Passive income: What is it?
Income that doesn't come from a regular employer that requires a lot of work to generate and sustain is known as passive income (or unearned income, as it's referred to by the Internal Revenue Service).
Investing in mutual funds or real estate, selling goods online, creating online courses, or engaging in various side jobs that don't require active participation are all examples of passive income streams.
Passive income, as contrast to active revenue, is frequently produced automatically and offers residual income with little time and effort. You'll have more time freedom and your personal money will improve. Stress and worry can be lessened by not having to exchange your time for money, and having more money in the bank can boost your sense of financial security.
Consider the following passive income options if you're a service provider wishing to cease selling money for hours or a product business looking to add income sources that don't require the complexity of sending out actual things.
20 passive income ideas to earn money
- Start a dropshipping store
- Create a print-on-demand store
- Sell digital products
- Teach online courses
- Become a blogger
- Sell handmade goods
- Run an affiliate marketing business
- Sell stock photos online
- Become an Instagram influencer
- Buy a rental property
- Invest in the stock market
- Rent out your spare room
- Rent out your car
- Lend money to peers
- Earn while shopping online
- Buy and sell websites
- Start a YouTube channel
- Invest in REITs
- Sell designs online
- Invest in vending machines
- Start a dropshipping store
One of the best passive income opportunities, even if you don't have much in the way of cash flow to start with, is dropshipping. Some dropshippers claim to earn more than $100,000 annually. Dropshipping is not a get-rich-quick scam, though, as it requires an initial time investment in order to make money.
The dropshipping business strategy entails setting up an online store where clients can explore and purchase goods. Dropshipping is interesting since you don't have to see or handle the physical things you sell.
When you dropship, your supplier takes care of the entire process, including manufacturing, packing, and fulfillment. Additionally, this passive income business has a low cash risk because you don't need to pay your supplier until after your consumers have made a payment.
The danger associated with investing in a product that has no market is another one that can be avoided. To identify hot items in various markets to offer in your shop, use a platform like the DSers.
You may be able to generate a sizable passive income and learn how to manage an ecommerce business depending on the product you select and your pricing.
- Create a print-on-demand store
Print on demand can help you commercialize your talent if you're an entrepreneur, designer, or creative professional. Working with suppliers, it entails customizing white label products like t-shirts, posters, backpacks, or books, then offering them for sale based on individual orders.
You simply have to pay for the product after you sell it, much like dropshipping. There is no need for inventories or bulk purchases. Print-on-demand businesses become excellent sources of passive income because:
Products can be swiftly created and put up for sale in a matter of minutes.
Your supplier manages fulfillment and shipping.
You may automate a number of marketing and sales procedures once your store is set up.
You can quickly and easily produce things to sell in your Shopify store using a print-on-demand firm like Printful. In general, print on demand is a straightforward, low-risk passive income source that you can start using right away.
- Sell digital products
Digital products are assets or media that customers can't physically touch. These comprise files that may be downloaded or streamed, including PDFs, templates, plug-ins, and Kindle novels.
Digital goods have significant profit margins, making them excellent sources of passive income. The asset just needs to be created once, and you may sell it repeatedly through your online store. No inventory or storage space is required.
You are free to sell as many digital goods as you like. By offering kits, printables, files, and other resources that professionals can utilize, many creators increase their passive income from digital assets. To help with the design process, UX Kits, for instance, sells personas, flowcharts, and wireframes.
The company's items have been sold to more than 10,000 consumers in more than 100 countries, and it still offers same profitable products for sale online today, proving the viability of this passive income technique.
- Teach online courses
Online course sales are now more straightforward than ever for educators. You have few restrictions on how you can produce pre-recorded courses and begin selling them, whether your subject is marketing, illustration, or entrepreneurship. Online courses are similar to digital goods in that you may sell them repeatedly without keeping any stock or inventory, making passive income possible.
It takes some initial time investment to teach online. You'll need to produce digital resources like templates for students to take away as well as an outline for your course and a recording of it.
Consider Yegi Saryan, the company's founder. After founding an online beauty company that sold items for eyelash extensions, she established Yegi Academy as a learning division. Her lash classes, which provide both online and on-site training, assist business owners all over the world in launching their careers in the beauty industry.
Your online course can be shortened, lengthened, or edited to fit a variety of class sizes and experience levels because it is recorded in advance, increasing your passive income streams. You can utilize software to automatically distribute lectures and materials at certain intervals, or you can design fully downloaded courses that students can complete at their own leisure.
Whatever way you look at it, creating an online course to teach is a terrific method to make passive income with little initial commitment besides time.
- Become a blogger
Although starting a blog can be difficult, blogging as a business concept is become increasingly popular as a passive revenue source. To make money online, you no longer need to be a well-known figure on the internet. Simply locate your audience on one or two platforms, then direct them to your website.
Building a blog takes a little while. But if you produce high-quality material and advertise it on your platforms, you'll develop a large enough audience to bring in a sizable income.
You could use blogging to generate passive revenue by:
promoting affiliate goods
A sponsored post is made
promoting your own goods
advertising using Google AdSense
What's best? To start a blog, you don't need any programming or design expertise. You can quickly set up a blog with a content management system and hosting service like Shopify.
Although it will take time to develop an SEO marketing plan and produce and promote the material, your efforts will be rewarded since, depending on how you monetize your blog, the return on these passive income investments can be as high as $30,000 per month.
- Sell handmade goods
Online sales have never been more profitable. The chance to create and grow an online business is enormous given that there are already over 4.6 billion internet users worldwide.
You can sell on hundreds of online stores. Some, like video games or handcrafted goods, have defined specialties, whilst others let you sell anything you choose.
Popular online marketplaces include:
your personal online shop
Handshake
Amazon
eBay
Ruby Lane
AliExpress
There is a double upfront investment. Making and selling handmade items like pottery or clothes will need an investment of both time and materials. Additionally, you should set up an online shop to hold your goods.
- Run an affiliate marketing business
The act of suggesting a good or service to a customer is known as affiliate marketing. Because you receive a commission everytime someone uses your referral link to purchase the suggested good or service, it's a fantastic passive revenue source.
For the following main reasons, online business owners join affiliate marketers:
It is simple to carry out. You merely take care of the marketing aspect of things. The company will create products and complete orders.
Low risk applies. Joining an affiliate program is free. You can sell current earnings with no initial outlay of cash. You'll need to put some time into developing traffic sources to increase the number of clicks on your links. Once that's done, commissions are a pretty passive source of revenue.
It can be scaled. Typically, affiliate marketers don't employ additional staff. While your prior work generates income in the background, you can present new products to an audience and design campaigns.
Making money with affiliate marketing can be a satisfying method to expand the sources of income for your company. Your time is the only expense. Once the hours are put in, you can continue to reap the benefits.
- Sell stock photos online
Photography is a service-based business, so unlike many of the other passive income suggestions on our list, you often get compensated for your time when you engage in it. To make money with photography, you must be present at an event or picture shoot, which might get tiresome after a while even if you're making a fortune.
You can, however, make passive income from photography if you work as a full-time photographer or have a high-quality camera by selling your images online. For high-quality images and videos, stock picture websites like Pexels, Shutterstock, and other online media houses will pay.
Except for your camera and laptop, there is nothing else you need to have around the house. Once you upload your images to the platform, these websites will handle the marketing for you, allowing you to focus on selling your work.
You can simply tie in digital products like prints or print-on-demand products like shirts and caps if you run your photography business on Shopify, offering you even more passive income streams so you can work less and earn more.
- Become an Instagram influencer
Dwayne "The Rock" Johnson receives a million dollars for each Instagram post. Even if you don't have chiseled abs or more than 200 million followers on social media, you may work as an influencer on Instagram and get money on a monthly basis.
You must establish a network of followers who share your interests if you want to use Instagram to influence people's purchasing decisions.
Do you enjoy comic books? You can open an Instagram account and begin regularly posting about the newest Marvel and DC television programs. The same holds true if you have a passion for sports, scuba diving, interior design, or even just general culture.
Influencers like Alex Lange occasionally publish paid content for companies like Tinder.
- Buy rental property
One of the earliest methods of generating passive income in particular and long-term wealth in general is real estate investing.
If you have enough cash, you can purchase real estate, such as apartment complexes, and rent them out for rental revenue. However, because being a landlord is a somewhat active job, you can engage property managers to handle tenant management, property maintenance, and rent collection.
Additionally, when the housing market improves, the value of your homes will grow, boosting your profits in the case of a future sale.
- Invest in the stock market
The stock market is a terrific method to create enduring wealth, despite the high learning curve and potential for confusion. Thinking in the short term rather than taking a long view to achieve financial objectives is a frequent error that most people make while investing money.
Stock investments are intended to diversify your portfolio and lower risk. This can be accomplished by purchasing mutual funds, exchange-traded funds (ETFs), and equities with high dividend yields that produce income over the long term. You must open and fund a brokerage account at a reputable financial institution before you can begin investing in the stock market.
- Rent out your spare room
Perhaps you lack the initial funding necessary to invest in rental properties. Are there any further rooms in your flat, though? Alternatively, do you plan to leave your house unoccupied while on a three-week road trip? To rent out your free space, you can work with a firm like Airbnb or VRBO.
Homeowners and travelers who are seeking for their next trip can connect through Airbnb. There is a high demand for your available space as an Airbnb host since people choose Airbnbs because they are frequently more handy and may be found for less money than hotels.
Even better than renting out one extra room to generate passive money is renting out ten. If you want to increase your Airbnb passive income, you can buy flats only for rental purposes (according to local rules). However, you should be aware that setting up a rental arrangement frequently involves work. Before renting out your spare space, you might need to furnish or renovate it.
- Rent out your car
You can rent out a variety of items to generate passive income in addition to your home. Using a service like Turo, you can also hire out your vehicle. If you already use your vehicle for Uber, you may sign up with Carvertise or Wrapify to make extra money while you travel around the city.
Find someone who needs a car for Uber or Lyft to drive for them as another method to make money from your car passively. Therefore, you can load up a Netflix show while your car is doing the driving for you rather than actively driving around in your spare time.
- Lend money to peers
Have excess money lying around that's not helping you? Peer-to-peer lending is a viable side business idea. The lending of money to borrowers or small enterprises is known as peer-to-peer lending.
You can register on a website that links borrowers and lenders, such as LendingClub, Prosper (for individuals), or Worthy (for corporations), to make the process simple.
These websites typically offer loan requests and interest rates that are determined by the borrower's past behavior. These loans typically have returns of between 5% and 6%. Your cash flow will be higher as you lend more money.
- Earn while shopping online
When you shop online, cashback reward services like Swagbucks, MyPoint, and Rakuten let you make passive income. You can start earning money from these sites right away after signing up without doing anything more but shopping. You get more points the more you shop online. And the more cash you can bring in.
A word of caution: in an effort to gain rewards, refrain from going over your monthly spending limit or using the entire limit on your credit card.
- Buy and sell websites
There are websites available on almost any subject you can imagine. What's best? Many of them generate substantial incomes from sources like affiliate marketing, advertising, paid memberships, or merchandise; they are frequently offered for sale.
Once you open and verify an account, websites like flippa.com make it simple to buy and sell online stores securely.
It's a fantastic approach to run a company with some customers and revenue flowing in. You also have access to seller support after completing your purchase to help you succeed.
- Start a youtube channel
It's still possible to launch a YouTube channel. In the US, a staggering 74% of individuals utilize YouTube. That is a sizable audience to draw in for passive income. The problem? It takes a lot of work in the beginning for little to no reward.
However, if you have a long-term perspective and don't mind front-loading your work, a successful YouTube channel has a great potential for passive revenue. As you build up content, clicks, and views as well as expand your audience, passive income streams like affiliate sales, sponsorships, branded integrations, and ads can all pile up.
Consider Ali Abdaal's tale as an illustration of what is feasible. Within four years, he was making more money from his YouTube channel than he was from his UK-based medical practice.
- Invest in REITs
What if you lack the funds to purchase complete housing complexes? Can you still make money from rentals? You can, indeed.
You can invest in a range of real estate assets using a real estate investment trust (REIT) platform like Fundrise with a $500 minimum investment and increase your passive income as the value of your investments rises. A business that owns and operates successful real estate is known as a REIT. Smaller investors can pool their funds in this way to make investments they otherwise couldn't afford.
The average annual return for REIT investments over the previous ten years was 9.5%. If you have initial cash, real estate investment trusts are one of the best passive income ideas to consider as a long-term investment.
Starting a business requires both upfront cash and extensive study. You don't want to enter into this venture haphazardly. Fortunately, there are several tools available, including this guide, to assist you in getting started.
- Sell designs online
Selling digital designs on design marketplaces like 99designs, ThemeForest, or Creative Market is a terrific way to start a passive revenue stream. These platforms offer a built-in market that is already hungry for design materials, regardless of whether you utilize a website builder to create website themes, logos, branding resources, templates, illustrations, or even fonts.
The $13.1 billion sector of graphic design in the US is constantly expanding. Thankfully, securing a passive piece of that pie can also be simple.
For instance, you would have to apply and wait for approval if you wanted to begin selling designs on Creative Market. From there, you obtain your own retail space where you can begin offering your exclusive designs for sale.
- Invest in vending machines
Ever wonder who maintains all those always-stocked vending machines? Your desire for soda and snacks is providing (semi) passive cash to the proprietor of those machines.
With some study, you too can join in the fun. Fun fact: The $8.6 billion vending machine market is a thriving one.
Vending machine business startups do need to make an initial time and financial investment. This is a wonderful manual that offers advice on how to set up your own vending machine.
You can estimate the initial investment you'll need to make to purchase your first set of machines by using marketplaces like Craigslist, eBay, or BizBuySell (as well as how many you can afford to start). A route of vending machines makes for a fantastic cash-flowing source of essentially passive income once you acquire locations where you can install them.
