each of these purchases are:

WMT: $0.46

MCD: $0.52

K: $0.50

KO: $0.50

AAPL: $0.27

Therefore, these small purchases of additional fractional shares of five large cap, blue chip companies add a total of $2.25 to my annual dividend income. My total expected dividend income from my Loyal3 and TradeKing portfolios is now up to $48.53. While this might seem like a pitiful amount of money, it takes time and invested capital to get this income up. Were I not to put any more capital to work in the next year, I should see a bit of an increase from dividend increases. As of now, I’ll average just over $4 in dividend income each month. However, my goal is to add to this as funds become available so that I can earn more money in pajamas because passive income is the best income.

BuzzTV

Stock Purchases

Last week, I wrote about the way I’ve earned money in pajamas with my first dividend in my passive income account. Passive income comes in whether I’m working or not. While I only earned $0.64 on my first earnings report, I’ve continued purchasing stock in some pretty strong companies the past week. I’ve been buying stocks through a Loyal3 account before this week.  I intend to continue buying the companies that Loyal3 services through their platform because of the fee-free structure. However, the biggest weakness with this broker is the fact that purchases are limited to the 65 companies that Loyal3 works with.

To broaden my horizons and purchase stocks that are not offered by Loyal3, I decided to open up an account with TradeKing, which is a low-cost online broker that allows users to make straight-up stock purchases for $4.95. They also offer options, but I am not comfortable utilizing this service at this point. Many passive income bloggers advocate saving up around a grand to minimize the cost. This is a good idea, but I had just $500 to invest after cashing in some US savings bonds that were purchased for me more than 20 years ago.  If I were to throw all of the funds that I had available at one stock on Loyal3 or on TradeKing, that would have put all of the money at risk if the one company I bought into were to go belly-up. I try to invest in solid companies with solid earnings and solid track records, but changes in the market can lead to crazy things like Bear Stearns becoming a non-entity in really short order.  I wanted to diversify quickly to cut down on the risk that comes from having all of one’s eggs in a single basket.

I threw between $150 and $200 into all of my Loyal3 holdings, with the exception of my latest purchase in Kellogg, which I am hoping to build to that level. I wanted to move into three different sectors of the economy that I had no exposure to. I wanted the companies to have a strong history of paying dividends. I also wanted to see that I was able to get stocks at a relatively good price after the recent drop in the market. The price/earnings ratio of each of these stocks is attractive based upon the broader market and based upon their own P/E ratio from earlier this year.

Oil and energy stocks have been hit hard in recent months as the Saudi government has been trying to squeeze American suppliers out of the market. I went back and forth between a purchase of Exxon-Mobil and Royal Dutch Shell. I decided to go with the latter. Shell (RDS.B) has not cut a dividend since World War II, and this includes all sorts of market conditions. With my $4.95 brokerage fee, I bought 3 shares at a total cost of $156.72, or just over $52 per share. The current annual dividend is $3.76 per share. I do not expect this to increase this year because of the market conditions in the energy sector. However, I also expect oil prices to rebound in the coming year or so.

via Wikimedia Commons, Ralf Roletschek, CC BY 3.0
via Wikimedia Commons, Ralf Roletschek, CC BY 3.0

My second purchase was in the financial sector. I decided to go with a Canadian Bank that started paying out dividends more than 25 years before the US Civil War started. The Bank of Nova Scotia has been paying investors since 1833, and they just announced an increase of their dividend to $0.70 in Canadian dollars per quarter. From what I’ve been reading, Canadian banks are more conservative than American banks because of regulatory requirements. Despite this conservative bent, the banks are quite profitable, and the “Big Six” Canadian Banks (a group that includes BNS) controls about 90 percent of the banking industry in our northern neighbor. BNS held their dividend steady during the 2007-2009 financial crisis, but they’ve been steadily increasing their payments to shareholders in the years since. I was able to purchase 3 shares, and with my brokerage fee, the total cost was $140.31. My 3 shares should bring approximately $2.19 per share in terms of the dividend payout, although this is subject to vary with fluctuations in the currency exchange rate.

My final purchase was an American telecom giant. AT &T (T) has been increasing dividends each year for more than three decades. They just purchased DirecTV, and along with Verizon, they are definitely a leader in the telecommunications industry. I went back and forth between VZ and T, and finally decided upon T. I purchased 5 shares of T, and these shares set me back $171.35. The annual dividend that AT & T pays out is currently $1.88 per share.

These three purchases give me international diversification in three solid companies from three different countries (four if you count the Anglo-Dutch nature of RDS.B). These companies have a strong history of rewarding their shareholders. They also gave me exposure to three different sectors of the economy. I chose to enroll in dividend reinvestment in each. Although my dividends will be small in the short term, each payment will go toward buying additional shares of these stocks. These partial shares will pay dividends as well, which will supercharge the rate of compounding. I don’t expect Shell to yield more than 7 percent for long, but in the short term, that should help me build my position a bit quicker than usual.

Combined, at the current payout rate, I should earn approximately $27.25 in additional dividends over the next year. This brings my annual total for expected passive income from dividends to $46.27, which is just under $4 per month. This is obviously well below my budget, but I plan to put additional capital to work and anticipate these companies increasing their dividends over time. I figure that I’ll need to supplement my retirement accounts and Social Security, and passive monthly income from dividends will be a great way to do just that. I now have positions in eight different companies, and I hope to build upon this in the future.

DISCLAIMER: I am not a licensed professional advisor, and the information on this site is merely for informational and educational purchases. Make sure to consult a professional before investing in securities, as you can lose money. 

BuzzTV

August 2015 Passive Dividend Earnings

Earning passive income is really one of the best ways to earn money from the office, home, the store, or wherever you might be, because it comes in at all hours of the day no matter what you might be doing at any given time. Getting more and more passive income is one of my goals. I’ve started to buy stocks that provide me with dividends on a regular basis. I’m focused on stocks that have paid steady or increasing dividends over a period of years through all sorts of economic conditions.

In late July, I opened an account with Loyal3, which is an online source for purchasing stock. The platform is pretty cool because you’re able to become a partial owner in some really profitable companies like Apple, Coca-Cola, Nike, and McDonald’s without paying any fees. I’ve also recently opened another brokerage account with another outfit because Loyal3 only has around 60-65 companies from which you can purchase stock. If you want to branch out into a sector or company that’s not included, you have to do it with another broker. Regardless, one of my purchases from early in August paid a dividend after I bought in, so without further ado, here is my dividend income from the month of August:

Apple, Inc (AAPL)  $0.64

You’ve read this right. I earned a whopping 64 cents in dividends, which was a regular quarterly dividend of $0.52 per share. When multiplied by my 1.2313 share stake in Apple, you get 64 cents. This is admittedly a very small chunk of change, and many people might wonder why I’d even bother. However, I would argue that the journey of a thousand miles begins with the first step. Without the first 64 cents, the first $1,000 or $10,000 cannot be earned. Unless I put more money into Apple in the next couple of months, I’ll get another $0.64 in November. I also intend to build up positions in additional great companies with great products over the upcoming months and years while also adding to existing positions over time. I also intend to use my dividends to accelerate the purchase of additional stock. The goal is to have this regular income pay for some of my expenses when I hit retirement age in a few decades. The earlier I start, the more the admittedly small dividends will start to grow exponentially.

How many dividends did you get for not working in August?

Disclaimer: I am not a professional financial advisor. This site is for informational/educational/motivational purposes. Be sure to contact a certified financial advisor or accountant before making investment decisions. 

BuzzTV

Stock Purchase–K

Disclaimer: I’m not a professional investment advisor. The information on this site is for informational and educational purposes and should not be viewed as investing advice. Before investing in securities, you should check with an investment advisor. 

As I’ve noted before, the best form of income is passive income. This is income that truly comes in while you’re at work, on the road, watching TV, sleeping, eating, or basically anything else. This is the ultimate method of earning money in pajamas. As I’ve just started buying stock in the past month or so, I decided to use some excess cash to buy a bit of stock via my Loyal3 account.

While my previous purchases were a bit larger, I did not have the access to a similar amount of money for this particular purchase (although I might be making a fairly sizable buy in the next week or so in an account that charges for trades). Although I did not hit the major drop well, I figured that time in the market is better than trying to time the market. Regardless, Loyal3 only makes trades in a couple of batches a day, so getting the absolute best price is unlikely.

I had already set up positions in KO, AAPL, WMT, and MCD. I figured that these are some of the biggest companies in the world. As I’ve noted, I’ve actually utilized a couple of these while outside the good ol’ USA. This purchase expanded my portfolio to 5 positions. I decided to put $25 toward Kellogg’s (K). The good news is that $0.64 of this was actually dividend income that I received earlier this month, which means that my dividends are starting to get put to use, albeit on a very small scale. I’ve eaten a number of Kellogg cereals, and I frequently eat Pop Tarts for breakfast. Like Coca-Cola and McDonald’s, Kellogg’s is basically available around the world. I’ve bought Pop Tarts to eat for breakfast while in Aruba and Honduras. Pringles potato crisps are also a brand that Kellogg’s sports that is popular in many parts of the world.

While $200 got me nearly 5 shares of KO, my $25 got me substantially less when it came to purchasing K. I now own 0.3741 shares of the cereal giant. According to NASDAQ, the P/E ratio is is estimated to be in the 17 range for the next couple of years (for what it’s worth). I’m hoping to add similar amounts to my recent purchase over the next couple of months to build up my position to $100 or $150, which would be close to my other positions. The dividend yield that I locked in for this purchase was just south of 3% at 2.97%, as the current annual dividend is $2.00 per share. My 0.3741 shares will add right around 75 cents to my annual estimated dividend income. With my previous purchases this year, my estimated annual dividend income should now be around $19.03. This is just more than a buck fifty per month. I’ll definitely need more than this to aid in retirement, but small steps can add up to big nest eggs over time.  A couple of months ago, my estimated dividend income was a big, fat goose egg. $1.50 is literally an infinite improvement over 0 in my goal of earning money in pajamas.

 

BuzzTV

Earning Passive Income with More Dividends

The past couple of weeks have been rough on stocks. It’s now down 9 out of the last 10 sessions. I’ve put more money to work, though. Could it go lower? Sure. Will it eventually come up if it does? Most likely. Regardless, as I’ve said before, passive income is the best income, and I’ve decided to buy more of solid companies that have long histories of paying out dividends. My first two buys in the last few weeks were in WalMart and Apple. WalMart has been basically sideways, and Apple has been hit pretty hard in the days since I purchased them.  Day-to-day fluctuations are not a big concern, as I’m not looking to sell these stocks in the next few months.

Last week, I put $150 to work in McDonald’s stock through my Loyal3 account. This purchased 1.5196 shares in the Golden Arches. McDonald’s has a current annual dividend level of $3.40 per share, which gives a dividend yield of just above 3.4 percent on my cost. This added $5.16 to my estimated dividend cash flow for the next 12 months. I’ve eaten at the big M all across the US, and I’ve also eaten at this company’s restaurants in England, the Czech Republic, and Honduras. They are literally making money every day all across the planet.

Yesterday, I decided to buy again. I had $250 to put to work. I again bought WalMart with a purchase of $50. This purchased an additional 0.6973 of a share. At an annual dividend payout of $1.96 per share, this added another $1.37 to my estimated dividend payout over the course of a year. $1.37 might not sound like a huge amount, but the $1.37s will start to add up over time. It’s also possible that WalMart’s stock will increase in price over time, which would further enhance net worth.

My final purchase was in one of Warren Buffet’s holdings: Coca-Cola. This Atlanta-based company has increased its dividend for 52 straight years. This is one of the largest such streaks that are around. This stock is tied to another of my purchases, as McDonald’s sells Coke products around the world. I’ve also had Coke in various places that I’ve visited. This includes places as remote as small towns in Kenya. The footprint of Coke is huge. I put $200 into Coca-Cola through my Loyal3 account. This bought 4.8804 shares of the soft drink giant. Coke currently pays out $1.32 per share for a dividend, and this is a yield of more than 3 percent. This purchase bought me an additional estimated dividend payout of $6.44 on an annualized basis.

There you have it. I’ve bought a small slice of three massive companies that have huge global footprints. All of these companies are able to handle their dividends at this point with their current level of earnings per share. My hope is that they will continue their long streaks of paying out to shareholders and also add to the dividend on an annual basis. My current dividend income portfolio now has an estimated annual payout of approximately $18.28. Of course, this could go up or down, but my goal is to reinvest dividends into companies that also provide income, which will hopefully lead to an ever-growing amount of capital and income. This will definitely be an example of earning money in pajamas.

Disclaimer: I am not a professional investor or a financial advisor. All information in this article are merely for entertainment purposes. People can and do lose money in the stock market. Consult a professional before deciding to make any investments. 

BuzzTV

Stock Purchase–AAPL

This week, I added another position toward my goal of earning money in pajamas with dividend stocks. My first purchase of $100 went toward WalMart Stock. My second purchase was a bit larger because I wanted to make sure that I was able to purchase a whole share of another company with my Loyal3 account. This stock is one of the biggest and most popular in all the world. I decided to buy some stock in Apple Computer. Of course, the best time to buy some Apple stock would have been around 1999, but I was not really into stocks at that point. However, with some money from previous birthdays still available to put to work, I decided to jump in now.

My goal is to earn additional money without actually putting in additional hours for it. Therefore, buying Apple would not have been on my radar had I started just a few years ago. In 2012, however, the company started paying dividends again after a long hiatus. The dividend has been steadily growing since its resumption. The current yield is not terribly high, as it is in the 1.7 percent range, but it has shown growth to the upside. The P/E ratio and the payout ratio for the dividend are both solid, and everyone knows that iPhones and iPads are all the rage with kids these days.

I put in a total of $150 into AAPL, and this bought me 1.2313 shares in the company. Currently, the dividend on this stock stands at $2.08 per share after a big 7-for-1 split last year. My current holdings should net me about $2.56 in dividends over the next year. When added to my anticipated dividends from my WalMart purchase, my current estimated dividend income for the next year should be right around $5.60. Both of these stocks could raise their dividends in the next year, so that increase would be added to my $5.60. I also plan to buy a few more positions in the near term, and I have some plans for utilizing some passive income to buy even more, which will give even more passive income. My hope is to increase my dividend income each year until I can replace a significant percentage of my expenses by retirement. They say that the journey of a thousand miles begins with the first step, and I look at these purchases as the first two steps in my journey.

I’ll plan to give updates on any future purchases, as well as any income as it starts to come in.

Disclaimer: I am not a financial professional. The information on this site is for educational/informational purposes only. Investors in the stock market can lose money, up to and including all of their investment. Please consult a financial professional before making any investments in the market.

BuzzTV

Earning Money in Pajamas with Dividends on Loyal3

Note: Loyal3 is closing down in May 2017. Therefore, this platform will no longer be available. It will be a good idea to choose another brokerage.

As I wrote in my last post, passive income is the best income. One of the best ways to get passive income that I noted in that article was through dividend stocks. These stocks are issued by companies who have created enough income and built up enough equity through their business operations to return some of the profits to those who invest in their endeavors. While reading up on dividend growth investing over the past few weeks, I stumbled upon recommendations for a website that allowed for fee-free investing. This site Loyal3.com allows investors to put in as little as $10 toward a number of quality stocks–without having to pay any commissions. I was intrigued to say the least.

I have some money that I’ve had laying that’s come from birthday and Christmas gifts over the last few years, so I decided to open an account and put it to work because it’s basically been earning nothing. I decided to buy $100 worth of WalMart stock last week to see how the site worked. The transaction went through today, and that $100 investment bought me 1.398 shares of ownership in Wally World. WalMart currently pays an annual dividend of $1.96 per share, which is split into four quarterly payments, so this will give me about $2.70 in dividend income over the next year. I chose WalMart because it’s the biggest retailer in the world, it makes lots of money, it pays a solid dividend that’s increased every year for around four decades, and it trades at a relatively low price-to-earnings ratio. As this went through pretty easily, I have decided to buy some more stocks on Loyal3 with the funds that I have available.

The Loyal3 site is pretty easy to navigate, and it only took a few minutes to go from creating an account to linking a bank account and telling the site what to purchase. The transfer of funds from my bank took from Saturday to Tuesday, and the purchase went through on Tuesday morning. The site only makes purchases in a couple of batches each day, so this is something to consider if you’re looking to purchase at a specific price as you can’t totally control the purchase price. I chose this “broker” because most other low-cost brokers are quite expensive if you don’t have a fairly large sum to invest. For example, I considered TradeKing with its $4.95 fee per trade, but for a $100 investment, I’d be starting about 5 percent in the hole before the stock moved up or down at all. It would take a purchase of $500 to make TradeKing or Scott Trade worth it, in my estimation. If I get a good nest egg going, I’ll probably open an account with one of these sites to further diversify without paying heavy fees. With Loyal3, I can buy fractional shares for as little as a $10 investment and it costs me nothing, as most well-established stocks are not going to shift in price by 5 percent on the vast majority of days.

There are some negatives that come with the Loyal3 platform. One is the afforementioned fact that the site utilizes batch trading, rather than up-to-the-minute trades. This can lead to some fluctuations in price, but as noted above, I don’t think that’s going to wipe out any advantage gained by avoiding paying a fee on a smallish trade, at least the vast majority of the time. Another negative is the fact that the site only has a relationship with slightly more than 60 companies, but some of these are among the biggest names around. Included are stocks like: WalMart, Apple Computer, Intel, Microsoft, Coca-Cola, Kellogg’s, PepsiCo, and others. Each of these pay a good dividend that’s grown in recent years (sometimes for decades straight). Energy and healthcare companies are not get included.

However, for my current level of investment ability, I think that the Loyal3 platform should work well for my purposes.  I plan to spend the rest of the money I have available, purchase additional shares with some other passive income, and then reinvest any dividends that I get. The goal is to increase dividend income year-over-year to where I have a nice cash flow supplement when it comes time to retire. Dividends are definitely passive income, and WalMart is active in many countries around the globe, so this company is literally providing income (albeit a very small amount at the moment) while I’m in bed, which is one of the best ways to earn money in pajamas.

Disclaimer: I am not an investment professional. Therefore, this article is intended only for entertainment/informational purposes and is not an actual recommendation to buy any specific security. Stocks go up and down, and investors can and do lose money.

BuzzTV

Passive Income is the Best Income

This site is dedicated to getting people to think a bit outside the box and make some money whilst in their pajamas. Most people think that money only comes from going into an office (or a fast food joint or retail store) and putting in eight, ten, or sixteen hours sitting in a cubicle, or, if they’re lucky, a corner office with a view. This is definitely one of the ways that people make money. Some of them are quite successful in bringing in money this way. However, until the power of passive income is brought to bear, they will have to continue going into the office eight or more hours a day to continue to make more of the green stuff (or more colorful stuff if you happen to live outside the US).

While teens might be thinking of ways to make money this summer, or a working-class parent might be looking for ways to make more money all of the time, saving up money over the long-term can be a great way to start toward passive income. The difference between active and passive income can be summarized in this statement:

You work for active income. Passive income works for you. 

In other words, you have to actually go to work and do some task or create some item that people are willing to pay for in order to make money the old-fashioned and more common way of making active income. Passive income is that money that comes from having capital or knowledge invested in a money-making tool. This capital is probably going to have some work associated with it initially. Few people are born with silver spoons in their mouths, so they will have to do some work to make some money to start with.

This is where self-discipline comes in. I’ve already noted the power of a dollar on this site, but to summarize what I’ve pointed out before, saving a dollar a day from your teenage years to your normal retirement age of around 65 could net a nest egg of over $250,000. Saving four dollars a day over that time will net a cool million. Save even more, and we can really, really get into some pretty cool numbers or a retirement (or semi-retirement with only work you want to do) that could start decades before most people think you really should retire. 

How to Get Passive Income

Passive Income can really add up.
A $500 bill, public domain via Wikimedia Commons

Savings Accounts

There are several ways to get passive income. One of which is the old-school savings account or certificate of deposit. However, there is a problem with this. The income that you get will actually decrease over time unless you add more money to your stash of cash because the interest that you will get in these days of near-zero fed funds rates will get eroded by inflation. Nonetheless, for every $1,000 that you’ve got in one of these instruments, you could theoretically make a dollar or two a years. Have a cool million? We’re talking about $10,000 or $20,000 in passive income. Some families live quite comfortably on this income every year.

Dividend Stocks

Some people really like dividend stocks. These stocks will pay a dividend from their earnings on a regular basis (usually quarterly).  In fact, one blogger formerly known as Dividend Mantra, now known as Mr. Free at 33 built up enough passive income to retire on his dividend payments alone within six years. The lower your expenses are, the quicker this goal can be achieved. For example, you’ll need much less passive income if you’ve got $20,000 in annual expenses vs. if you’ve got $50,000 in annual expenses. Mine are actually closer to the higher figure, but this can still be done if an income is higher and you can save quite a bit of money.

One of the cool things about this dividend stream is that it only went down a bit more than 20% in the last market crash in which the overall market went down more than 50%. This means that passive income from dividends can actually wind up being a better deal. Also, for those who are still building a nest egg, these dividends can go toward buying more shares that will increase the amount of dividends that a person can earn over time. Here’s a good post from Joshua Kennon on how reinvesting dividends on an initial $10,000 investment affected an investment in Coca-Cola stock over 50 years.

Appreciating Stocks

While dividends are technically regular stocks, not all stocks pay dividends, which are in effect cash payments to investors. Other stocks can still pay off because of price appreciation. When adding in dividends and price appreciation over time, the stock market has returned an average of 8 to 10% over the past century plus. That’s a pretty good track record.

Until recent years, Apple (which happens to be one of the best-performing stocks on the market) did not even provide a dividend. However, in the late 1990s, the stock was in the $4 range. Those who invested money at this point did not really miss the dividend. The stock’s price went up over $600 per share before splitting last year. A person who bought at the bottom, or even the middle, of this spike would have profited handsomely, even without a dividend. They would not have had to have worked an extra second to make that money, as Apple would have contributed to their income.

Bonds

Bonds are long-term debt instruments that have performed quite well over time. Governments like the national governments of the US, Canada, the UK, or even Paraguay frequently issue bonds to finance current spending levels. They promise to pay out a certain yield (basically a payment for allowing the government to borrow your money, much like a savings account for a bank).

State and local governments, as well as corporations, will also frequently issue bonds. Some of these bonds are taxable, but municipal bonds are free from federal income taxes. When thinking of tax ramifications, be sure to check with an accountant or financial planner to see what will pay off best. The amount that a government or business pays in interest relates to their perceived stability. For example, the US currently has a very low interest on bonds payable, while Greece is in danger of defaulting on their debt and has to pay a high premium.

Getting Others to Make Money for You

There are marketing systems in which individuals can get referral income in various ways. For example, Amazon provides an associate’s program in which web content providers earn a certain cut of any sales that their page or site generates. This starts out at a 4% payment, but goes up from there. Of course, like the other options, there is some work required at first, but over time, this can start to add up to a decent income for those who are motivated and successful. Much of this income can start to take on a passive nature and can then be invested to make even more passive income. Amazon Associates is just one of many options in this regard.

Rewards Credit Cards Offer Passive Income

Another way that it’s possible to make money pretty easily is through credit card rewards. This strategy is not for those who cannot pay off all of their bills every month. It’s good to have a bit stashed away in savings before attempting this. If you can do that, there are banks out there who are more than happy to compete for your business by offering bonuses for getting a credit card and then meeting a minimum spending requirement. I’ve focused more on travel rewards cards that allow me to travel for pennies on the dollar rather than cash-back cards, and here are five travel rewards cards that you might want to check out.

Rental Property

This, like most of the other forms of passive income, involves some risk. A renter could totally trash a house or trailer, the market could totally collapse and cut the value of the property, or a tsunami could come and completely inundate your investment. All investment involves risk. There is risk to my personal home. This is why I have insurance. After a rental property is paid off, though, everything over taxes, insurance, and upkeep can go into the column of passive income. Even if the property is only partly paid off, the rent that the tenant pays should pay off the debt. It’s probably not a great idea to leverage a huge sum of money for most people, as a market crash could lead to a foreclosure, but investing in real estate can pay off.

For example, if you own a house with no debt that is valued at $100,000, you could probably get anywhere from $500 per month and up in profit, depending upon the local market. Even if you still owe money, the renters would be in the process of paying it off for you, which is a form of passive income. If you’ve tired of dealing with renters, you could then sell the house for the $100,000 give or take and invest that in something else, so rental property can also be a good way to get passive income.

Try A Few Options For Yourself

These are just a few of the ways that people can make passive income on the money that they’ve already put to work. This money never goes to sleep, but continues to work all year round, making more passive income that adds to a snowballing amount over time. As I mentioned in the title of this article, passive income really is the best form of income. Having money work for you is much greater than having to continually work for more money. I’ve got a way to go in building up my nest egg, but as an old Chinese proverb states: The best time to plant a tree was twenty years ago; the second best time to plant a tree is today. Passive income is definitely what I would call making money in pajamas.

DISCLAIMER: I am not, nor do I claim to be any sort of certified financial planner. This article is just intended for general informational/entertainment purposes. Before making any investments, you should contact a certified financial planner. Always remember, past returns are no guarantee of future successes.

BuzzTV

Saving Money in Pajamas with Credit Cards?

One of my favorite pastimes is travel. I’ve had the good fortune to visit a wide range of countries over three different continents. I’m hoping to get to more next year. I’ve also been on trips to Hawaii and California at prices that most people could only dream about. For example, I got tickets to LA from my home in the Midwest for a whopping $11.20 each. I also got three of my five nights at a Hyatt House hotel for $0. I paid for two nights out-of-pocket.

How do I do this? I use points that I’ve earned from various credit card bonus programs. This is not for everyone. People with bad credit will not get approved for a card. People who tend not to pay off their bills in full every month should not get approved for a card. Those who only buy what they can afford and then pay it off every month can get some great awards. There are several different options that can help you get to the destinations that you’re looking to get to.

1. Airline or Hotel Co-Branded Cards

These cards are tied to a specific airline or hotel. For example, Marriott, Hilton, and Hyatt all have their own credit cards that give you a certain number of points per dollar spent. They usually pay bonus points when used to pay for a hotel room at the hotel company that the card represents. All of the major US airlines have a co-branded card (or cards) that can help you get to the destination of your dreams quickly, be it Orlando or Oranjestad. Of course trips to exotic locations like Australia or Tanzania might take more points, but they can be had. I’ve flown to Aruba, Denver, and LAX on miles, and I’ve stayed in Honolulu, Aruba, and Anaheim on hotel points.

2. Flexible Point Cards

These are the gold standard amongst those who are really travel hackers. Cards like the Chase Sapphire Preferred or the Citi Thank You Premier fall into this category. Chase, Citi, and AMEX all have their own point systems that allow you to transfer your points into a chosen travel partner (or get cash back). For example, Chase Ultimate Rewards points can be transferred at a 1:1 rate to airlines like United, British, or Southwest, among others. They can also get transferred to IHG (Holiday Inn), Marriott, or Hyatt at the same rate. Only certain Chase cards work like this. I used these cards for my recent trip to see Mickey and Minnie, and they saved me over $1,000. If you’d rather have cash back, some of these cards will offer a bonus of up to $500 after meeting a minimum spend over 3 months. Of course, if you have to pay interest to get the bonus, it’s not worth it, so make sure that you can pay off your account IN FULL each month before applying.

3. Cash Back Cards

These cards come in two major varieties. One is the straight cash back card. The old Discover It card would fall into this category. Basically, users get 1% cash back for every dollar spent and 5% cash back on various rotating categories each quarter that can involve merchants like gas stations, travel, grocery stores, restaurants, etc. The other form of cash back card is the travel reimbursement card. The Capital One Venture Miles or the Barclay World Arrival Mastercard would fall under this category. These pay a cent or two back for every dollar spent, redeemable for a statement credit on travel expenses.

Before getting these cards, it’s important to remember that credit cards can be a very good employee, but they can be a very bad master. Do not go applying for credit cards if you have a propensity to be a spendthrift. If you’re fairly frugal, you pay off all of your bills every month, and you can avoid the temptation to spend money you don’t have just because it’s on plastic, these cards can help you save money on travel or get some cash back on a regular basis. They can get be a great way to get into debt, but they can also be a great way to get some great experiences for a fraction of what you’d otherwise have to pay.

For more information on how to game the system, I regularly read popular travel blogs like

The Frugal Travel Guy and Million Mile Secrets, among others.

Apply at your own risk, but if you’re disciplined, these cards can really pay off.