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Passive Income 101: How to Travel the World Without Working (AND $50 in free video content)

11/21/2011

in Make Money, Travel, Uncategorized

“[The tree] is slow in coming up, is there to give
Your grandsons shade in later years, long hence”
Virgil, Georgics II:58

I still remember waking up in a cold sweat.

2 years ago, I had an epiphany. Instead of freelancing and earning money by the hour, what if I figured out a way to earn money while i slept? If I could build something that would earn me money, constantly, I would finally

be

free.

I decided then and there that I would develop a passive income, enough to allow me to travel and live without HAVING to work. I wanted to do better than the 4 hour workweek—I wanted the ZERO hour workweek.

Note: The zero hour workweek doesn’t mean I actually only work zero hours per week. It means that if I WERE to work zero hours a week, I would still earn money. For example, when I lived in the wilderness in October, 2011, I had no access to any electronics for 28 days. When I returned home, a full month’s salary was waiting for me in my PayPal account. However, now that I’m back in civilization, I’m writing this blog and working on projects that interest me. Passion drives my work, not a desire for money.

Now, I want to give you an overview of passive income and the strategies that I used to achieve it.

My first passive income

I still remember the day when I received my first sample copy of Game Programming for Teens, my first published book. Below is a video from my first segment on TechTV’s Call For Help, which became a monthly segment.

I was 14 years old, and I had just gotten published! In the coming month, it turned out to be a thrilling success–my book became an international bestseller, was translated into several languages, and it reached the top 200 books on Amazon.

Since 2004, I’ve continued to earn royalties on the sale of that book. I learned my lesson well: build a product that earns forever, not a one-time commission.

Consider the average employee. He goes into work daily, works for his 4-8 hour shift, and earns money for every hour he spends at the office. An employee trades time for money. No matter how highly salaried he might be: at the end of the day, without spending time working, he’d earn no money.

I, on the other hand, had built a product, something that, once created, would continue to sell itself. The fundamental idea of passive income is to build something that will be evergreen; that is, something that will continue to earn money without requiring time.

Building a business is a great example. Take a restaurant owner, for example. He spends years building an excellent reputation and clientele. He hires other employees to take over the basic duties. He frees up his time by hiring new managers, who take over the administrative duties. If he is really successful, he franchises out his business so others pay him a cut without him doing any real work other than providing a name.

When my epiphany hit in 2008, I decided to take that passive ideology online. i waned to figure out a way to make money constantly through evergreen content.

Let’s look at some specific methodologies of building passive income generators.

Online Passive Income Strategies

I. Ad Revenue via Search Engine Optimization (SEO)

My first idea was to figure out a way to write articles online that would rank highly in Google’s search results. I started learning how at The Keyword Academy (affiliate link) which taught me a TON about how to build niche sites and articles. I hired a team to write hundreds of articles on niche topics and posting them on a variety of websites, trying to rank highly on Google.

The strategy worked amazingly well. I picked perennial topics that wouldn’t go out of fashion during a specific season or over time, such as how-to articles on repairing your home or reviews of kitchen products—things that will always be searched for.

I would find potential keywords by using a combination of tools. Using the Google Keywords tool, I would generate a list of thousands of potential words. Using Excel and an algorithm designed to find the value of the keyword, I would decide keywords based on two criteria, which I creatively call The Keyword Monthly Value Test.

Does the article make, passively, at least $20/mo if ranked in the top 4 results on Google?

Does the article, based on the competition of previously written articles, stand a chance to rank on the front page?

Below, I’m pasting a video from one of my old master classes, which shows you step by step how I generated keywords and valued them. This video is a nice $25 value, free for you :) Note—the Google Algorithm has changed a bit in the meantime, so I don’t write hundreds of small articles anymore. But, this video shows you exactly how to value any keyword, and that is data you can use on any keyword for any web site you already have or any business you want to advertise.

 

Since 2008, I still make money daily from those articles, written three or more years ago. Granted, Google has changed their algorithm so I make quite a bit less than before, and it is difficult to jump in this system today. The workflow is simple:

The AdSense Passive Strategy

The goal is to choose an underserved niche, and actually build a website that provides value. Here’s an example: One friend, after subscribing to my email list, joined The Keyword Academy. He then registered and built Costumesery, which made him a bit of money during the Halloween season. He then built a team of outsourcers who wrote, edited, and published his content—now he has a network of 10 blogs, all written by outsourced employees. This method takes a long time to set up and get going, but it provides a nice consistent passive source of income. The downside is that it really does take a lot of work to set up, and you never know if a keyword will be successful until it actually is: you need to take the ‘ready-fire-aim’ approach of attacking numerous niches and keywords until you find something that sticks. To the naysayers who say that SEO or article writing is a scam. Yes, it’s true, there are tons of crappy AdSense optimized pages that are out there just to attract clicks. However, these sites fade with every Google update. The kind of approach that I’m talking about revolves around building niche Web sites with GOOD content. You want to provide value. Like any business, you attract repeat clicks and loyal visitors by actually building good content and interacting with potential customers. Then, the web sites that seem to be performing well, you can focus into a real business. Imagine, for example, you go to Flippa.com and buy a ranking domain about home repair. There are dozens of articles already prewritten about home repair, how to install shower kits, and whatever info. Then, you improve the content and backlink the site, improving its ranking on Google. Now, you start getting lots of visitors, 100-200 per day. You put up an email subscribe form and start emailing them content. You start actually surveying customers and seeing what they want. Now, you can actually build a business around these customers—you could buy and sell items they are looking for, and use drop-shipping to provide them with products. One of my students started importing toilets from China and reselling them via his domain, making quite a bit of money in the meanwhile. Ok, so this is a basic overview about building good niche Websites with SEO. If you’re interested in more info about this topic, sign up at The Keyword Academy.

II. Affiliate Income via SEO or Search Engine Marketing (SEM)

Affiliate income in the online world is like a party promoter in the real world: money is made by getting the word out. An affiliate marketer makes money when they refer a sale to someone else. So what’s a good example of an affiliate market? Amazon.com is the world’s largest affiliate network: just go to associates.amazon.com, and you’ll earn 4-8% for any sale you refer. When you see Amazon product ads on sites that you browse, know that the owner is earning money every time someone clicks the ad and buys something. In the affiliate method, your goal is to match people with the products and services they desire. There are several affiliate networks that help marketers find out about affiliate programs. My favorite is NeverBlue.com, which has high class merchants such as Netflix, eBay, an eHarmony. A couple other good networks you might check out are Commission Junction and ClickBank. So once you become an affiliate, how do you actually convince a potential consumer to buy the product? This can be done in several ways. First, you can do it with SEO, which I spoke about in the last section. Rather than building websites to garner ad-clicks, you might instead substitute the ads on your site for affiliate links. Many of the SEO sites I built recommend relevant Amazon products, and each time someone buys something, I earn money. You can also try Search Engine or Social Media Marketing. In this method, YOU buy the ads (on Google, or Facebook) and try to redirect people to your site or to a related product page. If you hit on the write ad/product combination, you can simply buy ads automatically and repeatedly and earn a consistent income. Buying ads is easy on Google Adwords or on Facebook. I love you, reader. Like, a lot. I want you to understand what I’m talking about, so below I’ve pasted a video from my Online Marketing Master Class. This video, a $25 value, shows you how I buy ads to landing pages, in order to bring in affiliate income.

There are lots of methods for turning affiliate income passive—email lists, permission marketing, brand building, etc—but they are out of the scope of this article. I teach these methods in my Online Marketing Master Class, which is about to reopen for sale…

One last method to building passive affiliate income is via affiliate subscription services. Some merchants charge a monthly subscription for a service, and if you successfully affiliate one of these products, you can earn monthly residuals for the lifetime of the customer. I’ve used this method to earn $1,000/month for over a year from a single email (for a product I truly believed in and recommended).

III. Building Your Own Product

One excellent way to build passive income is to develop your own information product. If you build an excellent product and market it well, you can convince others to purchase it.

An information product is distributed online via video, audio, or text. If you build a subscription product, you can earn monthly income from your customers. You can also attempt to find affiliates who will do the marketing for you!

Check out Commission Junction and ClickBank to see examples of products that have been built by people just like you.

Your product doesn’t have to be online! You could build a drop shipping business. When customers buy a physical product from your website, this automatically starts a process where your supplier ships the product to the customer, without you being involved.

IV. Conclusion

I’ve talked about several ways to build businesses online in this article. Note: No passive income business is easy. Every business model requires a lot of setup time and often an investment before it can be profitable. If you are interested in learning how to build an online business, check out my Online Marketing Master Class, where I teach these methods from the ground up.

I help people find their muse. Want to earn passive income, anywhere in the world? Click the button below to be notified when my Online Marketing Master Class is open for sale.


If you have already built a successful online business, please contact me: I’d love to interview you for future articles.

{ 40 comments… }

Debbie June 5, 2014 at 5:56 pm

Since I lost my job in January I have tried so hard to find another one. out of frustration i thought i would check into drop shipping, and liked the idea but i have never built a website and it has been such a struggle just to get started. i have put out so much money and I have gotten nowhere, i have no more money to put out. But I still want to do this and I not only want it to succeed I need it to succeed so please i am begging for help. where do I start and how do I start i am lost, clueless and completely frustrated please help!!!!!!!

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otto May 11, 2014 at 12:12 pm

If anyone would like to learn how to dropship and make money on ebay please checkout my youtube channel for how to videos. http://youtu.be/Zjq_IcRj5lM

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greg January 26, 2014 at 5:30 pm

Maneesh, Im out East in the Bean… My business is Doorprop, Doorprop.com. I have lots of Video material and am looking for some help with promotion. http://www.youtube.com/user/TheDoorprop/videos
I found you while i was making a decision to go kick it in Colombia for awhile?!?!?!?

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Dhawal January 17, 2014 at 2:38 pm

Hello I am from India.
Doing Diploma In Computers .
Now In 3rd year of diploma engg please any tips for earning money ..hope u vl gv dt nd it will work

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thomas December 23, 2013 at 12:58 pm

Me again, sorry about the spelling before, you just gave a me a great idea to travel and teach tennis and set up passive income, any other tips? Let me know if you come to japan, arigoto!

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Maneesh Sethi December 23, 2013 at 2:02 pm

For more tips, you’ll only need to wait until January. I certainly will!

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www.seoclerks.com October 15, 2013 at 5:48 am

I am not sure the location you might be getting your information, however superior topic. I has to devote more time to studying far more or even identifying far more. We appreciate you great info I’d been hunting for this data in my quest.

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Maneesh Sethi August 9, 2013 at 5:55 pm

Fixed! Thanks!

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Cesar July 7, 2013 at 6:26 pm

Hey Maneesh,

Thanks for this valuable info. Great way you’ve put it together too. I just found out about you by Googling “Chris Guillebeau podcast.” Great tips and tricks. Looking forward to learning more.

Cheers

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jman June 19, 2013 at 5:58 pm

I love your site, but I’m currently unemployed and feel like everything is out of reach. Any advice?

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Fernando April 3, 2013 at 2:00 am

Great article Maneesh, me and my girlfriend has have really enjoyed reading and applying your strategies to build a online business. We started as freelance designers and now working our way towards build a product which will help to create the passive income you have mentioned here.

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Alicia January 28, 2013 at 2:28 pm

Information overloadddd lol great article, I just have to process all the info that was just thrown my way lol

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James White January 28, 2013 at 12:59 pm

Love your blog. Lots of real great ideas presented here.. I have had some success with buying PPC Ads, but it’s not a very passive income. It also requires a bit of an investment of capital and intestinal fortitude to get through he testing phase. Do you have an suggestions on how one could make PPC passive?

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maneesh January 28, 2013 at 2:20 pm

I’m not the expert in PPC, but I would think you’d need to train a staff or find someone to do it for you

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David January 24, 2013 at 8:48 am

I had a successful SEO business, but the Panda/Penguin updates have made it impossible to rank new sites using the old methods. Any ideas?

David

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Farooq January 22, 2013 at 6:32 pm

Also, can you give us a guide on how to outsource article writing/editing/publishing/etc.?

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Alicia January 17, 2013 at 7:36 pm

I just discovered your blog, I admire your lifestyle, and hope to mimic it. Just added your blog to my favorites :)

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Michelle January 14, 2013 at 4:33 pm

Hi Maneesh. I have really enjoyed reading your blog so far, and am becoming more and more of a fan of your work.

I have a quick question, though, regarding the video you posted above.

Do you have to do anything special to get the CPC column in the excel file after the search? I have tried a few times to change things around, but nothing seems to make it work.

Any suggestions would be very helpful, I am a little stuck. Thanks!

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maneesh January 14, 2013 at 5:31 pm

I wouldn’t recommend using that column, the formula doesn’t work anymore

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Farooq January 22, 2013 at 6:29 pm

Maneesh,

Do you have an updated formula?

Thanks!
Farooq

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Faisel November 13, 2012 at 7:57 am

Excellent Stuff you’ve got here…. Got it me all excited..

However there are broken links on this page. Am i the only one experiencing this?

http://maneeshsethi.com/wordpress/wp-content/uploads/2011/11/flowchart.png

http://maneeshsethi.com/online-marketing/

ERROR 404 – PAGE NOT FOUND

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maneesh November 13, 2012 at 8:09 am

Thanks! I’ve fixed these!

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Faisel November 13, 2012 at 8:28 am

This page is still down. Thank you in advance!
http://maneeshsethi.com/online-marketing/

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maneesh November 13, 2012 at 8:33 am

No problem. That page is shut down for good—so I took it out of the post.

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Keyanna October 31, 2012 at 7:55 am

Great post Maneesh! I definitely gained a ton of value from this post even though i’ve been blogging for a year. I never knew the value of my keywords, I always judged them by the competition. I was wondering if the continuation from the ‘potential keyword’ video still available?

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Kian October 23, 2012 at 8:35 am

Hey there superb blog! Does running a blog like this require a great deal of
work? I’ve no knowledge of computer programming but I was hoping to start my own blog soon. Anyway, should you have any suggestions or tips for new blog owners please share. I know this is off topic however I just wanted to ask. Kudos!

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maneesh October 23, 2012 at 11:12 am

I mean, I spend hours a week on it. But it’s mostly writing.

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John Maxwell October 22, 2012 at 7:16 pm

Passive income gurus, even smart coder guys like you and Brian Armstrong (http://brianarmstrong.org/), are failing to apply simple economics.

I’ll try to summarize here, but you may want to read an economics textbook (introecon.com is free and supposed to be good) on the concept of “net present value” to understand more fully.

You can convert any chunk of capital in to a “passive” income stream by investing it (e.g. in dividend-paying stocks, an index fund, treasury bills, etc.). And you can convert any stream of passive income in to a chunk of capital by selling it (e.g. sell your web business on Flippa).

Heck, if you think you think web businesses represent an especially good asset class, you could just *buy* them on Flippa instead of putting the money in to dividend-paying stocks.

So what you really want to be doing is comparing passive income streams and money you’d make through other means (e.g. employment) on equal terms. To do this, you have to apply a discount rate to future earnings, and also take in to account the fact that your passive income stream may go away.

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Shannen October 9, 2012 at 11:42 pm

Hi! Just started reading your blog, and I have to say it’s fascinating. I’m a writer and Comm major in my first year of university, so this kind of thing looks incredibly tempting.

Do you have more information on content-building? I know a bit about vlogging, but I still feel pretty vague on the subject.

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maneesh October 10, 2012 at 10:59 am

I’m glad you love it :)

What do you mean about content building? You don’t know how? Or what do you want to do?

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Elias July 27, 2012 at 7:23 pm

This Digital Nomad life style is what I really want but I find it so difficul to build these streams of passive income.

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maneesh July 28, 2012 at 7:21 am

nothing worth doing has ever been easy..

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Andrew July 13, 2012 at 11:32 am

Thanks Maneesh – I first heard your story from an interview on the Four Hour Work Week Success Stories podcast. You’ve been an inspiration to me!

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Jennifer June 19, 2012 at 10:46 am

Sometimes you need people to outwardly express the common sense that is masked by the drive to succeed in this rat race by doing something you’re not even passionate about. Very well spoken, my friend.

PS. Good to meet you at Le Bain in NYC last Sunday…enjoyed the brief company.

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Katie May 20, 2012 at 8:52 am

Hey Maneesh, thank you so very much for this post, and for the generous videos from your Masterclass. I’m very interesting in partaking, hopefully at some point this summer! Everything you’ve said has made perfect sense, and I don’t know what I haven’t found out about all this before! In fact, I don’t know why EVERYONE isn’t living like this already! Feels like the world’s best kept secret :) Thanks for letting us in on it. Keep up the great work, Katie.

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maneesh May 20, 2012 at 8:59 am

Hey Katie! Thanks! I’ll be doing one final sale of the master class in a couple weeks, and then shutting it down forever. Sign up to my newsletter on the right if you’d like to be notified. Cool!

-M

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Sheyi April 13, 2012 at 9:54 am

Nice write up Maneesh, i fell in love with your style the first time i read about you online. You are such a genius worth celebrating.

I wouldnt say its racism or something else as neverblue refused to approved my account. It is so painful for me.

Sheyi

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Kayvee November 21, 2011 at 1:35 pm

Thats a wealth of information…

thanks for that…

my suggestion to anyone (I learnt this the hard way) is to pick a method and stick to it.

Don’t multi-task and don’t jump from one idea to the next.

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maneesh November 21, 2011 at 2:03 pm

This is insanely important. You CANNOT jump from idea to idea…it just doesn’t work!

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Tiare July 27, 2013 at 9:29 am

Yes, perseverance is so important! Obstacles are what you see when you take your eye off your goal. See an idea through from start to profit.

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