Robert Kiyosaki's Passive Income Blueprint: 5 Brilliant Ideas To Make Money Effortlessly

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Almost 20% of American households generate passive income from interests, dividends, or rents, with median earnings at $4,200 annually. Building passive income streams is an emerging trend as more people increasingly gain access to investment instruments that have long been limited to the wealthy. Rich Dad Poor Dad author Robert Kiyosaki believes everyone should focus on financial education and leverage passive income streams to build wealth. Kiyosaki, who predicted the fall of Lehman Brothers during the 2008 global financial crisis, recently shared with GoBankingRates that creating passive income streams is the simplest way to earn money without working for it.

1. Buy Dividend Aristocrats Stocks

Kiyosaki believes that stocks that pay shareholders dividends proportionate to their investments can be an excellent option for people already investing in the stock market. Companies return value to investors through share buyback programs or issuing dividends at regular intervals, such as monthly, quarterly, or annually. Meanwhile, stock price appreciation also grows your portfolio value over time. Kiyosaki thinks reinvesting the dividend income into more stocks is a faster way to compound money. Note that dividends can fluctuate depending on various business and industry factors. However, volatility and income stability can be managed by shortlisting dividend aristocrat stocks with a history of hiking dividend payouts each year for at least 25 consecutive years. Some popular dividend aristocrats are Walmart, Exxon Mobil, PepsiCo, and Chevron, offering stable dividend yields of up to 4.4%.

2. Create Passive Rental Income

Kiyosaki supports real estate investing as a way to create a steady passive income stream from rental cash flow. Real estate is among the few tangible assets that can hedge market volatility and inflation while growing your net worth through capital appreciation. However, given the high cost of entry into real estate, most don't have adequate savings to buy properties. If your goal is solely to own real estate and benefit from regular rental income and property value growth without the hassles of being a landlord and miscellaneous housing costs, you can explore real estate investment trusts (REITs) that own, operate, and manage properties acquired by pooling money from investors. REITs allow you to buy units of a fund representing portfolio properties at a fraction of the total property cost and ensure you receive monthly rental income and benefit from capital appreciation. While REITs manage tenants and oversee property maintenance and timely distributions, the trusts often charge asset management fees and have a lock-in period ranging from three to ten years. Real estate can boost your finances but is deemed an illiquid asset class relative to stocks or gold.

3. Peer-to-Peer (P2P) Lending

Investors finance debts to earn a steady income from interest payments. Bonds are a popular way to invest in debt, but those looking to lend smaller amounts of money can explore the microlending opportunity in the peer-to-peer (P2P) lending space. Kiyosaki acknowledges that instruments like a high-yield savings account are excellent for parking cash that earns interest, sometimes up to 10 times the average national savings rates. However, he thinks investors can earn higher returns from lending money to small business owners or entrepreneurs seeking capital for regular interest payments. You can explore P2P lending platforms like Kiva and Prosper that allow you to start lending money to entrepreneurs and small businesses with as little as $25. While lending can offer higher returns, high-risk borrowers with poor credit history can pose challenges of defaults. One can mitigate non-repayment risks by lending to entities with good credit profiles, which can result in slightly lower returns.

4. Generating Income From Annuities

While an annuity is an illiquid investment that often comes with withdrawal penalties, it offers a guaranteed income for a specific duration or the remainder of the annuity holder's life. Preferred by retirees, an annuity is a binding agreement between an individual and an insurance company. The annuitant makes staggered payments or deposits a lumpsum amount in exchange for regular monthly payments, which can be immediate or deferred. The average annuity annual return rate ranges between 4% and 6% but can go higher, depending on the annuity type. While fixed annuities will offer a minimum rate of interest but guaranteed income, one can achieve higher returns from variable or indexed annuities. Variable annuities enable annuitants to receive bigger payments in the future if the annuity fund performs well in the market. Meanwhile, indexed annuities are fixed annuities that track the performance of benchmark stock market indexes like the S&P 500 index. Similarly, the risks are higher when you tie your life savings with stock market performance, which can lead to income fluctuations during market upheavals.

5. Royalties From Intellectual Property

The author also believes in monetising your skillset, which can be an instrument you play or writeups you can publish. Kiyosaki advocates collecting royalties when selling intellectual property, like an album or an e-book. While creating a song or writing a book might take time, the next steps of marketing and selling your products are relatively simple. Tons of marketplaces will push your products live in minutes and help you generate passive income from the repeat sales of your work with easy payout options. For instance, Spotify pays between $3 and $5 per 1,000 streams, but the rate can further vary due to factors like country, listener account type, and even your contract with Spotify.