Why passive income?
During the last 5 years, I have been working really hard to find the best ways to earn money for my ultimate goal: FREEDOM! I want to have more time to do all the things I really love: spending time with family, traveling the world and enjoying a flexible schedule. In order to do that, I had to find ways to make passive income a reality.
The great things about passive income are:
- Passive income isn’t dependent on how many hours you work: once your income stream is set up, you can make money with little work needed to maintain it. Isn’t this alone a great motivation to find your passive income stream?
- It requires you to put in the work upfront, but you will then be able to generate revenue day after day!
- You will have more time to do what you love, while still being able to make money and pay your bills.
And even if you are not dreaming to quit your day job, it’s never a good idea to depend on one single income stream. Your job is not 100% secure, and by being able to generate income using different ideas to make money will give you more security.
But there is one thing I really want you to remember which I learned during these years:
Passive income is not EASY: it takes time and hard work to build. Whether your passive income stream will come from a product or investments, you need to have the motivation to create it in the first place!
But if you put in the hard work and do your research, you will learn how to make money while you sleep.
After tons of research, I found different ways to generate passive income streams:
- Investing money you already have
- Renting out things
- Investing in digital content creation
Best Passive Income Ideas
Below you will find all the passive income ideas I researched over the years (including the things I am doing to build my passive income stream). Some of these passive income ideas require more work than others upfront, and some of them come with financial risks that you will have to evaluate before jumping in.
I classified these money-making ideas by:
MONEY: the amount of money you’ll need to have to generate a significant passive income.
RISK: how risky this passive income idea is. This will also depend on your risk tolerance.
TIME: how much time you will need to put in, which could be research time at the beginning or actual work to set up your passive income stream.
GAIN: how much passive income you can generate. This is based on an average. Every passive income idea can generate an amazing gain (or very little if poorly executed, or if dependent on external factors).
RISK: how risky this passive income idea is. This will also depend on your risk tolerance.
TIME: how much time you will need to put in, which could be research time at the beginning or actual work to set up your passive income stream.
GAIN: how much passive income you can generate. This is based on an average. Every passive income idea can generate an amazing gain (or very little if poorly executed, or if dependent on external factors).
This score, of course, is just based on my view and experience.
But the question you need to ask yourself is:
How many people are going to commit to really learn about how to make money through passive income?
JUST DO IT!
Choose a few ideas that sound interesting and try them out! If you don’t start to create passive income now, you will never escape the rat race to live the life of your dreams!
How To Create Passive Income
Investing money you already have
Investing is the easiest form of passive income, and doesn’t require much day-to-day effort. If you are able to save money, or you already have a substantial amount of funds sitting in your bank account, there are plenty of passive income opportunities for you to chose from.
1. Invest In Dividend-Paying Stocks
MONEY: 10/10RISK: 9/10TIME: 4/10GAIN: 8/10
What are dividends? Dividends are cash paid by a company to its shareholders.
When you invest in a dividend-paying stock, you are buying a share of the company and you literally become part-owner of that business. As the company grows and generates extra cash that it doesn’t necessarily want to re-invest, it might decide to return some of the extra cash to the shareholders in the form of dividends. And because you own a fraction of the company, you will receive a portion of the cash!
Dividend-paying shares can be an excellent tool for generating income, but make sure you do your research on the shares you buy as dividends are not guaranteed: if the company isn’t generating enough cash, it can cut or suspend its dividend.
If you want to learn more about dividend investing you should read:
- The Dividend Mantra Way: Achieving Financial Independence By Living Below Your Means And Investing In Dividend Growth Stocks
- Dividend Growth Machine: How to Supercharge Your Investment Returns with Dividend Stocks
- The Single Best Investment: Creating Wealth with Dividend Growth
2. Buy Index Funds And ETFs
MONEY: 10/10RISK: 8/10TIME: 2/10GAIN: 7/10
If you have the capital to invest, but don’t have the time, knowledge or energy to get stuck in dividend investing, index funds and ETFs are a much easier alternative. Both index funds and exchange-traded funds (ETFs) track specific returns of a market index.
If you want your money working for you, you are looking for a simple approach and don’t want to play with risky strategies, this passive income stream might be for you.
It took us a long time to decide how to invest our money. I have always been terrified of investing in the stock market as I am the worst gambler in history. Then I discovered index investing and ETFs and I am converted. Last year my investments made a return of over 10%!
3. Invest with Robo Advisors
MONEY: 7/10RISK: 7/10TIME: 2/10GAIN: 7/10
Up until a few years ago, if you wanted to invest your hard-earned money in the market, you required to hire a portfolio manager or financial advisor.
This not only required a minimum sum to invest that is probably higher than most of us has, but also came with very high fees.
What are Robo Advisors?
Robo advisors are digital platforms that aim to change that by automating investing, using algorithm-driven technology.
This makes high quality investing available to everyone, even if you have little money to start with.
This makes high quality investing available to everyone, even if you have little money to start with.
Betterment is the largest robo advisor on the market, and without a doubt, one of the best, especially if you are not keen to spend too much time learning about investing.
There is no minimum amount to invest, the fees are low (between 0.25-0.4%), and you really don’t have to know anything about investing.
All you have to do is:
- Open an account (which takes less than 5 minutes), with no minimum deposit.
- Tell Betterment a bit about yourself: Where are you in your financial life and what are you investing for? Dream vacation? Down payment for your mortgage?
- Based on your answers and risk tolerance, Betterment will recommend an investing plan and use their advanced technology to build you a personalized portfolio.
It couldn’t get any easier than this!
Blooom is similar to betterment but for your 401k plan. The amazing thing is that Blooom will give you a free analysis of your current employer-sponsored retirement plan.
This will help you to uncover unnecessary hidden fees very quickly.
Not only they will massively reduce your fees, but they will also rebalance your retirement portfolio based on your age, to maximize your returns.
4. Peer-to-Peer Lending
MONEY: 8/10RISK: 9/10TIME: 3/10GAIN: 7/10
Peer-to-peer lending means loaning money to other people. Specifically, you lend money to people who don’t qualify for traditional financing. Companies like Lending Club and Prosper offer returns in the range of 4-10%, which are a lot higher than a typical saving account. You will be able to select the right investment for you, based on your risk assessment strategy.
Make sure you do your research, as there is always a risk of losing your money.
5. Crowdfunded Real Estate
MONEY: 8/10RISK: 7/10TIME: 3/10GAIN: 7/10
I love real estate investing, but it requires a lot of upfront capital plus you are going to have to learn to love your tenants (see point 6 below)! Crowdfunded real estate investing gives you a way to still invest in the real estate market, without having to necessarily put in a lot of money upfront. It’s definitely a much more passive investment than owning a flat or a house!
When you invest in crowdfunded real estate, you are normally funding loans, which are then used to buy and improve real properties, and you get paid for that.
With Crowdfunded real estate investment, you can get returns in the range of 7-10%, similar to peer-to-peer lending, but you have the actual house to back up the investment.
PeerStreet has a minimum investment of $1,000. If you are interested in finding out more. Once you have an account, you will be able to check the potential real estate deals or look through PeerStreet’s portfolio suggestions.
Please keep in mind that this is a new market, and there are risks to investing. Make sure you do your research before you dive in!
Article I recommend:
6. Invest In REITs (Real Estate Investment Trusts)
MONEY: 7/10RISK: 7/10TIME: 3/10GAIN: 7/10
Another way to invest in real estate is to invest through a REIT.
A REIT is a company that owns, operates or finances real estate and allows anyone to invest in portfolios of real estate assets, the same way as stocks: you can purchase individual stock or exchange-traded fund (ETF). You can then earn a share of the income produced through the real estate investment without having to own, manage or finance a property.
A REIT offers capital growth and generally high dividend yields.
Article I recommend to learn more about REITs:
7. Open A High-Yield Account
MONEY: 6/10RISK: 1/10TIME: 1/10GAIN: 2/10
We have been experiencing low-interest rates for years, and most bank accounts pay close to nothing for savings. If you have money sitting in your bank account, and you still don’t know how to invest it or prefer a no-risk investment strategy, make sure you pick the best possible rate for your savings.
You normally need to look at online banks to get a much better interest rate, but the difference can be massive. You can get up to 155x more than traditional banks! Do you think I am kidding?
Although the interests paid by Bank of America are extremely low, CIT Bank still offers over 25x the national average, which is unbelievable compared to the others.
Here are some of the best options for high-yield accounts available on the market now:
- CIT Bank – 1.85%
- Barclays Bank – 1.50%
- Synchrony Bank – 1.55%
As all the banks listed above are FCID Insured, your money will be safe and although you won’t get rich, you will be able to get much higher returns than just leaving your savings in your current account!
Renting Things Out
If you own things, you might be able to generate residual income by renting them out. Taking advantage of things you already have is one of the best ways to make passive income a quick reality.
8. Invest in a Rental Property
MONEY: 10/10RISK: 6/10TIME: 8/10GAIN: 7/10
This is one of my favorite passive income ideas! It’s the first one we explored and decided to go for, as we love houses and we do like to have a tangible investment. You will normally need some capital to invest and it will require doing quite a lot of work to find the right rental property.
Although a lot of people don’t really consider real estate rentals a passive business, it’s definitely more passive than going to the office every day!
We have 1 rental at the moment and we are renovating the second one. Last year we generated over $14,000 net passive income (after mortgage payments and taxes) from one apartment, and all I had to do was go in to inspect the property 3 times to make sure the tenants weren’t destroying it! It turned out they kept it in perfect condition and they were lovely people! Call me lucky.
Every time we buy a rental, we renovate it to high standards to make sure it’s in perfect shape and won’t need much work done for quite a few years. If you want to make it even more passive, you can outsource the property management duties and maintenance tasks.
This year we are hoping to get over $25,000 in rental income alone!
Websites I recommend:
9. Rent Out Your Spare Room
MONEY: 1/10RISK: 2/10TIME: 4/10GAIN: 5/10
What could be better than earning passive income from home? Earning passive income from your home!
If you own your house and have some extra rooms or you rent a place with some extra space, you can start earning money now on websites like Airbnb.
If you are renting, make sure you check with your landlord first, as you will need his/her permission to rent out the extra space for some cash.
How much you can make will depend on the location, the size, and condition of your home, but this is definitely a way of earning money from space that might just be sitting there empty.
Going away on holiday? List your home while you are away and you could earn more than what your holiday is costing you!
10. Rent Out Your Car, Bike or Parking Space
MONEY: 1/10RISK: 1/10TIME: 4/10GAIN: 4/10
Got a car? A bike? A garage or an extra parking space? You should probably rent it out! Just like renting out a property, this will require some maintenance and work, but you can definitely earn some good money.
If you want to rent out your car while you are on holiday, or while you are not using it, check out this website:
With Turo, you’re protected with $1 million in liability insurance, and your car is covered against theft and physical damage.
To rent out your bike you can use:
It is completely free to list your ride on Spinlister. They will only make money when you do and take a 17.5% fee for any rentals. They also guarantee the safety of your bike up to $10,000.
If you have a free parking space, driveway or garage, post it on websites like Craiglist. If you live in a major metropolitan area, you will be surprised by how much you can make for your spot!
E-commerce
Having an e-commerce store is one of my favorite passive income ideas.
E-commerce platforms like Shopify are making it easier than ever setting up an online store in no time.
11. Start your own online store
MONEY: 4/10RISK: 3/10TIME: 9/10GAIN: 7/10
With more and more people shopping online every year, building your online store could be your key to make money while you sleep.
There are several business models for an e-commerce website:
- Sell your own physical product: it’s a lot of work and requires some capital to invest but you could create something unique with high-profit margin.
- Sell your own digital products: again, a lot of work to set up by creating your products, but you will not have to worry about shipment and good delivery.
- Dropshipping: you will not have to own stock. When someone purchases a product from your online store, the manufacturer will ship it directly to the customer. It’s great as you don’t have to handle deliveries and returns, but you don’t have much control over quality and customer experience.
- Sell other people’s product: you get to sell a lot of different products from the start, but it’s hard to differentiate yourself and make a profit in a competitive market.
Shopify is by far the best e-commerce platform out there. They have beautiful templates that will make designing your site a breeze.
They also have lots of tools and adds-on to help you process payments, handle deliveries and returns, set up promotions and much more.
Investing In Digital Content Creation
If you don’t have savings and don’t own many things, you can still generate residual income by creating digital content. This normally requires more time upfront, making it a bit less passive than other ideas, but if you stick with it for long enough, you will be able to reap the benefits and generate real passive income streams.
12. Start A Blog
MONEY: 2/10RISK: 1/10TIME: 8/10GAIN: 7/10
Really? Yes really! Blogging isn’t 100% passive and requires A LOT of hard work in the setup phase. Believe me, I did it! It took me 3 months before I launched to generate enough good content, and don’t trust anyone who tells you that you can create a money-making blog in a week!
But what I found out myself is that if you put in the hard work, and you are clever about what you write about, you can quickly generate traffic, and TRAFFIC = MONEY.
You can generate income by adding ads to your blog, or you can generate money using affiliate marketing. With affiliate marketing, every time people click on affiliate links on your site and make a purchase, you receive a small commission at no additional cost to them.
13. Write An E-book
MONEY: 1/10RISK: 1/10TIME: 8/10GAIN: 7/10
Writing an E-book requires a bit of time investment upfront, but it can be an amazing source of passive income month after month. And with digital technology, it has never been easier to become an author!
If you love writing content, you won’t find it hard to write an 80-100 page e-book on the things you love. Make sure you pick a profitable niche and you market your book through bloggers and influencers in that niche.
Non-fiction e-books that educate your potential audience on specific topics like finance, online marketing, and business are going to make you more money than fiction books. Of course, there are always exceptions and you could write the next Harry Potter book, but if you want to create some residual income opportunities quickly, I would suggest you go for what sells first!
Using the Amazon Kindle Direct Publishing platform is an easy way to get your e-book on Amazon as quickly as possible and start making some money!
14. Teach Your Expertise
MONEY: 1/10RISK: 1/10TIME: 8/10GAIN: 7/10
Teaching your skills by creating an online course has the potential to become a fantastic way to earn passive income. You will have to put in the work first, and then you will profit forever (or shall we say for a very long time?)
There are plenty of people that make a living from selling online courses. You can create videos, e-books, checklists and audio files to supplement your lessons and share your passion with others.
You can create different courses at different prices to maximize your chances of selling it.
The best online websites that make it easy for you to sell your skills and create online courses are:
- Teachable.com
- Udemy
- SkillShare
15. Set Up Your YouTube Channel
MONEY: 3/10RISK: 1/10TIME: 9/10GAIN: 7/10
I won’t lie: it’s not easy to make money out of a YouTube Channel. You will need to create quite a lot of video content before you can start to earn any significant amount of money. But if you pick the right target, and manage to create great and useful content, you will be able to get organic traffic from YouTube and Google.
You will make money by display ads on your channel, and get paid every time someone watches your videos.
On the plus side, great quality video content is relatively scarce, compared to text-based content. Also, people prefer watching a 5-minute video recipe than reading a long set of instructions. The market is less competitive. If you have great video and editing skills, you should give it a try!
16. License Your Photos
MONEY: 2/10RISK: 1/10TIME: 6/10GAIN: 5/10
If you have a great eye and friends keep telling you how beautiful your photos are, you might be able to pick the best photos from your hard drive and make money by selling them online.
You don’t have to be a professional to sell them and you still have the opportunity to earn some money, even if you are just a novice.
Most websites pay you based on the number of downloads: you get paid a percentage every time someone downloads one of your pictures. So once the pictures are uploaded, you will be earning passive income every time someone buys them.
Best websites to sell your photos online:
If you want to learn more about making money by selling your photos online, there are some great courses on Udemy! All these courses are rated above 4.5 stars and have been taken by over 1,000 people!
17. Sell Printables on Autopilot
MONEY: 2/10RISK: 1/10TIME: 7/10GAIN: 6/10
If you love design and you are an artistic person, selling digital products on Etsy could be a great way to earn passive income. Digital products require little maintenance, your customers will simply receive a link to download them (which means you don’t have to worry about shipping and returns handling). All you need to do is spend time upfront to create beautiful artwork! (Easy right?)
Printables can bring you plenty of passive income success. Some examples of the most popular printables include:
- Greeting Cards
- Wall Art
- Organizer
- Decorations
- Invitations
These are just a few examples: there is no limit to your imagination! Are you a great cook? You can sell meal plans and recipe cards. Are you a fanatic organizer? You can sell beautiful planners or calendars.
Use your knowledge and expertise to make beautiful products. As long as printables are appealing to your target audience and high quality, they will sell!
What’s the bottom line?
Passive income through any of the ideas above requires work, but IT IS POSSIBLE to make money while you sleep! No matter what ideas to make money you go for, you might have to sacrifice time, but if you want it badly enough it will be worth it!
My favorite passive income ideas (mostly because I am working on it already and can see the results) are:
- Buying Index Funds And ETFs
- Investing in a Rental Property
- Starting A Blog
And I am seriously looking into:
- Writing An E-book
- Teaching my expertise
- Starting an online store
Remember, if you want to achieve financial independence and be able to quit your job, you need to seriously start thinking about earning passive income!
Are you interested in any of these passive income ideas?Yes or No?
What are the best passive income ideas that will work for you
What are the best passive income ideas that will work for you