Passive income comes in many varieties, however, there are really only a few that everyone can benefit from. While there is not a one size fits all approach to earning passive income, this post aims to highlight a few passive income ideas that can change your life. Now, while you do not have to implement all of these, a lot of them can merge together to give you a direct benefit from one to the other. Where one passive income stream feeds into the next, they all grow together. Feel free to give these ideas a try as many of them have benefited myself and my wife’s lives forever.
**This post contains affiliate links where I earn a commission based on purchases made**
What is passive income?
Simply put, passive income is money that you earn based on the hard work you put in days, weeks, months, or years ago. This type of income is the most desired by any standards. Through passive income, the recipient can earn money 24/7 no matter what they do. This is also known as “making money while you sleep. Through passive income, there is a huge return on your time as well. Let’s say you work 8 hours a day 5 days a week to satisfy the traditional 40-hour workweek. Take another person who spends 40 hours to build an asset that pays them indefinitely no matter if they work or not, person B will put in a set amount of hours to essentially never have to work on that task ever again.
Meanwhile, person A is enduring week after week of soul-crushing, mentally draining work. After one year, person A would have spent 2,000 hours or 83 DAYS working at a job they most likely hate. Person B spent 40 hours building an asset that will always be there and pay him indefinitely. It becomes very clear rather quickly which path is more desirable for most people. In this article, we will cover 15 passive income ideas you can get started on today which can pay you in your sleep and change your life.
1. Affiliate sales
Affiliate sales are one of the fastest and easiest ways to earn passive income. You’ve seen these all the time. It’s often seen on blogs where someone recommends a product, course, or program where if the user purchases or signs up, the creator gets a small commission. A few examples of affiliate sales could be;
- Amazon affiliates
- Be An Affiliate For Name Brand Companies
- Bluehost WordPress Hosting Affiliate
- WPX Hosting Affiliate
While there are thousands of affiliate programs you can use, these are a few you can get started with immediately. Some are better than others so ask yourself which product/service do you feel comfortable and happy to recommend?
Of these examples, you can create an account and share a specific referral link where if someone clicks that link and makes a purchase, you make a percentage of the sale. Most influencers will put this in their bio for people to buy. Since they are recommending a product, that most likely means they’ve used it before and trust it. That’s an important point, only recommend a product or service you have used before. It’s better to be authentic and recommend only the products thatWe use rather than trying to make a bunch of money recommending something you’ve never used. Authenticity is the most important factor in affiliate sales.
2. Book royalties
Personally, I think book royalties are such a great passive income stream as every one of us has a topic that we know better than a lot of people. Whether that’s underwater basket weaving, Sports, quilting, or the millions of other topics out there in the world. In today’s world, it’s easier than ever to create a book and have it published Within 3 months or less. that can be a lifesaver as most books require anywhere from $500 all the way up to $10,000 to get it on the shelves in stores. Try using Amazon Kindle Direct publishing and Ingramspark which are both fantastic print-on-demand Services.
On their platforms, you can write your book in something like Google Docs, have a third party on upwork create the cover, and have all the files uploaded and ready to be published within a month of finishing the final draft. Once you upload the cover and the manuscript, the print-on-demand service takes care of the rest for you. What’s even better is through their platforms you don’t have to do any marketing if you don’t want to as it gets published on their websites and naturally people will come across it.
Personally, you should use ingramspark for paperback copies as it can be sent to book stores around the world since there is a refund option that Amazon KDP does not offer. Likewise, you should use Amazon KDP for all ebook sales as they have the all in one method for selling and earning from an ebook. Not to mention the Amazon platform is the most recognized in the world. There is a trust factor there that is harder than an ebook listed on a website.
Especially through the Kindle unlimited platform which offers a 30-day free trial and one free ebook to download. So you can tell people to sign up under Kindle unlimited you get a referral bonus along with the sale of your ebook. It ends up working out really well for you as you make higher commissions on ebooks through Amazon KDP than you do through physical books on Amazon.
But the best part about print-on-demand book royalties is you do not have to have any inventory of the books. The second an order gets placed, they design and ship the product on your behalf end it then gets delivered to the customer within one week. So ultimately this is great if you have some type of platform that you can get a boost in sales from just by posting a free blog article or Instagram post letting people know about your new book.
The downside to the POD service is it takes 60 to 90 days for the commissions to hit your account. While this isn’t bad at all, don’t think you can earn money the second you make a sale. Ultimately this may not make you ultra-rich but it is a great way to earn some passive income on top of what you already do.
3. Index funds
Index funds are a fantastic way to earn passive income as picking individual stocks more often than not end up costing you either time or money. Sure you might take a really good stock out of 10 but you more than likely spent a lot of time researching the best stock to pick and contemplating if that’s the one you really want to purchase. Likewise when you invest in the total stock market index fund like vtsax through Vanguard, it is a compilation of the best companies in the entire world giving you the average return of the entire market. So when you compare the two, the chances of your portfolio going down when you invest in the entire stock market is a lot less likely than it would be if you were to pick 1 to 10 stocks.
If you value your time like I hope you do, save yourself the hours of headaches and just invest in VTSAX. The average return is right around 8.26% annually after factoring in inflation. So what most people do is invest an amount they’re comfortable losing every single month into VTSAX and ideally in 20 to 30 years the amount will be more than enough to live off of. A pro tip would be to start a side hustle now that you can add gas to the fire to reinvest back into VTSAX to expedite it to the point in which you’re making plenty of passive income from VTSAX.
4. Real estate investments
Real estate investing has created some of the wealthiest people in the entire world. While there are some Industries like Tech or Finance which result in more millionaires, real estate has a lot of extra benefits that many other Industries don’t. You can choose to invest in a Reit which is a lower-cost way to invest. essentially a Reit gathers hundreds or thousands of investors all over the world by taking their contributions to put into a pool that goes towards investing in properties. Some platforms like Fundrise invest in large multi-family or commercial property deals and they provide dividends upwards of 12% annually. To date, my trial run investment 3 years ago of $1,000 is now up to $1,942.5 which is an all-time return of 12.4% If you wish to sign up for Fundrise and get all advisory fees waived for 180 days, check out this Link.
On top of Real Estate Investment Trusts, Performing a house hack is financially one of the best possible Investments you can ever make to reach Financial Freedom extremely fast. The house hack is where you purchase a multi-family home or a home that has a garage apartment attached to it. You live in 1 unit and you rent the other parts out. You can also live in a single-family home with multiple bedrooms, live in one and rent the other ones out. Some investors take it to the extreme and live on the couch while they rent the other rooms out or while they sleep in a camper outside the house.
There’s so much flexibility with this strategy I could write an entire post on that alone. But essentially the point is to reduce, illuminate, or profit from your housing costs monthly. Where you might normally pay $2,000 a month on your mortgage, the house hack allows you to live in a great neighborhood for maybe $200 a month, nothing at all, or even make money every single month. In some instances, investors are not only living for free, they are making upwards of $1,000 a month in passive income from this strategy.
The reason why this is such a valuable strategy is that oftentimes, there is no bigger expense in your life than housing costs. We often spend 30% or more of our income on housing. So just imagine what could happen if you put all of that money back in your pocket. You would essentially be giving yourself a 30% pay raise expediting your path to Financial Freedom. House hacking is one of the best passive income strategies out there.
If house hacking is not an option, you could always consider traditional real estate investing. When starting out, it’s best to purchase multi-family homes as they give you more bang for your buck than a single-family residence. Ideally, you could invest in a quadplex which is a 4-unit, live in one unit and rent out the rest. If you ran your numbers right which I can do in another blog post, you should have a 10% or greater cash-on-cash return. Ultimately what that means is if you put in $120,000 to the property including repairs, closing costs and everything else, you should be getting a return of $12,000 or more annually.
Cash flow is King in this game but it makes more sense to look at what your return is in terms of what you put into the property. Most experienced investors out there make upwards of 70% cash on cash return. Let’s say a property is bringing in $3,000 a month in rent, you put in $50,000 for the down payment and all the rehab expenses. Your annual income is $36,000 compared to the $50,000 you put in, that’s a 72% return which means you’ll make your money back In less than a year and a half. Not including appreciation and principal pay down that comes with paying off properties, again, real estate is one of the best ways for passive income and Financial Freedom.
5. Amazon FBA
Amazon FBA can be a very lucrative passive income stream and you only need a few dollars to get started. Most people including myself started in Amazon FBA by flipping books. As income grew, I started to get into higher profit niches. You can find profit margins upwards of 30% or more on some good deals. But the best part about this is you purchase the item, pack it up, send it to Amazon, and they will list it on their platform, sell it, fulfill, and ship the item all on your behalf. It’s extremely hands-off, the hardest part is finding the products. The rest is simply getting everything in a box and sending it off to Amazon for them to do the rest for you. It’s a beautiful process and as you scale up you can start looking into Amazon wholesaling or private labeling.
Both are very lucrative and passive and you don’t even need to hold the inventory to ship off to Amazon. Some people have the item shipped directly from the manufacturer straight to Amazon’s warehouse and you just collect payments and make sure to keep up with inventory to know when to reorder. But Ideally, you can expect to make 30% or more profit per order. When I was heavily into Amazon FBA, I was spending about 15 minutes a week after factoring in ordering the products, verifying the quality, adding a label, and sending it to Amazon’s Warehouse.
I am not a financial advisor so I cannot tell you what to do with your money and what to invest in but cryptocurrency is a fantastic investment if you don’t mind risking some money. Truth be told I would only stick with the higher-performing cryptocurrencies as they have been proven to be successful. Most people that are doing well with crypto are extremely high risk so it’s tough to recommend this as a method for everyone but it can provide some nice passive income as it is a rapidly appreciating asset.
Invest at your own risk but there are definitely some coins or NFT projects you can win big on as the demand is continually increasing. BTC and ETH are easily over a 200% annualized return since their inception. Meaning putting in $1000 in 2010 when BTC was worth $.08 a piece, you would have a portfolio value of $762,953,750 in BTC. If you put in $1000 in ETH in 2015 when it was founded, you would have $3,213,536.2 at the time of this Article. While there are a lot of hypothetials, Crypto is definitely a space you might want to consider putting some of your money as it is rapidly growing and it’s showing no signs of slowing down any time soon.
7. Digital Assets (youtube)
Youtube has a ton of benefits that many people aren’t fully taking advantage of. On youtube, you can shoot a video, edit it and upload it to then watch it grow over time. Youtube is extremely different than other social media platforms simply because it is directly tied to Google so it favors keywords and other factors that boost it in the rankings.
Since Youtube is Owned by Google, it gets treated as another search engine so each video continues to gather attention long after it’s posted. Unlike Twitter or Instagram where 90% of your viewership occurs within the first 24 hours. Oftentimes, your video on Youtube might go viral simply because an event happened that causes people to watch those videos. A great example is when people started to work from home, home workout videos exploded along with products to help out with home workouts. Even though those videos may have been posted years ago, youtube started recommending them because they recognized that’s where the attention was going.
Youtube is a great passive income stream since once you hit a point in your viewership, revenue from your videos will start to increase. From there, the more traffic you have, the more passive income you get. So by having more engaging, high-quality videos that increase watch time (the most important metric) the more passive income you make. So aim to post videos that you know, love, and could do for years without expecting any sort of money.
After dedicating yourself to it for months or years, you can then enjoy the fruits of your labor as youtube is often a higher passive income stream than any other industry once it’s built up to a certain point. That being said, mixing in other passive income streams is still a great idea. If you are considering getting into uploading videos on Youtube, consider using TubeBuddy as it shortens the learning curve on what to do for each video you upload.
Courses are another form of passive income as long as you do it the right way. Many people try to develop a course and market it as though it’s the greatest thing since sliced bread. The unfortunate truth is many people who are making these courses are doing so to provide 90% fluff throughout the videos and 10% value. IF you are to go this route, make it worth it for your audience because you want a fan not a one time transaction. Make sure the value FAR outweighs the cost. While it’s none of my business to tell you what to make a course on, I will say to do it ethically as karma is real.
If you design a course with the only intention to make money, you’re in it for the wrong reasons. Design a course that you know better than anyone else, with every bit of information you think is useful as your customers will appreciate it. Doing the right thing is always the right thing. A few recommended courses are:
Teachable is great for the all-in-one course that you’ve been looking to use. You can offer one time payment, payment plans, and subscriptions for recurring passive income. Teachable offers a more complex and detailed layout providing more options and is best to use if you have an existing audience.
Seems to be an easy way to create a course without an existing audience. If you are wanting to learn more about Skillshare and what it can do for your passive income stream, check out this link.
This is a basic way to set up some passive income for yourself. The trick here is most courses are not recurring and are typically lower priced. Therefore, volume is a really important part of using this model as most courses on Udemy are $10-$20 So If you feel like you have some valuable information to give to the world, Give online courses a try!
9. Online Coaching
While this may not be necessarily passive as you have to do something in return to make income, there are ways to make it become a passive income stream. Some examples might include doing a subscription-based coaching platform, or a way for students to send questions, requests, or videos, pay you, and then you get back to them whenever you’re able. While it might take you a few minutes to send a response, the basic principle is you make money anytime, anywhere, and you’re doing what you love.
This is a great business model for those that have something valuable to give back to the community but don’t have time to answer each and every request. The goal with coaching is to get the highest dollar per hour output as possible. So if you spend 100 hours building something to only make you $100, that $1/hr doesn’t seem too awesome.
Likewise, if you spend the same 100 hours to learn everything there is to know about a particular subject which truthfully isn’t that long. (it’s just an example so bear with me) Let’s say you end up making $10,000 through group coaching 10 people for $50 a piece, that’s $500 a call, in 20 days you’ve earned your $10,000. Again while this isn’t exactly passive, you’re leveraging your knowledge in group lessons to make it more affordable for everyone. Ideally, you can record the entire coaching session and sell those off for $10 to access if you wanted to further your passive income stream.
10. Advertising Income
This is a great way to earn passive income simply by having more traffic on your website or social media. This almost always has a direct correlation with traffic to dollars earned from advertising. Advertisers understand the more people coming across your platform, the more they should pay you to have their ads on your page. Whether you work with a brand directly (recommended if you love the product/company) and get paid to sponsor their products in a post/video, or if you just go through google adsense or the other ad platforms, they are all great ways to earn passive income.
Apart from Google Adsense, if you have a blog, consider Ezoic as the payouts are usually much higher. You do need a minimum of 10,000 monthly visitors to your blog in order to be accepted to the program. If you are wanting to sign up for Ezoic, check out this link. If you are well past 10,000 monthly visitors and pass the threshold into 50,000 monthly visitors, consider using Mediavine as the payouts are much higher than Ezoic. To date, Mediavine has the highest paying advertising income for bloggers.
If you are not a blogger, consider posting high-quality engaging content on social media or youtube. As your brand grows, so does the Adsense income along with branding opportunities.
11. Credit Card Rewards Points
Rewards points are often a topic not talked about in the passive income space. It’s one of my personal favorite methods to earn money while not even having to change anything about spending habits. My personal recommendations are:
- 50,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening
- Earn 5x total points on flights
- 10x total points on hotels and car rentals when you purchase travel through Chase Ultimate Rewards® after the first $300 is spent on travel purchases annually.
- Annual Fee $550 annual fee $75 for each authorized user
- Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening by using the link above
- 5x total points on travel purchased through Chase Ultimate Rewards®, excluding hotel purchases that qualify for the $50 Anniversary Hotel Credit.
- 3x points on dining at restaurants including eligible delivery services, takeout and dining out.
- 2x on other travel purchases.
- $95 Annual Fee
- Earn a $200 bonus after you spend $500 on purchases in the first 3 months from account opening by using the link above
- 5% cash back on grocery store purchases (not including Target® or Walmart® purchases)
- 5% cash back on travel purchased through Chase
- 3% on dining including takeout and drugstores
- 1.5% on all other purchases.
- $0 Annual Fee
- $200 bonus plus 5% gas station cashback offer
- Earn 5% on up to $1,500 on combined purchases in bonus categories each quarter you activate.
- Earn 5% on travel purchased through Chase Ultimate Rewards.
- Earn 3% on dining at restaurants, including takeout and eligible delivery services.
- Earn 3% on drugstore purchases.
- Earn 1% on all other purchases.
The really fun part with credit card rewards points is when you start to use them together. For example, you can use the chase freedom unlimited card to get rewards on everything, then when it’s time to use the points, transfer them over in the chase portal for a 1.25-1.5 points multiplier.
Preferred gives a 1.25x redemption value and reserve gives a 1.5x value. That means if you have 100,000 points earned through the chase freedom card, just by transferring them to the Chase preferred or reserve cards, they’re worth 125,000 and 150,000 points respectively. That translates to roughly $250 and $500 in added value just by owning the cards.
Not to mention the 50-60,000 rewards points you earn when you sign up, these cards pay for themselves many times over if the annual fee is any sort of obstacle for you. On top of the redemption and signup bonuses, you get additional perks like $300 travel credits and 3-10x point multipliers on dining and travel expenses.
Just by living life as you already do, this is one of the best ways to hack your way to free flights and hotels. Just make sure to pay off your card in full every month!
12. Rent Out A Space In Your Home On Airbnb
This is a big one. We do this currently and it allowed us to cut our mortgage in half every month. We are able to live in a great neighborhood, close to work, right next to great schools for a price lower than the cheapest 1 bedroom apartment in our city. That’s through the power of Airbnb and house hacking. I can write a whole post on our exact Airbnb unit and the numbers on it if that’s of interest to you guys and gals.
The Airbnb concept is simple and extremely passive given that you outsource the cleaning yourself. For us, we don’t mind cleaning the unit since it’s a studio room. Not to mention every time we clean we get to pocket the cleaning fee so we profit a little extra through that. But if you were to hire a cleaning crew and property manager, it could be 95% passive for you. This is a faster and easier way for a lot of people to start making passive income than other sources. As long as the room you are looking to rent is fully furnished, clean, and you are a great responsive host, you’ll do great.
It is a hospitality business so treat it like a hotel and the guests will leave great reviews which helps you become a superhost and make even more passive income. The three main ways to utilize an Airbnb property is to:
- Rent out a room in your home
- Rent a garage apartment or separate unit in a multifamily property
- Or just the entire home completely separate from where you live.
Truthfully, the rent by room can be the most lucrative but take the most sacrifice. It just comes down to your goals and what you’re looking for. They are all great passive income streams and will definitely be great methods to experiment with as the demand for housing will not go down any time soon so you’re almost always guaranteed a market.
13. Dividend Investing
Passive income through dividend investing has a promising claim given you put enough funds in to make it worthwhile. An example of this would be to invest into At&t, Verizon, or Exxon. Given an 3-8% yield, you would get paid the yield of what you have invested in the stocks. You can opt for reinvestment or if you want to keep the dividend for your self.
As with most stocks, the dividends grow the more cash you have invested into them. Just be sure to stay disciplined and continue reinvesting until the cash flow is an amount you feel comfortable withdrawing. The point of passive income is to provide you with money that you earn while you sleep. There is nothing more passive than stock investing so just be sure to invest with the intention of long term growth as it needs to grow to be worthwhile.
If you don’t like the idea of picking one stock and it potentially going down, you can always choose to invest in an index dividend stock. These are great since they replicate the market as a whole giving you more consistent returns. The other great part about them is they have really low expense ratios. An expense ratio is the management fee the platform uses to make sure they’re making something on your money. Most expense ratios are .5-1% of what you have in that stock. Vanguard’s VHYAX has an expense ratio of .08% which is incredibly low, with a great yield of 2.75% and pays quarterly.
Dividend stocks are great to do if you just want to park your money and just have it pay you a return. Truthfully Index funds like VTSAX are even better since the expense ratio of .04% and average return of 8.26%. With all things passive income, both index funds and dividend stocks do take a while until it gets to the point where you can live off of it if you’re starting off from $0.
14. Selling Online Merchandise and Products
This one can I have so many different varieties of what you would be interested in. And a recommendation would be to find an niche of a problem on something that you know needs to be solved, then you create a product to fix that. One might be the seat gap filler. This product catches all items that fall into it like your phone to make sure you don’t lose those. While creating a product from scratch will take a lot longer and more of an investment, the payoffs can be amazing. If you create a product and sell it either through amazonfba or on your own website, you can have complete ownership over that product itself and full control over what you want to do with it.
Now on the other side if you created merchandise either by buying it in both overseas and having it shipped in, or doing a print-on-demand Service like printful and listing it on Etsy. The cool thing about that is the second someone places in order and gets designed and delivered from the manufacturer so you do not have to have thousands of clothes lying around your house.
This is a great model as you can create unlimited designs and list them on your website for people to purchase. Ultimately, Great brand that people would love to buy from, you have a market that a lot of people would love to buy a products from. So think about what problems need to be fixed, then create a product to fix that. Likewise you can design shirts yourself and list them Online without having to hold any of the inventory yourself.
Dropshipping is another great business model as long as you have enough money for advertising spending. This is another business where you physically don’t hold any of the inventory and it gets sent directly from the manufacturer once the item is ordered. So let’s say you are selling fitness equipment. Let’s say someone orders a piece of equipment from your website. After all fees, shipping costs, and purchases for the product take place, you pocket the money without touching the product yourself.
Again this is a great business model if you would like to scale quickly once you find a great product and can advertise it efficiently. It seems like the dropshipping industry is getting harder to make good money in as a profit margins are quite low in a lot of products. Sign up for a Shopify free trial list of products and send traffic to it today!
What type of passive income stream is best for you?
Why do we have covered 15 different passive income streams. While there are hundreds out there that you can utilize to make money while you sleep. The ultimate goal is to make enough passive income to surpass your living expenses. Therefore, you can retire early and make money anywhere anytime.
- Do you want to just put money into something and let it grow?
- Do you want to work on something that allows you to be creative? Something that allows you to write down everything that you finding aspiring and can potentially make money from?
- Maybe you enjoy the feeling of creating a product that fixes someone’s problems?
These are all questions that you need to ask yourself before deciding what passive income stream you want to build. But a pro-tip, if I can throw your way, is to pay attention to risk-averse methods. This is where you’re putting extremely low or no money at all into something. From there, you have the potential to make as much money as possible.
One example is blogging. The cost to host your domain on a platform as well as go through a provider can be about $20-$30 a month. And if your blog is bringing upwards of a couple hundred or even thousands of dollars a month, it works out to be a pretty good deal. so with all this information, right down a few of these methods that you would want to do, Circle the ones that make the most sense for you and your ultimate path, and get started!