My 6 Sources of Passive Income
I personally believe it is important for pharmacists to have different sources of passive income. Why? It is one of the best ways for pharmacists to achieve financial freedom and choose to work on your own terms.
We all know the high demand and stress of being a pharmacist. Wouldn’t it be nice to cut back on your hours by going part-time or PRN or even retire early?
Passive income is defined as money generated from various sources such as investments and rental properties that require a minimum effort to maintain.
With that said here are the 6 sources of passive income that I have:
Sources of Passive Income: Dividends from Investments
This passive income source is the most common that almost everyone who works a full-time job will have access to it. For example, your 401k will generate passive income in the form of dividends and capital gains.
Dividend is a sum of money paid by a company usually quarterly to its shareholders from profits or cash reserves.
I currently receive dividends from my 401k, Roth IRA, and a taxable account.
For demonstration purposes, my Vanguard taxable account gave me a dividend of $32.53 and $22.02 for the two latest quarters.
My Roth IRA account gave a total of $11,39 and $56.69.
And finally my 401k account netted $578.14 through the last three dividend periods.
From my old job, I also have a 403b (non-profit company) account that distributed dividends totaled $82,24.
Overall, the previous three months gave me a total of $783,01 or an average of $261 per month of passive income.
Sources of Passive Income: Cash Back/Rewards from Credit Cards
Credit cards are a great tool to help with your credit score. Make sure that you’re watching your credit utilization rate and pay off the entire balance at the end of the month.
Most credit cards will come with perks like travel rewards and cash back bonus.
What’s in my wallet?
There are lots of credit cards to choose from but the one we settled with is Citi World Dividends and the Bank of America (BOA)Travel Rewards cards.
In my opinion, you should have a good cash back card and a good travel rewards card.
Bank of America Travel Rewards
Our primary credit card is the BOA travel card. Here are some of it’s benefits.
- No annual or foreign transaction fees
- 25,000 points initial bonus ($250 equivalent)
- 1.5 points per $1 spent
- Redemption is very easy but only for travel expenses, cash redemption will make value decrease by half
We redeemed some points for our past travel and we still have approximately $3.000 in value for future redemption.
Citi Double Cash
My main cashback card was the Citi Dividend World Card, I signed up for this card in college and have been using it ever since. It’s your standard cashback card with the following features.
- 1% cashback on all purchases
- Redeemable when cashback rewards are equal to or exceeds $25
- Yearly limit of $300 in cashback.
This credit card is average, not bad, or that good in particular. I have been meaning to sign up for a new cashback card but have been hesitant about it since I wanted to keep my credit history since I opened this card in 2004.
I looked at several candidates to replace this card.
- Chase Freedom unlimited-1.5% cashback on all purchases plus 5% on grocery store purchases
- WellsFargo Cash Wise-1.5% cashback plus boost for digital wallet spending
- Citicard Double Cash-unlimited 1% cashback on all purchases plus 1% back when you pay for those purchases.
I’ve been wanting to change my cashback credit card since last year but have been sticking it out with Citi Dividend since I didn’t want to cancel it or open too many cards since I have a total of two under my name and am an authorized user for the Bank of America card.
My second credit card is WellsFargo Platinum. It’s also a college credit card that doesn’t offer much benefit except I use it as an overdraft protection card.
Credit card product change
I just found the solution to my problem. Credit card companies offer what’s known as a product change (PC). You can call up your credit card company to request a conversion to a new card, keeping your credit history, account number (not always).
I called Citi to request a product change and was approved for a conversion to the Citi Double Cash Back card with a new credit card number, however.
I also did the same at WellsFargo to do a product change to the WellFargo Cash Wise card but unfortunately not successful.
Sources of Passive Incom: Adsense Income
I operate this blog and my wife has a YouTube channel focusing on do-it-yourself home cooking and bakery. We share the same Adsense account and I documented our earning through here if you’re interested.
Essentially, we typically earn between $600 to over $1,000 in a typical month. However, our average has been in the $500 to $600 range lately.
Sources of Passive Income: Affiliate Income
We also earn affiliate income from both this blog and my wife’s YouTube channel. Our earnings ranged from just over $10 to over $600. This fluctuates wildly since it is all depending on what we typically get in terms of traffic.
Lately we’ve been getting around $100 per month from Amazon and others.
High-Yield Saving Interests
Traditional savings account are terrible. If you’re putting money in a WellsFargo is only 0.01%. You’ll probably find a similar rate with other similar savings account through Chase or Bank of America.
I had existing accounts with Betterment and Sofi, therefore I continued to do business with them instead of opening a new high-yield savings account.
There are other alternatives such as Ally.
Currently Betterment Cash Reserve offer an APY of 0.40% and Sofi Money at 0.25%.
This still beats the 0.01% at WellsFargo but it’s not of what it’s used to be pre-Covid-19.
Not that these APY are variable and is subject to change at the company’s discretion.
Recently I read that Sofi has applied to be a national bank and will be directly FDIC insured instead of indirectly through partner banks like how both Betterment and Sofi have as their current arrangement.
High-yield savings interest received is dependent on your balance and the variable APY.
Typically, we’ve been receiving on average around $50 or so across both our Sofi Money and Betterment Cash Reserve accounts.
Sources of Passive Income: Real Estate Crowdfunding
After doing a little research about real estate crowdfunding I was interested in it. On 11/2019, I made the decision to invest my initial $500 to Fundrise.
I’ve been wanting to write my review for Fundrise but I wanted to have enough data in order to do so.
To date, I have invested a total of $1,697 into Funrise. My net returns was $31,94.
According to Fundrise:
Net asset value (NAV) is the estimated value of real estate and other assets on a per-share basis. NAV is typically updated quarterly or semi-annually.Fundrise
My all-time NAV return rate is 4.4% and a year to date NAV of 3.8%.
Thus far, it’s looking like returns from Fundrise is beating that of a high-yield account.
I have not been charged with a fee yet because I signed up when I was offered a 1 year fee-free sign up bonus.
I will provide an update when this data is available.
In summary my 6 sources of passive income are:
- Dividends from investments
- Credit Card Cashback and Rewards
- Adsense income
- Affiliate income
- High-yield savings
- Real Estate Crowdsourcing
I should add a seventh source since we decided to move some money into the Vanguard Federal Money Market account. Yields are terrible across the board in terms of high-yield savings accounts.
You can check the latest APY through website such as Bankrate.
Ever since I started this blog, I’ve been looking for more ways to increase my sources of income, especially passive income streams.
Some passive income streams are easier than others but you should absolutely take advantage of the opportunities out there to earn passive income whenever possible.
If you’re disciplined enough to pay your credit card in full you should definitely take advantage of various offers on travel and cashback cards. This only can give you hundreds of not thousands of dollars per year.
Passive income in my opinion is one of the keys to your financial freedom!