The first item we will discuss in this second part of How To Get Rich III, 20 Sources of Passive Income is Private Lending.

11. Private Lending - Private lending has been around since people have been around. Essentially private lending is nothing more than lending out some of your excess cash to a trustworthy person who needs it. This has not always been easy or fruitful for the person who has had money they wanted to invest. As a result, several online services are now available that will accept your money and distribute it under your direction to those you feel are qualified; search for person to person lending on the major search engines to identify organizations you can use. The primary benefit of private lending is that the interest rates are often much higher than you would obtain by parking your money in a CD or bank.

12. Tax Liens and Notes - A primary benefit of tax liens is the higher interest rate you receive on your investment plus the fact that your principal is backed by real estate. Please note that you will almost never receive the property from investing in tax deeds, liens or notes; the primary benefit is the favorable interest rate and the security resulting from a real estate backed transaction. Avoid organizations that suggest you will be receiving the property the tax instrument is against. Another benefit of this type of passive income is that you can invest online from almost any state in the country - be sure to review Texas tax deeds, interest can be as high as 50% annually in some cases.

13. Bonds - Ok, you know about bonds - they are a conservative investment for old people and people afraid of the stock market right? Wrong. A bond can provide a secure and stable source of income for anyone. By definition, a bond is a debt issued by an authorized organization - often a corporation, municipality or utility. A bond sells for the issue price, matures (is paid back to you) at the principal (face amount or nominal price) and in between you collect interest that is called the coupon rate. Bonds are often purchased in the form of mutual fund bond funds. Some of these can be very lucrative with a yield exceeding that of equity funds but these are often hard to find. But they are there!

14. Mutual Funds (Income Funds) - As we are only considering sources of passive income, we are only going to look at income mutual funds. These may be called "growth and income" funds or "income" funds or "value" funds. Nearly every mutual fund family will have their own set of income or growth and income funds. Morningstar and other services provide third party ratings that you can use to identify the safest and highest paying income funds. Invest wisely and always consult a qualified investment advisor before investing. Mutual funds are also required to send you a prospectus (a formal disclosure of the funds objectives and operating guidelines) for your review before you can invest. Review the prospectus carefully and consult with your financial advisor for terminology you may not understand.

15. T-Bills, T-Bonds & T-Notes - Treasury Bills, Treasury Bonds and Treasury Notes - Considered to be the safest of all investments because they are issued by the United States Treasury Department, these vehicles are also among the lowest yielding. But you sacrifice yield for security whenever you invest. T-Bills, Bonds and Notes are most often purchased through your bank, broker or they may be purchased directly from the US Treasury Department through their Treasury Direct online service. Although you will not receive a high rate of return, the security of your investment cannot be any higher than it is with these investments.

16. Unit Investment Trust - A Unit Investment Trust is one of three different types of investment companies, the others being a closed end fund and the familiar mutual fund. UIT's offer securities in the form of "units" that represent a unit of their investment portfolio. This portfolio is often an unmanaged portfolio consisting of stocks and bonds. Units are usually sold in amounts of $1,000 and investors or "unit holders" receive dividends from the units they hold. A unique feature of a UIT is its termination date. Unlike most other corporations and investment company organizations, which exist in perpetuity, a UIT has a defined termination date which is set upon inception. When this date arrives the UIT is terminated and the the assets held are sold. The proceeds from this sale are then distributed to the unit holders.

17. Preferred Stock - A Preferred Stock is a security issued by a corporation that usually features a specific dividend rate. Preferred stock usually does not have voting rights except sometimes in extraordinary events. Preferred stock also receives priority over common stock holders when dividends are distributed - preferred stock holders must be paid first. And preferred stock holders also receive preference if the company is ever dissolved. Your rate of return with preferred stock may not be high, but the security of your investment is higher than with more risky investments.

18. Corporate Backed Trust Securities - Also known as Corporate Asset-Backed Securities, these investments are issued by corporations and are based on a pool of underlying assets. The cash flow from these assets provide the dividend payments made to the holders of the security. The asset pool can consist of almost any type of asset which provides a cash flow. Usually sold initially to a market maker type organization such as an investment bank, these securities may be resold to the general public by the broker. Contact your broker for more information on these types of investments.

19. Music Publishing - You don't know about music publishing? The artist may get the glory (and often the money) but the publisher Always gets the money. If you own the rights to a song or sheet music you are the publisher and you get paid whenever that song is played or performed in public. Although the current rate is only 8 cents (US) per "performance" think of all the radio stations, bars and clubs in the country where your song may be being played right now. Yes, bars and restaurants must pay you whenever your song is played in their establishment. You don't have to worry about going around to each bar, hotel lobby or elevator or restaurant (More places!) in the country to collect your eight cents - this is handled by any one (or some combination) of just three organizations which pretty much manage all music throughout the world - ASCAP, BMI and for the internet SoundExchange. Yes, you do need to register with these organizations so they know where to send your checks, but this can be a very lucrative source of passive income.

20. Copyrights, Patents and Licenses - If you are an author you get paid every time a book of yours is sold. Ok, this is obvious, but you can also republish public domain material under a new copyright if you change it by at least 20% or add at least 20% more material to it. The easy part (some would say not easy) is the writing of the book itself. The hard part is getting other people to buy it, that involves marketing which is beyond the scope of this article, but if you can get a bestseller on your hands, the royalties (payments you receive from being the copyright holder) received can be very high.

A patent is an innovation (process) or invention (thing). You get paid when the item represented by the patent is used or sold by some other organization or the public. The patent protects your right to exclusive ownership of that process or invention for a certain amount of time.

A license is also possible to sell to the market. What if you know a particular process or procedure that no one else does? Can you sell this knowledge? Yes, you can. And the way to do it is to license an organization to use your knowledge in the form of a process or procedure. Check out for a guide on how to do this.


21. Movie & Other Obscure Investments - We live in a dynamic world and there will always be investment vehicles being conceived for a need. Also, more obscure investments are available but generally are unknown outside of their particular industry. Movie investments are one of these. Movies often need financiers ready to fund the production of the movie project. When the movie is released to the public and begins to make money the financiers receive their capital and return on investment. This can be a good way to make a lot of money if you back a blockbuster or a good way to lose a lot of money - look at how many movies do poorly. Do not invest in this vehicle unless you are an industry insider.

Other obscure investments include exploration financing, water rights, coal leases, limited partnerships, commercials and commercial funding (yes, tv commercials and infomercials), receivables financing, sports team ownership, etc, etc, etc. If you have an interest in investing in any of these areas you need to find someone with excellent knowledge of the field and with a good track in investing in that industry. Consult with them intensely allowing them to guide your investment decisions. Generally, the best policy is to invest only in those areas where you are familiar and never, never invest more than you can afford to lose.


Passive income investing is the key to securing income. Income is cash flow. Cash flow is king. You cannot invest future income or a projected return or an eventual equity position; you can only invest the cash you have on hand today. Likewise, you cannot pay bills or buy groceries or pay the mortgage or tax man with anything other than cash or credit. A projected return or equity position will not pay todays bills or put food on the table. Capital appreciation is great - for tomorrow. I prefer cash in hand today. The more cash flow you have coming in now, the greater that tomorrow will be. Guaranteed!

Author's Bio: 

Mr. Jones has over 20 years experience in the corporate and financial arenas. He has developed and executed procedures and strategies for such diverse organizations as 1-800-Flowers, T. Rowe Price, US Army, US Congress, Maricopa County Office of Management and Budget, US Census Bureau, T.J Maxx, Sears, US Airways, Liberty Mutual Insurance, KPMG, Mutual Series, INVESCO, Allmerica Financial, 440 Financial Group, et al as well as a myriad of small and family businesses.

Mr. Jones has developed training strategies, customer service procedures, developed sales scripts and implemented and executed management strategies that have exceeded expectations, driven revenue growth, maximized profits, optimized operations and helped drive billions of dollars in annual revenue.