Passive Income Experiments Update [May ’10]
Creating streams of passive income is something we’re all striving to accomplish. After all, the idea that you can make money while you sleep is infinitely appealing, but it’s often much more easier said than done. I have a few passive income experiments going on simultaneously right now, so I thought it would be a good idea to start giving a monthly update on everything.
Right now, my three passive income experiments consist of Lending Club, Squidoo, and autoblogging. Overall, I think I’m doing okay, but it’s still far too early to make concrete conclusions.
Let’s dig into the details…
After investing in 47 different loans, it was bound to happen – one of my riskier loans was “charged off,” meaning the lender defaulted on the loan and was unable to continue making payments. I fully expected this to happen at some point – after all, a 10%+ interest rate would be astronomically high for such a large pool of loans. The good news is, my overall interest rate (taking into account the charged off loan) is 7.5%, which is still really good in my opinion. Let’s see how it compares to other investment alternatives (CDs, money market accounts, etc.):
As you can see, my interest rate at Lending Club still blows these other alternatives out of the water. (Note: I grabbed these screen shots a few weeks ago, so these rates may be slightly different today, but not by much). It’s important to keep in mind that Lending Club loans are of course more risky than these CDs and other accounts listed above, which have virtually no risk. Here are some other images from my Lending Club account summary that show my performance compared to other Lending Club investors:
It looks like I’m doing a bit worse than investors who have a similar portfolio to mine (7.5% vs 8.09% shown in the first image above). Compared to ALL investors, I’m doing quite a bit worse (7.5% vs. 9.64% in the third image), and my rate is worse than 79% of all investors. This doesn’t make me feel good, but at least tells me that my results may improve as time passes.
If you’re still skeptical about Lending Club, they’ve done a lot recently to really legitimize themselves almost like a bank. In the past month or two, they moved into a new building, and really seem to be growing fast.
If you’re interested in trying Lending Club, you can still sign up with this link and get a free $25 just for opening the account (no deposit needed). With that money, you can test out investing in a loan (since you can invest in increments as small as $25).
It would be fair for me to say that I’ve somewhat given up on Squidoo, at least temporarily. I still believe that there are people who can earn a reasonable monthly income from Squidoo, but it’s very difficult. My biggest problem has been the lack of free time to dedicate to writing articles for Squidoo. Between this blog, my newsletter, other small ventures that I’m working on, AND my 9 to 5 job, free time to allocate to Squidoo has been extremely limited. With that said, I’ve written about 15 “lenses” (articles) that receive a few visits per week, but the traffic and ranking for the articles haven’t been strong enough for me to actually earn anything yet.
So far, my strategy (and this is one reason I think I haven’t been too successful) has been to write “hit and run” articles which are fairly quick to produce. They’re short and to the point, which is why they probably lack the depth needed to be successful. Here are a few examples of ones I’ve written more recently:
Again, I’m not giving up on article writing, but I think when I have some down time with everything else I’m doing (when is that going to happen?) I’m going to explore some other article websites and see if they seem to have more potential than Squidoo.
About a month ago, I purchased a piece of autoblogging software that basically allows you to create blogs and have them automatically populated with content.
I started off cautiously optimistic, to say the least. My plan of attack has changed slightly, but I’m still hopeful. Originally, I wanted to create 1 blog a day for 30 days, and then evaluate how everything went. What I began to realize was that, although 1 blog per day was completely doable, it wasn’t a smart approach. Instead, I created 16 autoblogs and decided to stop creating them until these first 16 became sufficiently profitable.
As it turns out, I decided I need to do a bit more work for each autoblog in order to complete one primary objective: generate traffic to the blog. This proved to be the most difficult task, especially across 16 autoblogs.
With that said, a few of my autoblogs are starting to receive reasonable traffic considering what little time I’ve put into to optimizing them for search engines (5-10 unique visits per day). I’ve made a few dollars with AdSense, so at least things are moving, albeit slowly.
The main flaw I’m still seeing, as I explained in my original post about the autoblogging software, is that the quality of the content produced is poor. It’s readable, but it’s nothing you would ever want to read. Again, our goal isn’t to produce high quality content that people enjoy reading – it’s to capture search engine traffic with the hopes of the visitor exiting the site via an AdSense ad (or however else you choose to monetize the blog).
I still believe I can turn this into a decent source of passive income. Now that the autoblogs are set up, I only spend 30 minutes a week updating the blogs (it’s as simple as running the software to pull content from all feeds, making some minor tweaks to the post titles, and clicking “Post to Blog”).
Until next month, best of luck to you on your passive income experiments!
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