5 min read
When I was young, I thought it would be so cool to earn $100,00 per year some day.
Fast forward to age 23. I landed a job as an entry level data scientist that paid $80,000 per year. That was close enough to $100k for me to feel like “I made it.”
Related: How to Become a Data Scientist
But I quickly started to hate many aspects of the job including the commute, the horrible bosses, the pointless meetings, and the dumb schedule. The high salary couldn’t compensate for the feeling of dread that I felt on Sunday evenings knowing that Monday morning was quickly approaching.
Fortunately, I had made a discovery that would change my life: It was possible to earn money online with websites.
Back when I still had a job in Corporate America, I would wake up around 5AM each morning before work and spend a couple hours writing articles for this blog. And on weekend mornings I would head to the local coffee shop and crank out more content. Slowly, both my website traffic and online income started to increase.
Last summer my online income reached the point where it covered all of my monthly expenses, so I handed in my two-week notice at my day job.
Today, I earn a full-time living through a combination of online income from five different sites I own along with dividends from REITs and stocks.
And while I’m not financially independent (I don’t have a portfolio equivalent to 25 times my yearly expenses), I’m essentially living my dream life. I get to wake up when I want, work whenever I want for as long as I want in any location and I have no boss to answer to.
I’ve come to realize that I don’t need to earn income in a completely passive manner by having a massive portfolio to live my dream life because I actually enjoy the active work required to build and grow websites from scratch.
At the same time, I would never say no to passive income which is why I have most of my savings invested in stock index funds and REITs that pay me dividends each quarter.
I’ve found that a blend of passive and active income is ideal for the lifestyle I crave.
The active income that I earn as a result of working on websites fulfills my creative itch and the passive income I earn from REITs and index funds pads my bank account so that I have less financial stress in general.
I like to think of this financial approach to life as “buying cash cows and building empires.”
Cash Cows vs. Empires
I like to think of cash cows as assets I own that produce money for me without any active work on my part. The obvious examples are stock index funds and REITs. Every three months I receive a dividend payment from these assets that lands directly in my bank account.
Another example is a website that I recently bought in the food niche. I paid $7,000 for the site and it currently generates $700 per month in the form of ads and affiliate links.
However, because I’m not particularly interested in the niche and I don’t have sufficient knowledge to write about food topics, I’ve decided to outsource the content creation for the site. I want to be involved with the site as little as possible, yet I want to receive a paycheck from the site each month.
I love earning income from these cash cows because I’m not interested in being involved in the day-to-day work of these companies – I just want to earn passive income as a result of owning them.
Conversely, I like to think of empires as assets that I actively build from scratch. These types of assets possess two important traits:
1. I enjoy working on them. If I don’t enjoy working on them, then I don’t want to spend time on them. I’ll either sell them or outsource the work.
2. I have a unique edge that allows me to grow them. If I don’t have unique skills or knowledge that allows me to grow these assets, then I’ll outsource the work.
I currently own four websites that I actively work on each week that all meet these two criteria:
Four Pillar Freedom – I love writing blog posts for this site and I believe I have a unique ability to incorporate research, data, visualizations, and insights that make the articles enjoyable to read.
Collecting Wisdom – I enjoy curating personal finance articles each week and I think I have a good sense of how to find and feature interesting writing that people will want to read.
Statology – I like writing tutorials about concepts related to statistics and I believe I have rare knowledge (a master’s degree in statistics) that gives me an edge in this field.
Wander Cincinnati – I love finding and writing about unique places around my city and since I have knowledge about SEO and the city itself, I have a unique ability to grow this site into something huge.
The reason that I call these assets “empires” is because I can easily see myself working on them for the next 10+ years and building them each into their own digital empire in their specific niche. They all require active work on my part but I truly enjoy the work involved.
Find Your Empire
Financial independence is a wonderful goal, but it can be daunting. It will take most people a decade or more, even with a fairly high savings rate, to build a portfolio large enough that they can support their lifestyle entirely with passive income from it.
If you’re able to achieve F.I. in 10 years or less, then more power to you. But many people would be better off finding their empire – a small business they enjoy working on where they have a unique ability to grow it and earn income from it.
By doing this, you reduce the amount of money you need to have invested in your portfolio to achieve freedom. Think of your portfolio as an asset that generates purely passive income and think of your empires as assets that you’re willing to build from scratch that produce active enjoyable income.
Note: If you’re interested in starting your own website, check out my guide here on how to set one up in under an hour.
Steps to Finding Your Empire
Use the following steps to find your potential empire.
1. Identify your unique skills or knowledge.
This could be skills or knowledge in any niche including specific sports, a specific subject, a foreign language, a computer programming language, etc. If you know something that most people don’t know, you can monetize that knowledge.
A few days ago I stumbled across a blog someone had created around the game Sims 4. After looking at their monthly traffic, they most likely earn $1,000 per month purely from display advertisements on their site. This just shows that you can earn income from any niche.
2. Create content.
You could create a website, a YouTube channel, or a podcast that revolves around your unique skills and knowledge. For example, I know a lot about statistics so I created the site Statology, which has tons of different written tutorials and is monetized mostly with ads.
3. Monetize your content.
Once you create your content and start attracting visitors, you need to earn income in some way. Popular forms of income include ads, affiliate links to products and services in your niche, or your own personal products like courses, e-books, or paid tutorials.
4. Be patient.
Lastly, be patient. You’re unlikely to earn any income in the first six months, let alone the first year. When you pick a niche to build your empire in, you should think of something that you wouldn’t mind working on for at least 3 years, and preferably a decade or longer.
The longer your time horizon, the less likely you’ll get discouraged by slow progress early on and the more likely that you’ll learn to love the process instead of obsessing over the results.
Investing in traditional assets like stocks, bonds, and REITs are wonderful ways to generate passive income. But through sprinkling in some active income, you can gain freedom in life much sooner compared to waiting for your portfolio to blossom into something large enough to support all of your expenses.
Zach is the author behind Four Pillar Freedom, a blog that teaches you how to build wealth and gain freedom in life.
Zach's favorite free financial tool he's been using since 2015 to manage his net worth is Personal Capital. Each month he uses their free Investment Checkup tool and Retirement Planner to track his investments and ensure that he's on the fast track to financial freedom.
His favorite investment platform is M1 Finance, a site that allows him to build a custom portfolio of stocks for free, has no trading or maintenance fees, and even allows him to set up automated target-allocated investments.
His favorite way to save money each month on his recurring bills is by using Trim, a free financial app that negotiates lower cable, internet, and phone bills with any provider on your behalf.
His favorite micro-investing app is Acorns, a free financial app that takes just 5 minutes to set up and allows you to invest your spare change in a diversified portfolio.
His favorite place to find new personal finance articles to read is Collecting Wisdom, a site that collects the best personal finance articles floating around the web on a daily basis.
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