Let’s first clear up a couple of misconceptions before we discuss passive income ideas. Although the word “passive” implies that you don’t have to do anything to generate income, this is not true. A passive income stream must include at least one of the following two components:
- An upfront investment of money
- An upfront investment of time
Easy Passive Income Ideas
There are seven different sources of income for the average millionaire.
The majority of millionaires do not work seven different jobs. It has been common for them to leverage passive income as a means of accelerating their wealth accumulation.
It may sound great to kick your feet up on a beach somewhere and watch the money roll in, but it actually takes a considerable amount of effort to build a steady passive income.
Everyone would do it if it was easy, wouldn’t they?
It is vital that you don’t let the promise of a little hard work discourage you, however, if you are up to the challenge. You can start generating passive income right now in a number of reasonable ways. Even though passive income won’t solve all of life’s problems, earning it isn’t a bad way to start – especially if you plan to become a millionaire someday.
Is Passive Income a Good Investment?
An individual’s passive income, or residual income, is money earned while they aren’t actively working. When you earn passive income, you don’t have to trade your time for money, as you do at your 9 to 5 job. Instead, you earn money even when you don’t work.
Passive income can include investments in stocks, real estate, and even income generated from online business ventures.
How to Generate Passive Income in Two Ways
It doesn’t happen by magic that passive income appears out of nowhere. In other words, it is generated from assets that already exist. Regardless of what kinds of income-generating assets you have, there are only two ways to build them:
Approach 1: Invest money
Put idle cash into investments if you have a lot sitting around. The effort required to generate passive income streams of this type is usually minimal. You can think of them as a way to “put your money to work” in the background to generate returns for you.
Some examples are:
- Invest in a high-yield savings account
- Invest in alternative assets
- You can rent out your basement, attic, or garage
- Take advantage of everyday purchases to earn cashback
- Crowdfund your real estate investment
- Take advantage of Robo-advisors to start investing
- Make your first investment property purchase
- Invest in stocks that pay dividends
- Lending between peers
- Create a CD ladder
- Invest in a blog that is already profitable
Approach 2: Invest time & effort
In order to build your passive income asset, you will have to work manually if you do not have a lot of extra cash on hand. You may need to invest some monetary resources, but time and effort will make up the majority of your investment. There may be greater rewards in the long run.
Typical examples include:
- Affiliate marketing
- Create a YouTube channel
- Become an advertising agency owner
- Publish an online course and sell it
- Create an e-commerce website
- You can sell stock photography online
- Get the most out of your car
- Create an e-book
Passive Income Vs. Active Income: What’s The Difference?
Active income is earned by providing a service in exchange for money. There are many types of compensation, including salaries, hourly wages, commissions, and tips. In essence, it’s a trade where you exchange your time for a fixed sum of money.
This is how most people make their living, and there’s nothing intrinsically wrong with that, as long as you understand that there is a limit to how much money you can earn. The point isn’t to quit your job (at least not yet), but if you’re looking for ways to generate passive income, here are 19 ideas.
Cash-Required Passive Income Streams
Consider these passive income ideas if you have extra money you want to invest.
Invest in A High-Yield Savings Account
The interest rate that your money earns in a traditional savings account is probably virtually non-existent. As a matter of fact, savings account APYs are estimated to be around 0.01% nationwide, which is not enough to generate a meaningful income. With some really enticing interest rates, online banks have emerged on the scene. Your savings will earn more money if the interest rate is higher.
The interest rate for online savings accounts is much higher than that of regular brick-and-mortar banks. Why is that? There is only one word for it: overhead. Online banks are able to pay their customers much higher interest rates because they do not have physical branches (and all the things that come with them, such as tellers, rent, utilities, etc.).
When it comes to high-interest yields, CIT Bank (Savings Builder) and Discover Bank (Online Savings) are leading the pack – offering rates 5x – 6x the national average.
People often could only get these kinds of returns with a certificate of deposit (CD) in the past if they wanted a guaranteed two-plus percent return on their money. That approach has the disadvantage that the money is locked up for the CD’s term. On the other hand, highly-rated savings accounts allow you to access your money much more easily.
Alternative Asset Classes Can Be a Good Investment
There’s a lot of buzz around cryptocurrencies right now, but if you’re willing to take on a bit more risk, investing in fine art might be a better option than trying to outpace stock market gains.
Although past performance isn’t necessarily indicative of future results, adding another asset class to your portfolio – especially one that has performed as well as fine art – can be a good way to offset overvalued equity markets.
Fine art investing platforms such as Masterworks allows you to invest without having to acquire – or protect – million-dollar paintings personally. Art is similar to a mutual fund, where you can invest for the long haul and receive income (dividends) as the piece sells.
You Can Rent Out Your Basement, Attic, Or Garage
You can earn (mostly) passive income if you rent out space on your property as a homeowner. Renting space with Neighbor.com is easy and convenient. You can rent out anything you own or have permission to rent, including (but not limited to):
- RV pad
- Office space
- Empty lot
However, you are free to set your own rates. Your space will be booked through the app by users. If you are interested in storing something specific, you can review each candidate’s profile and send them a message for more information.
Cancellation of the agreement is the renter’s responsibility. By providing long-term storage to someone who needs it, you can earn passive income each month. In addition, a Neighbor’s general liability insurance policy covers you for $1M. Your neighbor guarantees automatic payment, so regardless of whether your renter stops paying, you will still receive payment.
Earn Cashback Now
The cashback rewards available to you could be an easy way to generate passive income if you do a portion of your shopping online.
Strategy #1: Cashback Credit Cards
You can earn cashback on purchases made with cashback credit cards. It is typically between 1-5%. It is possible to get cashback in different categories depending on the offer. An example of this would be a card that offers 2% cash back on gas and groceries and 1% on everything else.
Sign-up bonuses are also offered by many cashback credit cards. Most of these programs require you to spend a certain amount within the first 60 to 90 days of opening your account in order to qualify. However, you should pay off the balance of your credit card every month to get the maximum benefit from these offers. It is easy to negate any potential rewards by adding up interest fees quickly.
For those who prefer not to open a new credit account or already have a cashback card they love, there are other options to earn rewards for their everyday purchases.
Strategy #2: Cashback Apps or Extensions
When you use a deal-finding browser extension such as Capital One Shopping (in addition to your cashback credit card), you can find discounts anywhere on the web – between 1 and 40% off. You’ll never miss out on a great deal with them because they’re often free. You will be notified of any discounts or coupons whenever you visit one of Capital One’s 30,000 partner sites – Amazon, Best Buy, and Target, to name a few.
Invest in Real Estate Crowdfunded by Crowds
A row of houses in the neighborhood to demonstrate crowdfunding opportunities for real estate
Real estate investment is perceived by many people as the ultimate form of passive income. In an ideal world, you would own property that generates income through rents and appreciates in value over time, thereby producing excellent returns. In the past, you have often needed a lot of capital upfront to start a business.
You can invest in real estate without spending hundreds of thousands of dollars on a single property these days. In the case of real estate investment trusts (REITs), for instance, the money is pooled from many investors and managed by professionals. Real estate investment is done with the money in the pool. Real estate investment trusts take money from investors, purchase properties, and distribute the profits back to them.
Having a truly passive income stream allows you to concentrate on other things. Typically, REITs require a substantial investment to get into, but with Fundrise, you can get access to dozens of solid, value-producing assets for less than $500. Generally, it’s a great way to diversify your investments and gain exposure to markets you might not have otherwise had access to.
Take Advantage of Robo-Advisors to Start Investing
It is widely considered that investing is a cornerstone component of any wealth-building strategy. In the past, it was only possible for the wealthy to have their investments managed by a financial professional. The cost of getting started was just too high for the average person.
In today’s world, the internet has made investing more accessible for everyone. Rather than hiring a single human investment advisor, robo-advisors (also known as sophisticated computer programs) manage all your investments for you, even if you are new to investing.
An example of a robo-advisor is Betterment, which builds a portfolio tailored to your needs and goals. Getting started requires just telling it about yourself and your long-term investment goals, funding your account, and letting it handle the rest.
To compare further, take a look at our top-rated investment apps.
Invest in A Property for The First Time
Renting properties can be an extremely intimidating passive income opportunity, especially when it comes to finding tenants. Rent-to-own properties that already have tenants can be purchased with as little as 20% down with Roofstock. As a result, you begin receiving payments from the very first day you invest. The properties don’t even require you to visit them in person!
The difference between Roofstock and Fundrise is that Roofstock is not a real estate investment trust, so you will be buying individual properties.
If you live in an area where real estate prices are too high to realistically invest in, or if you don’t want to travel all over the country looking at potential properties, this is an ideal strategy for you. Furthermore, if you are new to single-family real estate investing, letting someone like Roofstock guide you through the process is a great way to get started.
When you buy the property, it will assign you one of its vetted property managers to handle the day-to-day tasks of being a landlord, such as collecting rent and scheduling maintenance.
You might also consider starting your own real estate, an investment group. Pooling your money together or just sharing your experiences, it’s a great way to team up with other small investors.
Stocks That Pay Dividends Are a Good Investment
Stocks that pay quarterly dividends may be one of the oldest and least sexy passive income strategies, but there is something to be said about them. A passive cash flow can be generated easily without much effort using this method.
When you buy stocks, you hope to “buy low and sell high.” Dividend stocks work similarly, but with a bonus: just for owning the stock, you get a small portion of the company’s earnings as a dividend. The dividends and increases in stock value are paid out when these types of stocks are held.
For example, suppose you purchase shares of Colgate-Palmolive. In addition to getting paid for each share of stock you own, the stock price is likely to rise over time. Approximately $0.34 to $0.68 has been paid for every single share owned by shareholders by Colgate-Palmolive for the past seven years.
Lending Between Peers
In peer-to-peer lending, also known as P2P lending, people lend and borrow money from one another. People with money and people who need money are brought together in the system by creating a marketplace. In the same way, as a traditional bank or lending institution would do, it connects borrowers and allows them to lend cash to each other.
Let’s say you lend someone $10 and they promise to pay you back $11. The friend gets the money he needs and you earn a 10% return, assuming they pay you back. Now imagine this happening on a much larger scale, with thousands of people lending and borrowing money. P2P lending works exactly like that.
In addition to touting its benefits, proponents of peer-to-peer lending emphasize the fact that it is democratizing the loan industry. People with disposable income are able to earn a return on their money while gaining access to the credit they might not otherwise qualify for.
Investors can compare loan details, such as grade and subgrade, loan purpose, interest rate, and borrower information, on Lending Club, one of the most popular P2P lending platforms. With Lending Club, you can invest in the following 12 types of loans:
- Credit card refinancing
- Debt consolidation
- Home Improvement
- Major purchase
- Home buying
- Car Financing
- Green loan
- Business loan
- Moving and relocation
- Medical expenses
- Other types of loan
In addition to Prosper, StreetShares is another peer-to-peer lending platform.
Create A CD Ladder
By putting your money into a CD ladder, you can maximize your interest rate without tying up your money for a long time. To accomplish this, several different CDs are staggered so that they mature at different times. A CD ladder is an investment that allows you to keep your money liquid (or withdrawable) like a savings account while earning higher interest rates than savings accounts.
The first step to creating a CD ladder is to find a bank that offers high-interest rates on CDs. Consider the following CDs that a bank offers:
- 6-month CD at 1% interest
- 12-month CD at 2% interest
- 18-month CD at 3% interest
Buying one of each is the right decision for you. When your first CD matures after six months, you decide to renew it. With the money, you buy a CD for 18 months. You buy another 18-month CD six months after the 12-month CD matures. Every six months, you’ll have access to funds through a CD ladder. You can choose to open a new CD every six months or withdraw your money and interest every six months.
You can claim your money sooner if you have a CD ladder that “matures” every six months rather than putting all of your money in an 18-month CD. Although you may lose a small amount of interest, the flexibility is worth it. Early cash-out penalties are something you want to avoid at all costs.
Invest in A Digital Business That Is Already Profitable
If you’d like to skip the startup phase of starting a business, you might consider buying an existing blog that’s already earning revenue. The reason for this is that a lot of people start blogs and then get bored with them pretty quickly. People often give up before reaching their full potential when starting a blog, as it’s a labor-intensive process.
The Flippa and Empire Flippers marketplaces are two popular places to browse available blogs for purchase.
The websites and blogs for sales of Empire Flippers tend to be more well-established and profitable. There will be a range of prices between $20,000 and $2 million. Nevertheless, most of them have multiple revenue sources, so you’re taking over a site that’ll make you money right away.
You might find some hidden gems on Flippa, even though its inventory isn’t nearly as prestigious as eBay’s. You bid on the site you’re interested in in an auction-style format. Depending on your luck, you may end up with a pre-built blog for less than $1,000 if you bid low enough!
I want to stress one thing here: If you decide to buy a blog, you should be familiar with running an online business at least in some capacity. This is not something you should jump into blindly.
Time And Effort-Intensive Passive Income Ideas
Ultimately, if you are willing to roll up your sleeves and get to work, you will be able to create a steady flow of passive income through the ideas in this section, and maybe even surpass your day job income at some point in the future. Even though there may still be some monetary costs involved, the majority of your investment will be in the form of your time and effort.
Using A Blog to Market Affiliate Products
Earning a commission for each sale you make is what affiliate marketing is all about. Affiliate marketing involves promoting other people’s (or companies) products and services.
For example, suppose you want to earn commissions when people buy mattresses online. When you recommend a decent quality bed on the Internet, you would make $50 for every person who purchases the bed you recommended. Mattress companies generally charge 5% commissions on mattresses, and the average price of a decent quality bed on the Internet is around $1,000.
Theoretically, it makes sense, doesn’t it? How do you actually begin?
Launching your own blog is a great way to get started. Blogs are your own websites where you can write about whatever you want. In order to be successful as a blogger or affiliate marketer, you usually need to focus on a niche or topic for your blog. Referring back to the mattress example, someone who blogged about sleep (sleep habits, sleep hygiene, tricks, tips, etc.) would be a fantastic affiliate for mattress companies. If a sleep blogger attempted to sell basketballs on their blog, they would probably not be successful.
Besides that, a blog gives you access to a wide range of other revenue streams. The possibility of earning passive income online does not end with affiliate commissions; you can also earn money through advertising. One of the great things about blogging is that it can be scaled – residual income can be generated from posts that are several years old. Earning income is possible as long as people are reading your content.
Create A YouTube Channel
Even though YouTube channel owners cannot make money with their channels, making money with their channels is still an option. It will only take a slight adjustment to your strategy.
Several years ago, YouTube channels could be monetized almost by anyone. As a result, advertisers can place videos (advertisements) at the beginning of your content. Your account gets credited when you get a certain number of views.
Videos about makeup tutorials, travel guides, unboxings, or anything else you might think of are very popular. In addition to YouTube’s popularity, it has enough eyeballs to attract an audience even for the obscurest of topics.
Establish an Online Advertising Agency
Consider how many small businesses there are in your city. The majority of them probably aren’t effectively using social media to attract new clients or grow their sales. For example, most companies have a Facebook page, but that’s not enough to spread the word in today’s cluttered news feed.
Here’s where you can help as a Facebook Ad agency owner. This business model offers the benefit of very little ongoing work on your part once your client’s advertising campaigns are up and running. The business model is relatively hands-off, aside from checking in every day for a few minutes.
It is possible to learn the art and skill of Facebook ads even with very little experience. It can be picked up by pretty much anyone and they will land their first client within a month.
It is common for Facebook ad agencies, even one-man operations, to charge a monthly retainer of $1,000 to $2,000 per client. Additional money is spent on Facebook ads, which are paid directly.
In the course of bringing on more clients and establishing your reputation in the area, you can quickly see your income increase. Your business can run passively at that point by hiring an assistant.
Online Course Creation and Sale
Perhaps you have a lot of knowledge about a particular subject. The possibilities are endless when it comes to creating an online course that teaches anything from algebra to guitar on platforms like Udemy or Teachable. After you create the course, you continue to receive payment for each new student that enrolls. This is one of the most powerful strategies out there.
How do you decide which platform to use?
There are many options, but Teachable and Udemy are the most popular, and both are intuitive and easy to use. Your pricing and the look and feel of your course are more customizable with Teachable, but there is no built-in audience. You must instead do all of the marketing yourself. There is a built-in user base on Udemy, but you don’t have as much control and you have to pay a higher percentage of your revenue to it.
- Start a free course with an email address.
- Video, audio, presentations, images, and text can all be uploaded seamlessly.
- Personalize your school by adding your brand, colors, logos, etc.
- Launch your online course and attract students.
Create an eCommerce Website
E-commerce sites that are available 24/7 – even while you are asleep – are appealing passive income ideas online. Many new people are trying out this online business model that has taken the internet by storm.
It takes a lot of effort to set up a proper e-commerce site. The maintenance of a successful system, however, can be relatively passive once you’ve found it. The following are the most popular types of e-commerce sites:
- Manufacturing your own product or sourcing your own products is one way to sell your products.
- Pros: The profit margin is the highest and you have ultimate control.
- Cons: There’s a lot of work and a lot of money involved.
- You can sell other people’s products by sourcing goods from a variety of companies or one company in particular.
- Pros: The products are at wholesale prices and you get a variety of options.
- Cons: Lots of work and hard to compete on price. It can also be difficult to distinguish yourself from the competition.
- Customer orders are dropped shipped by the manufacturer when they place an order on your site.
- Pros: Physical inventory isn’t necessary, and there is less work involved than with the previous models.
- Cons: There aren’t great margins, you don’t have control over quality or fulfillment, and you can’t customize the customer journey.
You Can Sell Your Photos Online
Have you ever wondered how you can make money taking pictures? This turns out to be a pretty straightforward process.
Shutterstock is one of the best sites for making money with your photos. Shutterstock has paid out more than $500 million to contributors since its inception in 2003. No matter what level of experience you have, this site can be used as a passive income source because of its popularity and low barriers to entry.
You can sign up for an account, upload your images, and earn money when a customer downloads your photos. Customer type determines how much you earn per image download. Customers who have a monthly subscription download your image and pay for it specifically will earn less than customers who purchase it directly.
As you earn over time, your earnings per image will increase.
Get the Most Out of Your Car
Even during your typical workday, your car sits around not being used – whether you’re traveling or on vacation.
There are two ways to deal with your car: let it sit around and depreciate, or use it to earn passive income.
- With Getaround, you can rent a car: Getaround allows you to rent your car when you aren’t using it and earn thousands of dollars a year. Almost $9,000 is the average cost of owning a car each year. The money you spent on your car rental can be recouped with Getaround (if not all). Owners of Getaround cars get dedicated parking, a $50 driving credit per month to rent anything they want, and $1 million in primary insurance coverage. It is necessary to create a free Getaround account in order to take advantage of this passive income opportunity. The landlord sends you a payment each month on the 15th following the month you received your rental earnings.
- Wrapify is the ultimate advertising platform: Wrapify allows you to advertise brands and businesses on your car for a fee. The company’s website states that drivers can earn more than $400 per month. You will need to download the app and track your driving before you can get started. When a campaign is available in your area, you’ll be notified as soon as you meet the minimum qualifications.
- With RVShare, you can rent an RV: RVShare allows RV owners to rent their unused RVs to travelers. Start by registering with the site, creating a free listing for your RV, and responding to booking inquiries. There are different ways to earn money depending on the season, the type of RV you are renting, and how long the rental lasts. It is reported on the site that RV owners can make up to $40k per year through the site by renting out their RVs.
Create an eBook
Consider self-publishing your own eBook if you’re interested in writing, but don’t want the technical headache that comes with blogging. The length of eBooks is typically much shorter than for regular books, which makes them easier to create and sell.
It is usually non-fiction eBooks that are most successful. You might come across how-to guides or explanatory pieces on a particular topic, like fitness or graphic design.
There is probably no easier platform to get started on than Amazon Kindle Direct Publishing. It takes just a few minutes to publish a book, and most of them appear on Kindle stores around the world within 1-2 days. The Amazon KDP program gives you the freedom to set your own prices and make changes to your books at any time. You can earn up to 70% royalty on each sale to customers in most countries.
This course will help you save time, and hassle, and start earning money from your eBook sooner. A significant part of the course curriculum consists of selecting a topic for your eBook, developing a good story that people will be interested in reading, and marketing and selling your eBook.
You Can Sell the Location Data You Have
There is only one item on this list that does not require any effort or money. There is a new app called Tapestri that allows users to sell their location data and get paid for it. In most cases, smartphones collect much more data on you than other smartphones do, according to the company. As opposed to giving you a dopamine rush like every social media app, Tapestri will actually pay you for your data.
With the app, you can earn money easily. It only takes a few seconds to download the app, give it permission to track your location, and you’re done. Tapestri collects entirely anonymous data, which means that it cannot be associated with you personally by brands purchasing it. The companies that buy the data simply use the information to identify their target customers, including where they shop, where they go next, and on what days they shop.
Having the app installed and active can earn users up to $25 per month, according to Tapestri. In addition, you are not required to do anything. There are survey opportunities available in the app if you are interested in making a little extra money, but they are completely optional.
Choosing the Right Passive Income Stream
In the end, you can use a combination of these passive income ideas or try them all.
It is important to remember that the right path for you will be determined by your short- and long-term goals, the amount of time you have, the amount of money you wish to earn, and how many hours of work you are willing to devote.
Many experts recommend that you take up real estate as a career path. There are statistics that prove that 90% of all millionaires gained that status by owning real estate as a result of becoming investors as Louis Glickman said: “The best investment on earth is earth.” And, of course, some stats prove this point.
As for real estate, it is an excellent option, but it does require a significant amount of initial investment, as it is a long-term investment. Depending on your current financial situation, this passive income stream may or may not be a good fit for you. In order to get involved in real estate, you might be better off investing in an investment strategy where you can build up funds until you have a significant amount of money to invest in it.
Passive income ideas are more attractive to some people because they give them a sense of control and ownership over their income. It is a well-known fact that many entrepreneurs love the idea of creating something, whether it is a blog, a YouTube channel, a course, or an online store. There is no doubt that it’s a life-changing experience, one that can bring enormous wealth and satisfaction to those who choose to pursue it, even if it is technically not passive at the beginning.