Oh, be honest! Who doesn’t like money coming in? As they say, the more the merrier.
Sadly, too few of us can relate. Of course, we agree that having extra cash in the bank is the ultimate dream. But for most of us, it’s just that – a dream. We’re making steady incomes from our 9-to-5s, yes. But is that really enough? Are we actually ever saving anything?
Given global inflation rates and our seemingly ever-increasing expenses, it’s become almost crucial to supplement our salaries somehow. Whether it’s a side-hustle or selling our skills online, a passive income can help earn more in good times and keep us afloat in the not-so-good ones.
Active Income vs. Passive Income
How to get started? Understand the difference between active and passive income first. There are three main categories of income: active income, passive income, and portfolio income. Passive incomes include earnings from a rental property, limited partnership, or other business in which a person is not actively involved—a silent investor, for example.
Proponents of earning passive income tend to be boosters of a work-from-home and be-your-own-boss professional lifestyle.1 Passive income has been a relatively loosely used term in recent years. Ordinarily, it’s been used to define money being earned regularly with little or no effort on the part of the person receiving it.
Passive Income Ideas
Rental Properties
Depending on where, when and what you buy, real estate is perhaps the best way to generate passive income. It can grant the luxury of money coming in on a timely basis without you having to lift a finger. There are thousands of people living quite comfortably off rental income. Some earn enough to sustain their households without a job! What could be better than that, right?
A cash flowing rental property is a fantastic way to bring in a monthly income. To make this truly passive you can outsource the running of the properties to a management company.
However, the internet has made investing in rental properties easier than ever before. There are a lot of ways you can invest in rental properties depending on what your goals and interests are. You can be a limited partner in large residential or commercial properties, or you can buy homes and be a landlord – all online!
Rent Out Your Home
Extra space in your condo? Rent it out on VRBO or Airbnb.
For perspective, and these figures are pre-Covid, but on average, Airbnb hosts make upwards of $900 a month. Of course, on a case-by-case basis, you have hosts making tens of thousands and others not doing so well at all. For comparison sake though, the average of $900 is almost 2X that of income from other side hustles.
This simple strategy will utilize that spare room by turning it into an income-generator. You’ll be making the mullah right at home!
Pro tip: You can save money by purchasing pre-construction properties. When you sell these off later, the value will have risen and you’ll get your profit
Try Affiliate Marketing
For the uninitiated, Affiliate Marketing is a trick used by website owners, bloggers and influencers wherein they promote products by third party users by including their links on their own pages. Amazon, for example, runs the world’s biggest affiliate program but eBay, Awin and ShareASale are great too.
When a visitor clicks on the link and makes a purchase from the third-party affiliate, the site owner earns a commission. The commission might range from 3 to 7 percent, so it will likely take significant traffic to your site to generate serious income. But if you can grow your following or have a more lucrative niche (such as software, financial services or fitness), you may be able to make some serious coin.
Affiliate marketing is considered passive because, in theory, you can earn money just by adding a link to your site or social media account. In reality, you won’t earn anything if you can’t attract readers to your site to click on the link and buy something.
If you’re just starting out, you’ll have to take the time to create content and build traffic. It can take significant time to build a following, and you’ll have to find the right formula for attracting that audience.
There are websites that you can purchase cash flowing websites from to jump start your marketing efforts. Also, you can outsource the content creation, building of the website and SEO.
Earn from YouTube or Instagram
Thanks to YouTube and Instagram, content in the shape of blogs, vlogs and videos have become the most popular passive income streams in recent times. Like we said earlier, they’ve helped kids become celebrities and entrepreneurs rake in the dough. Sponsored posts, affiliate links, courses, product reviews, are the name of the game here. The trick is to find a popular topic, do your research and become an expert on it.
Granted, this will require quite a bit of upfront work but if you do it right, you can set up a passive income stream for the foreseeable future.
Flip Retail Products
Take cue from Marie Kondo and de-clutter. Actually, we meant turn that clutter into cold, hard cash.
Seriously! Instead of dumping that old Forever 21 cardi in the recycle bin, why not sell it off to someone who might not be able to afford a new one? In fact, why not sell new products on Amazon or eBay?
You can purchase them at cut-rate prices, sell them off and profit off of the price differentials. Maybe even build a catalogue online. But make sure you get good quality products from a cheap, reliable source. You don’t want to be buying at, and therefore, charging, too high a price.
Peer-to-Peer Lending
Who said only banks can give out loans? With third parties such as Lending Club, Prosper, Peerform or Upstart to help, so can you, etc. This way, you essentially cut out the middlemen, aka financial institutions and earn by charging interest on the money lent.
That’s why, peer-to-peer lending is one of the most profitable passive business schemes out there. The best peer-to-peer lending sites offer different types of loans and have low fees and competitive interest rates. They are also less finicky about the reasons they accept for approving the loans.
It takes time to master the metrics of Peer-to-Peer lending, so it’s not entirely passive, and you’ll want to carefully vet your prospective borrowers. Since you’re investing in multiple loans, you must pay close attention to payments received. Whatever you make in the interest should be reinvested if you want to build income.
Stocks, Bond Ladders and REITs
If you have a steady job, demand more than just a salary. Company stocks or sound retirement plans are a great source of passive income for those in full-time contracts.
Another option is to invest in other firms. Shareholders with dividend-yielding stocks get money straight into their brokerage accounts on a quarterly basis, provided the firm has performed well during that time.
This is paid as per share of stock, so the more shares you own, the higher your payout. Choosing stocks can be tricky so we’d recommend getting yourself a stock broker.
If the vagaries of the stock market aren’t your thing, try a bond ladder. Here, a bond’s maturity dates are spread across several months or years so the proceeds are reinvested as they mature. That’s why it’s so popular amongst retirees and non-retirees.
Alternatively, you can purchase stocks in a Real Estate Investment Trust (REITs). These are essentially real estate management firms that pay little or no tax. The best REITs increase their dividends annually, so you’re guaranteed a boost in your earnings every year.
Peer-to-peer Car Sharing
Alternatively, you can rent out your vehicle on platforms like Turo or Zipcar while you’re not using it. This is sort of like the Airbnb of the motor vehicle world, allowing private car owners to sublet their cars via the internet. They can list them on a platform of their choice, highlighting the make, model, color and type.
Here, participants can earn by charging a fee to rent out their cars. Many such companies are able to offer lower rates to renters because they do not have to worry about maintaining a fleet, as other car rentals do. It’s totally safe and practiced in over 56 countries now!
Write an e-Book
Even though e-Books gained popularity just a few years ago, quite a few people have been earning passively through them. There is lots of stuff to write about and it’s an easy job, one you could do from your bed.
But mind you, the market is pretty saturated. Write your own e-Books or partner with long-distance clients. Either way, make sure your pull out the big guns when it comes to your writing if you want to sustain yourself this way.
Monetize your Photographs/Designs
There’s a lot of money to be made in the creative industry. Photographers, for example, don’t earn anything when they click photographs. They earn when they sell their clicks.
The same goes for graphic designing. Stock image sites, newspapers and magazines are your best bet if you want to benefit from your work. There are also platforms such as Merch by Amazon, Etsy, CafePress and Zazzle where people sell their masterpieces.
Get the Ball Rolling Today
Now, everyone desires financial stability but like we said earlier, it’s a lot easier said than done. If you dream of a relaxed life that doesn’t demand too much effort, you ought to start developing your passive income starting today. Slow but surely, you’ll get there as long as you have a plan and go in prepared.