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Realities behind creating 'passive' income

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Affiliate marketing
Affiliate marketing | -Oxford-/Getty Images

Affiliate marketing

To many, affiliate marketing seems like an easy way to generate cash. Here's how it works: Website owners or bloggers promote a third party's product by including a link to the product on their site. When a visitor clicks on the link and makes a purchase from the third party, the site owner earns a commission, generally around 15% to 20%, according to StartupNation, a website for aspiring entrepreneurs.

Affiliate marketing is considered passive because, in theory, you can earn money just by adding the link to your site. In reality, you'll earn squat if you don't find a way to attract readers to your site, click on the link and buy something.

"It's a long-term project," says Joe Udo, owner of the website Retireby40.org. "If you're just starting out, then it's not going to be passive because you have to build traffic and generate content."

Even after you've gained a steady following, for best results, you need to write content that draws attention to the product and link. "If I recommend something, I'll usually write a blog post about it or add a link to another relevant post," says Udo. "It's best to recommend products that you like and believe in. You shouldn't try to sell things that you have no experience with."

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