So you’ve heard the term passive income and you’re wondering about the best ways to make passive income? Well, you’re in good hands because I’ve been making passive income from a few different sources for the past 5 years and I’ve learned a thing or two.
I’m always on the lookout for more passive income ideas and while I was writing this guide I even found more that I’ve started using already which I’ll talk about later in the guide.
You’ve also probably heard that passive income can change your life. You know you’ve seen some guy on YouTube telling you how he lives in a mansion in Beverly Hills all because he has seven sources of passive income bringing in 6 figures every month.
Although that is possible, passive income is no “get rich quick” scheme. If you want to start creating passive income you have to put in some work at the start and be dedicated.
It’s not something that you do and it magically works. It takes time, effort, and calculated risk in some cases.
This leads us to the question. What is passive income?
What is passive income?
Many people hear this term and don’ truly know what it means. The term is quite often thrown around these days that’s it’s lost its meaning. But here is what it actually means:
According to Investopedia, Passive income is officially defined as income that comes from rental property, limited partnership, or other business where the person is not actively involved.
In recent years, passive income has been used to refer to income generated which requires little to no effort from the person generating it.
Or as I like to define it, it’s income you make while you sleep. For example, I have blogs that make ad and affiliate revenue while I sleep. But I had to work hard at the start in order to write quality content and make sure it ranks.
Once the blog post is ranked and begins bringing in traffic. It requires little to no maintenance and it will continue to generate money every day.
With that being said let’s look at the 20 best ways to make passive income…
20 Best Passive Income Ideas
Investing in real estate is the ultimate type of passive income. Some say it’s the only true form because after you sort out any legal documentation and fully own the property. It requires little to zero effort.
Aswel as that, it’s an old and trusted source of wealth creation. Andrew Carnegie, one of America’s most famous philanthropists said:
“Ninety percent of all millionaires become so through owning real estate. More money has been made in real estate than in all industrial investments combined. The wise young man or wage earner of today invests his money in real estate.”Andrew Carnegie
If real estate investment seems out of your financial means right now. You can consider investing in a REIT(Real Estate Investing Trust).
Basically, you invest in a fund along with a pool of other investors. The fund then invests in income-generating property and pays you regular dividends.
Savings Account with a High Yield
Opening a high yield savings account is an easy form of passive income. You most likely have a savings account with your bank already so you might aswel get the best interest rate possible.
You should aim for an APY(Annual Percentage Yield) of at least 0.25%. Most standard banks give you as little as 0.01%.
Keep in mind that you would need to deposit a large lump sum to see any considerable gains from it over time.
Invest in Dividend Stocks
Dividend stocks are a great way of building passive income and it requires zero effort. All you need to do is open a trading account and research some high-yield dividend stocks to invest in.
If you don’t have the time nor the interest in researching individual companies. You should consider investing in high yield index funds.
Some popular high dividend ETFs include Global X SuperDividend ETF(SDIV), iShares Emerging Markets Dividend ETF(DVYE), and Global X MSCI SuperDividend EAFE ETF(EFAS).
These ETFs provide between 6 and 8.5 percent annual dividend yield.
Start a Blog
A very effective way to build passive income is through blogging. I teach people how to start a blog so I have first-hand experience of the power of blogging to generate passive income.
The best thing about it is you can have a blog up and running in a few minutes. Overall, it’s very easy to do and inexpensive. It can cost as low as $2.95 per month.
I don’t only show you how to start a blog but I educate you on how to monetize it so you can be making money almost immediately after launch.
Affiliate marketing is an easy way to get into the passive income game and has nearly a nonexistent barrier to entry.
If you’re unfamiliar with the term, affiliate marketing is when you partner with a brand and promote their services or product. Anytime you generate a sale for them you receive a commission.
Common ways to promote companies are through blogging, YouTube channels, and social media. Bear in mind all these activities include work at the start.
But if you can create top-quality videos and articles. They can generate traffic and revenue forever.
Silent Business Partner
A silent business partner is when you invest money into a business but you don’t actually participate in running the business.
Essentially, a silent business partner is an investor that usually owns a percentage of the business but doesn’t run it.
Normally, to become a silent business partner you would enter into a limited partnership agreement with another person.
You will act as the limited partner while the other person deals with the general operation of the business.
Write an eBook
If writing is your thing you need to consider writing an eBook. An eBook could be about anything you have expertise or knowledge in.
It coincides perfectly with starting a blog mentioned earlier in the guide. It’s very common now to see bloggers promoting their eBooks.
Once you’re done writing it the next step is to give it a price and let the selling commence. After that, there is very little maintenance, similar to writing a blog post.
Create an Online Course
Online courses are the ultimate form of passive income for a blog or website. You can create an HD quality course with very inexpensive equipment these days.
All you need is a decent microphone and a camera that records in 1080 HD and you’re ready to start filming.
Once you’re done, it will continue to generate passive income while you sleep.
Top tip for online course creation: Break each step down into 1 or 2 minute recordings. That way, if something changes you don’t need to redo an entire 10 or 20 minutes segment. This will save tonnes of time in the future.
Sell Stock Photos
This is one for you creative photographers out there. Do you have loads of extra photos leftover on hard drives?
It may be time to start selling them and turning them into a passive income churning machine.
Sell Your Stock Music
If you’re a musician and love creating tunes from your garage this may be a perfect passive income starter.
Rent Your Car
Renting your car may sound a little far out but it’s one of the easiest ways to make passive income. I want you to think about how often you use your car.
Does it stay in the driveway for hours on end or perhaps even days? Do you have a spare family car?
If you answered yes, this may be a great opportunity for you to generate another form of income while you sleep.
Check out Turo.com, it’s basically a car-sharing marketplace where you can browse vehicles for rent. Turo also provides third party liability insurance via Liberty Insurance in case anything happens to your car.
Rent Your Spare Room
This one is super easy but it also depends on whether you are comfortable with a stranger living with you. If you are, then it’s an easy and quite a stress free form of passive income.
I’m sure you’ve heard of Airbnb by now. It’s very easy to set up a profile and advertise your room. Most people use Airbnb to rent a room for a few days or up to a week.
Sell Ad Space on Your Vehicle
If you’re comfortable with having a banner on the side of your car then selling ad space might be for you.
Car wrap advertising companies usually pay you based on how much of your car is wrapped and how much you have traveled per month.
Sell Ad Space on your Website
If you’ve ever thought about setting up a website. Then you’re in luck because I have a step by step guide on how you can have a website setup in 10 minutes.
It’s also very cost-effective for as little as $2.95 per month.
When you have one setup you can sell ad space on your site. But to sell ad space on your website you need to build an audience first.
You should check out my guide on how to write blissful blog posts that people actually read.
For those of you that don’t know what dropshipping is. Dropshipping is an eCommerce business model where you don’t store the inventory you sell on your site.
Basically, when someone orders from your store, the provider ships it to them and you don’t actually deal with any of the packaging or shipping. Quite often, the provider is located in China.
However, bear in mind that you will need to deal with customer emails, phone calls, and possible complaints.
If you’re interested in learning more about dropshipping make sure to check out my guide on how to start an online store.
A friend of mine told me that he recently participated in a sleep study and the first thing I thought was, “Wow, that’s the ultimate passive income idea” 😁.
If passive income is money you make while you sleep then participating in sleep studies is the definition of passive income.
It’s important to note that most sleep studies require the participant to have some sort of sleep disorder and or are taking sleeping tablets. So count yourself out if you sleep easy at night.
YouTube or Podcast
Starting a YouTube channel or podcast is a semi-passive form of income and it just barely made the list.
Making quality videos and getting them to rank on YouTube is hard and a long learning process. However, if you manage to get very skilled at it, you can make a lot of money.
Technically, it’s similar to a blog post, once it’s made, it will continue to bring in traffic and revenue as long as the information is still relevant.
For example, look at Whiteboy7thst’s video on how much money does a dead YouTube channel make.
He shows his analytics and he’s still making up to $3,000 per month from a channel that barely uploads anymore. The revenue is coming from videos that were uploaded 10 years ago.
Peer to Peer Lending
Peer to Peer lending is the process of lending money to other people, usually via an application. These are typically people who don’t qualify for a traditional loan.
When you lend money to them, you make money back by charging interest on the loan, the same way a bank makes money from loans.
This type of passive income generator is available to people who have some money to spare in the bank. It’s also important to take into consideration the financial risk involved in lending money.
If you have a knack for design you should consider making some cool designs and putting them on a T-shirt or other clothing.
Websites such as teespring.com make it super easy for you to setup an online store. You don’t even need to make the store yourself. You just upload the design and they place the design on the T-shirt.
I made an online store in about 20 minutes for my Twitch channel using teespring. You can check it out here.
Store other Peoples Stuff
This is a super handy passive income idea. All you do is advertise your space, a room in your home for example and people pay you to put their stuff in it.
It’s as easy as that. If it sounds like something you are interested in check out neighbor. It’s the online marketplace where people advertise their storage space. Think Airbnb but for storing your stuff. People are charging anywhere from $20 to $500 per month.
Passive income is a very real thing if you think outside the box. The list above has given you 20 ways to make passive income. If I come across more ideas I will update this list.
If you have another way to make passive income make sure to let me know in the comment section and I’ll add it to the list.