My Search for a Low Touch Passive Income Generator

My thoughts and perspective on finding a low touch passive income generator.

My Search for a Low Touch Passive Income Generator
Photo by Dmytro Demidko / Unsplash
It was a musical thing, and you were supposed to sing, or to dance while the music was played. - Alan Watts

I struggled with where to publish this article. Part of me wanted to post this to my regular blog Neural Market Trends because it's where I'm writing about this particular subject a lot. The other part of me thought it would be best to share it on Medium with a larger audience. Guess which part won?

I've been studying the market for passive income and side hustles for a long time. The simple reality is that making money is never easy and if anyone tells you differently, they're a snake oil salesman. In order for passive income to work one of two things (or both) need to be true:

  1. You have a large nest egg of money that's generating passive income for you, or;
  2. You have a low-touch product or service like an ebook or blog.

Let's face it, anything that requires you to actively work to earn income over the long run isn't passive, it's active. These are things like your current full-time and/or part-time gigs. You have to show up to make money. While I admit that in creating passive income you will have to work hard (i.e. writing that ebook, setting up the blog and SEO optimizing it, etc.), in the long run, your activity on it should decrease.

Some readers might comment that Real Estate Investing (REI) is one of those passive income strategies, to which I resoundingly say "NO!" There's always something breaking, annoying tenants, and empty apartments to keep you very busy.

I'm a Gen X'er that's annoyed with the Boomers, inspired by the Millennials, and confused by the Gen Z'ers.

What about starting a business? Can that be a passive endeavor? Can it be active in the beginning and then passive and 'low-touch' later?

The answer to that question is, probably not BUT (there's a big BUT in there) it is possible. You just have to figure out the market and see how others are doing it.

Understanding the Gen Z generation

I'm a Gen X'er who's annoyed with the Boomers, inspired by the Millennials, and confused by the Gen Z'ers. Both my kids are young Gen Z'ers and my niece is about in the middle of that generation.

I had a long chat with my niece the other day to understand what her age group likes, what they use, and what they find important.

The overwhelming responses were focused on finding passion and purpose, learning, and experiences. We spoke about Instagram, Etsy, YouTube, and the fact that careers are not what they're excited about. They value experiences and connectedness in far deeper ways than I expected.

...the connectedness of technology is what enables them to have richer and more meaningful lives.

She reminded me of something that Alan Watts spoke about many years ago (and someone made a nice video about it). Life is a dance, there is no destination and we should enjoy the experience of moving through time and space together.

For this generation, the connectedness of technology is what enables them to have richer and more meaningful lives. They shop on Instagram, make memes on Reddit, and use dating apps. They love watching YouTube to learn about new skills.

This got me thinking about how to build a low touch product or service. The question is, would it be able to capture a wide swath of generations?

A look at how Instagram, FetLife, and Reddit make money

After my conversation with her, I thought about how websites make money. I figured that if your site focused on topics like sex, religion, politics, or money you'd get a large part of the market of eyeballs.

After my chat with my niece, I'm going to add another topic to that list: experiences and learning.

After all, sex sells!

I thought about this over the past few days and started to dig through the various web properties out there. I looked at Instagram mainly because it feels like an 'experience' type of site. Users post their photos of vacations, their brands, and whatever they want that is communicated through photos.

Instagram offers you a place to upload your photos but they take that data and then serve ads to people. They make money through this method mainly. They even share some of that revenue with an Instagram user if they have a large enough following.

Those ads are sometimes embedded as product placement but for the most part, people don't seem to mind, they just want to share their photos and get some likes!

The next one, FetLife, is a bit more titillating. I came across this site from reading various relationship and sex bloggers on Medium and decided to check it out. After all, sex sells!

Fetlife is a website focused on fetish and various kinky sex experiences with its user base. My understanding is that you create a free profile, upload photos, and then organize meetups (hookups?) with like-minded kinksters.

Service + automation is a win for passive income.

I'm not a member of the site - yes, seriously - but I did do a bit of sleuthing around as to how they make their money. I came across the big driver of it, Ads (NSFW link).

Reddit is another one of those free-to-use sites. It's been, by far, one of the best news, information, topics, and lifestyle aggregator sites out there. I'm an active user on there and some of my favorite subreddits are r/castiron, r/politics, and r/wallstreetbets.

Reddit is a great way to find new trends and understand the Zeitgeist of your communities. It's a treasure trove of data! I would categorize them as an experience and learning platform because I learned a helluva lot in some subreddits that made my life better! you want to clutter up your brand?

Just like Fetlife and Instagram, they serve ads. However, with Reddit, a user can buy a premium account so you can get rid of the ads.

Granted, I don't know all the ways these three sites make money but on the surface, it appears to be all ad-based.

Do Online Ads Suck?

I'm currently running an experiment on my Neural Market Trends blog to see how much Google Adsense income I can earn in a month. It's part of my data-gathering experiment to figure out how to build a product or service for passive income.

I don't like online ads and it's a big reason why I use Firefox (to screen out Ads), but I understand how much of a siren call of ease of use and fast money. Just add a line of code in your templates and like magic you start making money.

The question becomes, do you want to clutter up your brand?

For me? The answer is no. I like for my content to be clean and easy to absorb. I want readers to come back for my words, not for my ads.

Affiliate links to products or sponsored ads are ok in my book provided the content creator/influencer actually uses them.

I like subscription sites a lot but it's imperative that it provides valuable and unique content that you can't get anywhere else.

I know that marketers and companies have been doing sponsor-placed ads for a long time but they feel so corporate. I'd rather hear what some YouTuber or Instagrammer thinks of a particular product or service.

Of course, this engagement has not escaped the attention of 'said marketers.' They're actively recruiting those YouTubers and Instagrammers for sponsored product placements now. I get it, If you're Alex the French Guy (great cooking channel), you gotta be able to make money to support yourself AND your channel.

Still, these ads feel intrusive.

A Product, Service, or Subscription?

The most successful passive income ideas are the ones that don't feel forced at all. They're not forced upon the reader, they don't feel slimy, and they're clean and elegant.

Ads don't make me feel that way.

What about making a product and selling that? Or providing a service? Maybe a subscription service like Medium?

Let's talk about Medium for the moment. I pay $50 a year to be able to read toll-gated content. It's worth it to me because there's some great curated content here. It's turning into an obsession for me. I've read and interacted with some amazing writers and thinkers there.

After all, why bother with all this nonsense if you don't have a larger goal above?

The best part of Medium is that writers can earn income if their content is popular and useful to readers. This article I'm writing is in fact behind the toll gate, and if all goes well I'll be earning a few bucks from my stream-of-consciousness thoughts.

Subscription sites are like a partnership between lovers, it works as long as each one of you holds up your end of the bargain. If Medium doesn't provide great content I like, then I'm taking my money elsewhere.

I like subscription sites a lot but it's imperative that it provides valuable and unique content that you can't get anywhere else. It has to be protected and the fee has to be fair.

Creating a service is another idea I like. I've written about Park.IO before and I like how Mike has created this very low touch and passive income site. It took him time and effort to roll everything out in the beginning but all the processes are automated now. He just has to check in every day to see how the machine is running.

Mike provides a valuable service to a niche market and makes money hand over fist. Of course, he has infrastructure costs but you can write those costs off on your taxes, but service + automation is a win for passive income.

The last item I've thought about is creating a product. Whether it's a hard tangible product like a widget or a soft product like an ebook, it has to fill a need for a user in a particular market.

You want to have the biggest amount of web traffic to find your product so you can 'convert' those eyeballs to cash.

This leads me back to the five (six?) topics I wrote before: sex, religion, politics, money, and experiences and learning.

A relationship ebook or sexual wellness product has the ability to hit all the pleasure centers of a group of interested customers. After all, sex sells. Doesn't it?

Let's talk about investing.

Selling salvation is the cornerstone of any modern religion (Note: I have big issues about this). On the same note, selling Trump flags to a gullible electorate was also a big business for Trump. Religion and politics are horrible at how they extract wealth from the general population and large corporations. I have zero interest in those two topics and plan to never capitalize on them.

Writing about money topics (like passive investing) and selling an ebook is a very popular endeavor that earns some people big money. Everyone wants to make a living on the Internet (myself included).

Selling educational type courses or how-to ebooks for experiences (i.e. travel the world on a shoestring budget) are also big moneymakers, and valuable.

Investing and My Passive Income Desire

If you've read this entire article and have gotten to this very point, you'll be happy to know that I'm about to come full circle.

Let's talk about investing.

I started my retirement accounts as early as I could. I made a lot of mistakes along the way but managed to build up a good nest egg. I've written about my goal to retire at 59 (59 1/2) and generate $100,000 a year from passive income. I suspect that the majority of that income will come from stock dividends and debt (bonds) income.

There are a ton of caveats with this route and subject for another lengthy post, but the biggest problem with this is building up your nest egg.

The majority of Americans have no retirement, they're hoping for Social Security to pay the bills when they retire. This is a recipe for disaster and when I was young I was scared that this would happen to me. I had nightmares that I'd be eating cat food, living in a cardboard box, on the streets of Newark NJ.

Then there are some Americans that have a pension. They're pretty lucky but the reality is that these retirement accounts are being favored out for the ever-popular and 'you're on your own' 401k.

401k's and IRA's are the best way for regular Americans to save for their retirement, but only if they're smart about it. There are tons of blogs, articles, and programs (ebooks, etc.) for people to learn how to invest.

I started with growth stocks and funds and now I'm transitioning to dividend-producing stocks and funds. Why? Because I had time on my side (started young) and remained invested in the markets (do less, earn more). Passive investing saved my life and it vanquished all my nightmares.

Note, passive investing is not the same as passive income. Passive investing is a market philosophy that diversifies your risk and keeps expenses low. Passive income is the money you make from passive investing. Get it?

How do you build up that nest egg? From your full-time, part-time, and side hustles. You have to pay yourself first and set it aside in a retirement account. Then add to it on a regular basis and keep your eye on the account. Then when you turn 40 or 50 you can start seeing how dividends generate income for you.

It started out with $25 a year and has grown - by accident - to $800 a year. That's $66 a month on average, by accident. Imagine if I focus on this.

Once again I'll revisit the graph from above.

Imagine if you put the effort into creating a service or product, automate it, and then invest the profits. You could turbocharge your passive income in a few years.

That's my strategy right now. Take my nest egg and focus on the passive income. Grow that.

Then turbocharge it with a service or product. Take those profits and then invest them to make more passive income until one day I can retire and spend it writing to my heart's content.

After all, why bother with all this nonsense if you don't have a larger goal above?

Why go through all this analysis and review if there isn't a driving factor behind it all?

That is the goal behind my passive income goals, to build a life where I can do the things I want and NOT be tied to a cubicle or corporate chair.

Now the big question that's facing me is how do I merge the tracks together? How do I invest AND create the right product or service to provide something of value to my readers? Something that I can be proud of, inspired by, and meet my goals of early retirement.