What is Passive Income?
“Passive income is earnings derived from a rental property, limited partnership, or other enterprise in which a person is not actively involved.”
Taken from Investopedia.
Okay, let’s rephrase that:
“Passive income is basically any income or money you earn or receive (with minimal or no efforts) while binging on Netflix or playing League of legends, having put up some efforts in the beginning.”
There, much better.
Read the line again, and carefully read the bolded fonts.
You absolutely and I repeat absolutely need to put up some quality efforts before you even think about earning passive income!
I see too many people getting turned off by the idea of putting in some effort at all. Passive income is all about saving time while earning those dollars. But that doesn’t mean putting in no effort at all.
You can earn a million dollars by driving Uber (exaggerated I know, but you get my point) but that is not exactly passive income. As time goes by your efforts are less required while your earning stays the same or goes up.
Why is it important?
“If your salary is your only source of income, you are one step away from poverty” –Warren Buffet
Ever heard that quote before?
That is exactly why it is so important to build multiple streams of income. You never know what will happen to your job the next moment. As scary as it sounds, we all know what happened after Covid 19 made its appearance.
Many people I personally know lost jobs that lived a life of luxury, resulting in financial problems. They weren’t in the slightest prepared for uncertainty.
Even if passive incomes don’t make you a millionaire, they at least provide you a cushion for a downfall.
Passive Income Ideas
Some passive income ideas require more time and effort in the beginning than others but they also yield higher benefits. Some of them require more time and some require more money.
1. Blogging
Of course, how could I not include this in the list?
Blogging is a great way to earn passive income while you sleep, but of course, it requires some solid efforts in the beginning.
Contrary to popular belief, it doesn’t really require you to be an English major to start a blog. Most useful and popular blogs I know aren’t run by English gurus.
Plus it’s a great passive income source as you can earn through a blog in many ways that include but are not limited to: selling your own products, sponsorships, affiliate marketing, ads, etc.
2. Dropshipping
If my post is not the first one you’re reading about passive incomes, then surely you must’ve come across dropshipping.
Those who have no idea, let me explain:
Dropshipping is basically an e-commerce business that requires you to build a website(i.e a store) in which you showcase selected products from third parties (aka sellers), and when the customer buys something from your store, you purchase the product and ship the product to the customer directly. The highlight is that you don’t directly handle the product or own the inventory. You only purchase when the customer buys something from your shop.
“But who ships the product then?”
Usually the third party you’re buying from.
Uh-huh! Easy peasy!
Well, not so much. But it’s worth it. All the people I’ve come across who have started dropshipping stores don’t regret it. It’s a high return business that requires serious dedication but once it takes off, it soon turns into passive income. There are many programs developed for it, making it even easier to start than ever before.
Some common challenges dropshippers come across are product research, chargebacks, and Facebook ads.
“But it’s a store, surely it must cost lots of money?”
It really depends. Around 1000$ average. It could be more or less depending upon your variable expenses and how aggressive you are in your marketing and running Facebook ads(usually takes lion’s share of your capital)
It can be considered as one of the great passive income ideas if you are serious about making passive money.
3. Affiliate Marketing
You earn commission by promoting products.
Really, it’s just that simple.
BUT why would anyone listen to what you are recommending, I mean who are you exactly?
So to make yourself known, you need a blog or a platform like Youtube, Instagram, etc.
This is because you need some credibility before promoting products or recommending something to others. I am sure you must’ve come across spammy affiliate comments on Instagram, Facebook, or just anywhere on the web. They don’t usually yield high returns.
In order to earn handsomely, you need a proper plan. The product you would be promoting should be one of high quality and something you’d believe in and know about.
4. Youtube
This is one of the best passive income ideas on the list. You would need to make a video on any topic of your choice and upload it on the platform. You are required to have at least 1,000 subscribers and 4,000 valid public watch hours to monetize your youtube channel through Adsense.
After that your real journey starts. You need to churn entertaining content or very informational content to grow your subscribers.
It’s a very nice and creative way to earn passive income while you sleep or just go about your day.
Currently, Youtube has over 1 billion traffic monthly.
Just think about how many videos you watch each day. For how many people you made money for. And you could be one of them too. Just a decent amount of views could get some nice cash rolling in.
5. Publish an E-book
Self-publishing an e-book is a great way to earn extra money on the side. In this time and age, you don’t need to run from publisher to publisher, begging them to give you a chance.
Self-publishing your e-book on amazon doesn’t require startup costs nor does it limit your creativity or imagination. You would just need to publish a book that serves value to your target audience. Your income would be author royalties whenever someone buys and downloads your book.
6. Online Courses
Just like publishing an e-book, selling an online course is another similar great way to earn passive income. Especially for people who aren’t too wordy and like to get straight to the point.
Find out what you are good at and see if there is a demand to learn it. Create and sell your online course. Or you could learn something totally different and make a course about it.
Just make sure that your course genuinely includes all the solutions your target audience is searching for. There are numerous ways you can make your course helpful that includes adding a video lesson, checklist, audiobooks, and small e-books, etc.
7. Stock Photography
If you are someone who just whips out the camera from the case at any given opportunity, then why don’t you put that talent and passion to good use and earn some side income for yourself?
Many third-party sites allow you to upload your photos and earn a commission through them. Popular ones being I stock and Shutterstock among many others.
And if you feel like taking it to the next level then, you can build your own site and sell your own stock photos and photography services. These days stock photography is more in demand than ever.
8. Licensing Music
If you are passionate about music and want to somehow earn through it without having to pursue it as a profession then licensing your music could earn you a nice passive income.
In order to get started, you would need to produce your music and give rights to people or companies to use your music in exchange for cash. You could sell to youtubers, wedding videographers, and Ad corporations to name a few.
9. Airbnb
If you have a spare room or house, why not rent it for travelers? This has enabled many people to earn some nice passive income.
Sites like Airbnb allows travelers to stay in the country inexpensively instead of booking hotels. You can also set your own rate. So there is really nothing to lose. Its closest example would be renting out your property. Though it has different procedures than that of Airbnb.
10. Investing
Investing in dividend stocks and real estate is also a sure-shot way of earning passive income. The top wealthy people mostly earn their passive incomes in this way.
Real estate is a preferred choice to generate high returns since its value appreciates over time. Investing in real estate would include but are not limited to Rental properties, REITS (real estate investment trusts), and Crowdfunding.
Investing in dividend stocks means that when the public company you invested in earns a profit, they pay you back a portion of it in the name of dividends. The amount can vary from company to company and also from year to year.
Bonus:
Online Rebates
Rakuten is a pretty popular cash back service. It provides a rebate when you shop at their wide range of online retailers. Rebates can range from 1% to 20% and sometimes even higher.
You can choose to be paid through a check or paypal.
So while online shopping like you normally would, you earn some side money. The setup is pretty simple;
Create a Rakuten account and follow the directions to activate it. You can earn some nice cash if you love shopping online.
Well, there you have it.
Top ten passive income ideas that generate money. Honestly speaking there are thousands of ways you can earn passive incomes. This list just includes the top ten.
I could’ve included grocery deliveries, freelancing, and many other ways but they should not be confused with passive incomes as they are active side hustles. I see that many times people confuse the two.
Earning money in this day and age is not as difficult as it was years ago.
So what are you waiting for? Pick one that suits your interest and decide and plan how much time and effort you are willing to put in and start walking towards your journey of financial freedom.
