“Making money while you sleep” has a nice ring to it, doesn’t it? This post details 15 passive income ideas to bring you closer to financial independence.
Before we get into the passive income ideas, I think it’s a good idea first to clear up a couple of misconceptions. Although the word “passive” makes it sound like you have to do nothing to bring in the income, this just isn’t true.
All passive income streams will require at least one of the following two elements:
1) An upfront monetary investment, or
2) An upfront time investment
Over time though, as you stack up multiple passive income streams, your income starts snowballing. With each new passive income investment, you see more money coming in every month.
Now, let us get to the list.
#1 Robo Investing
Letting an algorithm manage your investments is about as passive as you can get. Robo-advisors like Betterment allow you to set your willingness for risk, then sit back and let the income flow. And the fees are much lower than what you’d pay a human account manager.
Currently, the best robo-advisors are:
#2 Buy Dividend-Paying Stocks
When you own stock in a company directly or through a fund, you may receive dividends. A dividend is a distribution of a portion of a company’s profits.
They are decided by the board of directors and can be issued as cash payments, like shares of stock or other property. It’s an opportunity for a company to reward shareholder loyalty.
The amount you receive depends on how much stock you own and how much profit there was to divide.
#3 Crowd Funded Rental Properties
Rental properties are near and dear to my heart.
In an extremely long-term study — measuring returns over the last 145 years — guess which investment beat out even stocks, for the best returns?
Best of all, rents and real estate values combine the low volatility of bonds with the high returns of stocks. And like stocks, investors benefit from both ongoing passive income and value appreciation.
Crowdfunding companies like Fundrise and DiversyFund let you invest in rental properties in a completely hands-off process.
#4 Publish an e-book
Writing an e-book is very popular among bloggers, as many have noted that “it’s just a bunch of blog posts put together!” You will not only have to make an investment of time and energy to create the e-book but market it correctly. However, if marketed successfully (through blogging affiliates in your niche, for example), you could have residual sales that last a very long time.
Generally, e-books can sell very well because they are priced low. If your customers can afford to have a functioning laptop, tablet, or smartphone on which to read the e-book, they can afford to buy a cheap e-book without much financial difficulty.
Cha-ching – residual income!
For example, if you run an online shop and are interested in building up your Pinterest presence to drive traffic to your shop, you have options as far as further education. However, online courses even typically cost upwards of $100, while e-books tend to be under $10.
#5 Rent Your Property
If you’re interested in making money in real estate but want more of a hands-on approach, renting out your vacation home, house, apartment, or even a single room can be a stellar way to earn passively.
#6 Start a Blog
What are you passionate and knowledgeable about? Share it with the world!
No matter how small the niche, other people in the world share your enthusiasm.
With your blog, you can make money via the following streams:
- Advertising and sponsored content
- Affiliate marketing
- Digital products
- Physical products
#7 Rent Your Car
Familiar with Turo? It’s a simple enough concept: “Airbnb for cars.”
Individuals can rent their cars out short-term to other individuals. Yet another example of the sharing economy at its best!
Turo does provide state-minimum insurance with all bookings, and several options for car owners to add more protection if desired. Still, make sure you do your homework to fully understand all risks and liability for your car before renting it on Turo.
#8 Sell Stock Photos
If you love taking pictures, why not sell them online? This may not ever replace your day job, but if you’ve got a knack for it, you can earn hundreds of extra dollars per month.
How much you earn depends on how large your portfolio is, experience level, and the number of stock photo agencies you work with.
Like with investing, diversification is key. The more photos you have spread across agencies, the better your chances to earn passive income.
Sites like 500px, Shutterstock, iStock, and Adobe Stock are well-known places to start.
#9 Peer to Peer Lending
Peer-to-peer lending, or P2P Lending, is a favorite of mine. The idea is to lend money to individuals or a business. They then pay you back, plus interest.
The returns typically range in the 6-10% spectrum – nothing to scoff at. Of course, at the higher end of that spectrum, expect the risk to be significantly higher too.
Check out Lending Club, Worthy, StreetShares to learn more.
#10 Use Cashback Credit Cards
If you’re already using credit for some of your purchases, pursuing credit card rewards is an absolute no-brainer. Most top rewards cards let you earn anywhere from 1 to 5 percent back with almost no effort on your part!
#11 Domain Names
You don’t need to be the next Google to start making money online. Thousands of people are generating income by investing in domain names. They do this by buying, selling, holding, or developing domains to increase their value.
#12 Create Alexa Skills
Alexa is the new frontier in personal devices. Just like with apps on smartphones, there is a way to create content on Alexa that you can profit from passively.
The Alexa equivalent of apps is called skills, which are little programs that work with Alexa’s voice-based system to generate content for the end-user. Creating a useful skill can yield high returns to Alexa’s growing userbase.
If you have the technical skills to master this, you can see excellent returns on creating Alexa skills.
#13 Start a Youtube Channel
We’re in YouTube’s golden years, growth is insane, and it’s still on the new side. There aren’t nearly as many videos as articles, so it’s easier to find an audience. Also, videos are much harder to make, which means less competition.
Right now you can create tutorials, vlogs, how-tos, gaming videos, and much more. You can also create ads to sell on the platform.
#14 Rent Out Your Garage or Attic
The Neighbor platform aims to disrupt the traditional self-storage industry by letting you house your neighbor’s extra stuff where you have space for it.
#15 Buy a laundromat/car wash.
Laundromats and car washes are infamous for being cash flow machines, but before you buy one make sure you complete your due diligence. Verify the books and the income as well as expenses. Will you have to pay an attendant or any employees? Is the city planning on raising the cost of water anytime soon?
If you are lucky and find a seller who just needs money and wants to unload quickly, you could scoop up an even better deal.
Not all of us are going to get rich from our jobs. If we want to achieve a level of financial independence, we are going to have to start earning passive income.
This list should give you a few passive income ideas. Pick one and get started. But put some effort into it.