Clearly, it’s hard to generate passive income. It requires the upfront investment of a significant amount of our time, usually with little to no returns for extended periods. We can go months and even years without a single dollar produced from passive income activities, making even the most astute entrepreneur shake their head in sheer and utter frustration.
The truth of the matter is that time is far more valuable than money. While money can be spent and earned, time can only be spent once, and then it’s gone forever.
When an income stream is passive, it means it requires little to no maintenance to keep the money flowing. Now, that doesn’t mean it can simply be completely ignored or forgotten about. No. Quite the contrary. It’s important to track every passive income stream and watch it like a hawk, no matter how automated it might be.
After some time and hard work these income streams start to build and are able to maintain themselves, bringing you consistent revenue without much effort on your part.
You can use passive income streams to help you get out of debt or achieve financial independence sooner.
1. Dividend Income
Dividend income is dividends paid to shareholders of stocks in the form of cash in your bank account. Dividend stocks are tried and true way to earn passive income. You will have to do plenty of research to find good stocks and invest a significant amount of money to receive large dividend checks. However, if you consistently invest money into dividend stocks you can amass a nice residual income over time.
Just as important, since high dividend stocks are stocks, there is always the potential for capital appreciation. In that way, you can earn passive income from two sources – dividends and capital gains.
2. Affiliate Marketing
Affiliate marketing is likely one of the most powerful ways that you can produce multiple passive income streams. However, this isn’t easy by any measure. To succeed at affiliate marketing, you need a large following of users. In other words, you need a big platform and audience. This is a passive income technique that is better suited to people who have blogs and active websites. Here are two basic ways to make money with your website.
When people click on the affiliate links on your site, you receive a commission at no additional cost to them when they purchase a product or service.
A second way you can make money is from advertisements that appear on your website. The most well-known way is through Google Adsense.
3. Create An Online Course
Have a technical skill? Want to convey that skill to others out there while generating a healthy passive income stream?
Online courses can be a great source of passive income. There are so many things that can be taught through an online course. You can teach skills such as playing an instrument, learning a new language, becoming a photographer and so on and so forth.
Customers sign up to purchase the course and your system automatically emails them everything they need to access the materials.
What do you put in your online course? Good question. You can add video lessons, checklists for completing steps you recommend in your video lessons, small ebooks to supplement the lessons, audio files for people listening while traveling, informative interviews with likeminded experts, and a whole bunch more!
In fact, you can create several packages at different price points. Some people will want everything, so you can include ‘the works’ for the highest price point and then have two lower price points so that you can receive the largest possible volume of orders.
4. Create An App
If you can come up with some unique ideas for mobile apps, or improve upon an existing app that will help people make their lives better, you may land yourself a great source of passive income.
Apps make people’s lives easier. Whether it’s an app that helps people put together nice pictures for their blog or an app that keeps track of tasks, there are helpful apps out there for everyone.
If you can come up with something unique, you can make quite a bit of money.
You can hire a developer to build your app based on your idea. This could end up being an expensive option, although it will probably yield a professional-looking app.
The end result is an app that has the potential to make you some relatively passive income. Don’t downplay the idea to build an app – it’s a good one!
5. Invest In REITs (Real Estate Investment Trusts)
If you’re concerned about investing directly in real estate, you can still take advantage of real estate in your investments through REITs – Real Estate Investment Trusts.
This is something like a mutual fund holding various real estate projects. The fund is managed by professionals, so you never have to get involved.
One of the big benefits of investing in REITs is that they typically pay higher dividends than stocks, bonds, or bank investments. You can also sell your interest in a REIT anytime you like, which makes it more liquid than owning real estate outright.
Read The Ultimate Guide On REITs In Malaysia
6. Invest Through Peer-to-peer Lending Platforms
P2P lending is the practice of loaning money to borrowers who typically don’t qualify for traditional loans. As the lender you have the ability to choose the borrowers and are able to spread your investment amount out to mitigate your risk.
Peer-to-peer lending platforms such as B2B Finpal, Funding Societies, and Kapital Boost make it easy and straightforward to invest in people and businesses to generate a passive income stream from interest payments.
Clearly, this will require some upfront investment. If you have some money stashed away, this might be a good avenue for investment without having to rely on low-interest-producing CDs at banks or high-risk stocks. Do the research and judge for yourself on whether this passive income idea works for you.
7. Create YouTube Videos
You can create videos in just about any area that you like – music, tutorials, opinions, comedy, movie reviews – anything you want . . . then put them on YouTube. You can then attach Google AdSense to the videos, which will overlay your videos with automatic ads. When viewers click on those ads, you will earn money from AdSense.
Granted you probably will not make a living off of just a few videos, so be prepared to make over 100 videos if you really want this to take off.
The keys will be to create compelling videos, to promote those videos on social media websites, and to create enough of them that your income will be coming from multiple sources. There’s a good bit of work that goes into creating videos, but once a video is done it can become a completely passive cash flow source for a very long time.
8. Rent Out Unused Space With Airbnb
If you have a house, apartment, spare room, or even backyard, consider listing your property on Airbnb and start earning money when you get your place booked. There are millions of people using Airbnb to find a place to stay instead of staying at a hotel, sometimes even for months at a time. It’s a way of earning money on space in your home that might just be sitting empty otherwise.
While this is not entirely passive income, it can take a little up front work but the returns can be amazing. If you end up giving this a shot, consider getting a maid service to minimize the amount of time you spend on transitioning from one guest to another.
9. Write A Book
Once the initial work of creating the book is done, and you’ve spent some time developing an effective marketing plan, selling books can be a great way to produce some serious residual income.
Once your book is available on a site like Amazon, you could receive a check each month for doing absolutely nothing. Obviously, the more time you spend marketing your books, the more money you’ll make.
There’s a lot of work upfront. But once that’s done, and the book goes into the sales stage, it becomes a completely passive venture.
This is especially true if you can sell the book to a publisher who will pay you royalties for the distribution and sale of the book. You’ll get a percentage of each sale made, and if the book is fairly popular, the royalties could be substantial. Just as important, the royalties can continue flowing for many years.
10. Produce An Audiobook
It’s an incredible stream of passive income if you do things the right way. Push out your audiobooks to the world’s most robust platforms such as Audible and iTunes.
If you have specialized knowledge or advanced skill sets in some area, you could opt to teach them through audiobooks. However, you have to focus on delivering an enormous amount of value and ensure that you have a high-quality production. Don’t try to slap things together and expect to earn any money online.
11. Write And Publish An Ebook
Another great method for generating a respectable amount of passive income is to write and publish an ebook. Non-fiction ebooks that help to educate your audience on topics such as online marketing, business or other self-development areas, are going to sell far better than fiction books at the outset.
Clearly, fiction can make tremendous amounts of money, but it’s also highly competitive if you’re not an already-established writer with an existing following.
This can be a lot of work upfront, but once the ebook is created and marketed it can provide you with a passive revenue stream for years. You can either sell the ebook on your own website or offer it as an affiliate arrangement with other websites that provide content related to your ebook.
To self-publish a book you’ll first need to write and edit it, create a cover, and then upload to a program such as Amazon’s Kindle Direct Publishing. Don’t expect instant success though. There will need to be a lot of upfront marketing before you can turn this into a passive income stream.
12. Start A Blog
Blogs can generate a tremendous amount of income, but not quickly. If you plan to start a blog, understand that it’s going to take a vast amount of work and time to succeed.
Regardless of your niche, as long as you have a clear understanding of things like searching engine optimization, social media marketing and the ability to write high-value content, then you will succeed with a blog. Once your blog becomes popular, it provides you with the platform and audience to generate multiple streams of revenue by marketing relevant products and services to your visitors.
13. Buy A Blog
Thousands of blogs are created every year, and thousands are either completely abandoned by their owners sometime afterward. If you can buy blogs with a reasonable amount of web traffic – as well as a demonstrated cash flow – it could be a perfect passive income source.
Most blogs employ Google AdSense, which provides a monthly revenue stream based on ads that Google places on the site. There may also be affiliate programs generating additional revenue. Both income sources will be yours once you purchase the blog.
From a financial perspective, blogs usually sell for 24 times their monthly income. So if the site generates $250 a month in income, you can likely buy it for no more than $6,000. Translation: a $6,000 investment will buy you $1,500 per year in cash flow.
Some sites have good “evergreen” content that will continue generating revenue even years after the site has gone silent. So a simple $5000 investment can net you some ongoing passive income.
Bonus tip: If you were to buy such a site, and then to reinvigorate it with fresh content, you may be able raise the monthly revenue enabling yourself to sell the site at a later date for substantially more than what you paid for it.
14. Sell Your Photos Online
Do you like photography? If you do, you may be able to convert it into a passive income source. Photography websites such as Shutterstock and iStockphoto can provide you with platforms to sell your photos. They may offer either a percentage or a flat fee of each photo that is sold to a site client.
E.g. Each time one of their clients downloads one of your photos you get a paid a royalty.
In this way, a single photo could represent a residual income opportunity, since it can be sold again and again. You simply need to create your photo portfolio, put it on one or more photo platforms, and then the activity becomes completely passive. All the technicalities of the photo sales are handled through the web platform.
Get really good with photo-editing software and find your niche. Portraits, landscape photography, business photography, or something else, find it and stick to it.
15. Product Design
Another way you can make passive income is by designing t-shirts and other products even with no prior design skills. Some sites allow you to upload your witty design ideas and then create t-shirts, coffee mugs, laptop covers and a slew of other products.
Shoppers then visit the site, check out your products, and when they purchase one of your designs, you will get paid a portion of the profits.
Even Amazon has gotten into this business. Amazon has a new service called Amazon Merch, where you simply upload your designs and Amazon takes care of the rest (making it, packing it, and shipping it).
16. Sell Your Own Products On The Internet
The possibilities here are endless – you can sell just about any product or service that you like. It could be a product you have created and can manufacture on your own or it could be digital in nature (such as software, DVDs, or even instructional videos).
You can set up a dedicated website for this product or service, unless of course you have a website or blog already in place. Alternatively, you can also sell it on an affiliate basis by offering it direct to websites and blogs related to your product or service.
While it’s not entirely passive, it’s certainly more passive than getting up and heading out the door to work every morning!
17. Cash-back Rewards On Credit Cards
If you’re using credit cards for some of your purchases or bills, make sure it offers cash back rewards.
While this revenue stream likely won’t make you rich, it will help save on money that you’re already likely spending in your day-to-day life. You can let your rewards accrue for a while and possibly put the easy money you earned toward another passive income venture!
Do a few searches online for the best cash back credit cards and sift through all the posts that detail what the right card would be to fit the bill. Be sure that the card you select doesn’t have an annual fee or you might be cancelling out your rewards.
If travel is your thing, we have seen people who are using bonus offers on travel rewards credit cards to save thousands of dollars on travel each year. You can really score big with these deals.
18. Get Out Of Debt
The less money you’re paying in interest to creditors, the more money you have in your pocket each month. Talk about a simple form of passive income. Getting out of debt quickly can increase your income even more because you’re no longer paying interest to creditors each month.
Let’s say that you owe $10,000 on a credit card, on which there is a monthly payment equal to 2% of the balance, or $200 per month. By paying the card off, you’ll be free up $2,400 per year in cash flow that would’ve gone to the monthly payments.
If you have credit cards or other debt, it can make sense to consolidate with a personal loan. This is typically the best option when you can’t see yourself paying off the debt in a year, but want to lower your interest.
You could get a 0% balance transfer card and use your 0% time to pay off the debt. There are some credit cards right now that offer 15 months at 0% with no fees – that gives you over a year to pay off your debt.
Learn about the Top 10 Things That Get You In Debt (Which You Should Avoid)
19. Open A High-yield Savings Account
Looking for a low-risk way to make passive income? Then look at opening a high-yield savings account with a bank.
While this won’t make you filthy rich, it will be a safer way to make consistent income and not lose all your money since they are PDIM insured.
This is also a great option to stow away your cash and create a little passive income while you are looking for a more lucrative investment option.
20. Licensing Music
Just like stock photos you can license and earn a royalty off of your music when someone chooses to use it. Music is often licensed for YouTube Videos, commercials, and more.
Clearly, this isn’t easy. But it is well worth your time if you can come up with something great.
Do your research and due diligence to create audio tracks that are appealing to a large audience. Search for other popular tracks that are being heavily licensed and see what they’re doing that you could try to replicate in some format, while not outright duplicating.
21. Start A Business And Have Someone Else Run It
Owning a business can be a good passive income source, provided you’ve got the right people running the business for you. You can choose to purchase an existing business or open a new business.
22. Become A Business Silent Partner
Do you know of a successful business that needs capital for expansion? You can become something of a small-time angel investor and provide that needed capital. But rather than offering a loan to a business owner, you can treat this as a business opportunity and take an equity position in the business.
In this way, the business owner will handle the day-to-day operations, while you will act as a silent partner who also participates in the profits of the business. You will probably want to look at how some businesses work first, so you can get a feel for how to manage your business finances while keeping tracking of how your partner is handling everything.
23. Become A Referral Source
Every small business needs referral sources in order to maintain sales. Make a list of small business providers that you use on a regular basis and feel you can recommend to others without reservation. Then contact the owners and see if they have any kind of cash referral marketing offers available.
You can do this with accountants, landscapers, electricians, plumbers, carpet cleaning services – the list is endless. Keep a list of these businesses, and be ready to refer them to your friends, family and coworkers. You can earn a fee on each referral just from talking to people.
Don’t overlook referral programs at work either. If your company offers a referral bonus for either new employees or for new customers, then take advantage of that plan. It’s easy money with virtually no work.
24. Create An Online Store With Drop Shipping
With the explosion of eCommerce, drop shipping has become very popular. Here’s how it works: you create an online store that offers products from certain manufacturers. A person visits your site, orders a product, and your system sends the order to the specific manufacturer. The manufacturer then completes the order by shipping it directly to the customer.
One of the cool things about this type of business is that you do NOT need to order inventory. The customer pays for the product, you collect the profits, and the manufacturer stores and ships the products to the customer. It’s as simple as that.
25. Buy A Laundromat
Many cities have established laundromats that are available for sale. Here is how it would work: you buy the already existing business, make sure that you have someone to manage the day-to-day operations, and then collect the profits.
The reason why you would want to buy an existing one and not start one from scratch is that the start-up costs are pretty high. Commercial washers and dryers are not cheap, so it makes a lot more financial sense to buy an already established laundromat then starting from ground zero.
26. House Or Pet Sitting
One of the easiest ways to literally make money while you sleep is by house and pet sitting. You have to live and sleep somewhere: so why not get paid to stay at someone else’s house and/or pet sit while they’re on vacation?
Provided there are no unreasonable home maintenance expectations, house or pet sitting can be a great way to put some extra income in your pocket. While not totally passive, it beats having to get a job and is pretty dang easy.
27. Bond / CD Laddering
Bond and CD laddering involves owning several different bonds and/or Certificates of Deposit that mature at several different times during the year and taking the profits from those investments as cash income during the year.
Although many CDs and bonds might not earn as much of a return as a Peer to Peer lending investment, bonds and CDs also generally come with little to no risk, ensuring a solid income source on a regular basis.
28. Rent Your Stuff
Thousands of people every day are looking to rent any variety of items. Here are some ideas of products that you could rent out: extension ladders, party tents, tables and chairs, etc.
You can even rent out your car when you are not using it.
Just make sure that you have a proper rental agreement signed by both parties, get paid in cash beforehand, and get a current photo ID and secondary proof of address in order to protect the property you’re renting out. For extra peace of mind, consider requesting a security deposit as well.
29. Invest Automatically In The Stock Market
You can automatically invest in various ways through what’s called a robo-advisor.
A robo-advisor is just like what it sounds like – a robotic financial advisor. You spend about 10 minutes answering a few questions and setting up your account, and the system will take it from there.
30. Vending Machines
Vending machines are another great low maintenance small business idea. I have a friend who has vending machines all over neighboring towns. He replenishes and cashes them out once every two weeks. His vending machine business is part of his retirement plan.
The vending machine business such as the “soft toy” machine has also been getting quite popular (if you haven’t noticed) in Malaysia.
31. Make Money For Tasks You’re Already Doing Anyway
Yes, you can make some money doing some of the things you’re already doing.
You can make your own schedule with Uber and pick up extra income by driving others around when you are already out and about anyway!
32. Invest In Real Estate
This probably falls more in the category of semi-passive income, since an investment in real estate is always at least a little bit of an active venture. Still, once you have an investment property that is established and fully rented, it’s mostly a matter of managing the property and keeping it performing well.
Additionally, there are professional property managers who can manage your property for you, usually for around 10% of the monthly rent. This professional management can make the investment much more passive, but will take a bite out of your cash flow.
Another benefit of investing in rental properties is the loan pay down. If you obtain a loan to buy the property, each month your tenants are paying off part of the loan. Once the mortgage on the property has been paid off, your cash flow will increase dramatically, allowing your mediocre investment to skyrocket into a full-fledged retirement program.
It wouldn’t take many paid-off properties to provide a pretty great, and mostly-passive, future for you and your family.
33. Outsource Most If Not All Of Your Business Needs
If you’re spending too much of your time on an existing business running it yourself, why not outsource most if not all of your tasks? Yes, it will require you to give up some control, but in many businesses it’s the only way to free up your time so you can focus on other tasks that will result in more income.
If you don’t want to hire employees, consider hiring freelancers who work as contract laborers. Look for freelancers with a strong work ethic who provide quality results.
Here’s a list of tasks that you might want to outsource:
- Bookkeeping
- Writing
- Web design
- Editing
- Task management
- Social media marketing
- and so much more!
Yes, many people can turn their existing businesses into passive income businesses. As long as the main product or service isn’t something only you can do, you can transform your business into a passive moneymaker.
