Wouldn’t it be great if you never had to work? If you invest your time and money in one of these best passive income ideas, you might never have to lift another finger.
What exactly is passive income? A passive income stream is a way to make money without having to actively work.
While most passive income ideas, like active income, do require you to put in a little legwork upfront, they can help you earn more during good times and tide you over during tough times as necessary.
Some people have relied on passive income entirely, using a variety of passive income streams to replace the income that might normally be generated by a typical 9 to 5 job.
Building your personal wealth through passive income is a smart way to earn money and to become financially free. In this guide, we’ve gathered up some of the best passive income ideas so that you can start earning passive immediately, with as little work required!
Best Passive Income Ideas
When it comes to earning passive income, there are thousands of potential passive income ideas you can pursue. However, here are some of the best options to consider as a beginner.
1. Selling Information
A popular passive income source is selling information. There are a few ways you can go about this. While some passive income ideas require a significant upfront investment, this is an affordable (sometimes free) way to get your foot in the door to earn money in an easier way.
You can sell an eBook, a video or audio course, or other products that capitalize on your knowledge. This tends to work best for people who have specialized interests or knowledge in certain areas (like real estate investing, computer programming, gardening, photography, or something along those lines).
You can launch a course on a platform like Coursera, SkillShare, or Udemy, or sell your eBook via your personal website or blog. Some passive income earners choose to start with a “freemium” model, in which you build up a following with free content and then start charging for more detailed information.
2. Flip Retail Products
This is one of the best passive income streams for people who like to shop! However, there is a small amount of risk involved because you will have to hang on to products until they sell. Make sure you actually have room in your home to do this before you dive in.
Basically, what you’ll be doing is scouring online sales platforms like Amazon and eBay. You can buy products at cut-rate prices and re-sell them elsewhere.
This isn’t the best passive income stream if you want something that is truly zero labor – you’ll have to be constantly on the hunt for sales and shipping things out to buyers. However, it can make you a ton of money and work particularly well if you have a contact that knows where to find valuable products at rock bottom prices.
3. Affiliate Marketing
Affiliate marketing is often lumped into the same category as network marketing, but the two are not one and the same.
Affiliate marketing is a popular strategy employed by social media influencers, bloggers, and website owners. In this technique, you would promote a third-party product by linking to it on your website or social media account. Amazon Associates is one common affiliate partner but ShareASale, Awin, and eBay are other options as well.
This is a passive income stream that is highly effective – but you need to make sure your site has readers or your social media account has followers. Without loyal fans, you aren’t going to get many clicks and sell very many products.
4. Rental Income
Real estate investing is another common way that people passively earn money.
However, it is important to note that real estate investing does require some work – just less of it than the typical active income stream.
You’ll want to educate yourself on the best ways to maintain and manage real estate as a landlord. To effectively earn passive income from rental properties, you’ll need to consider how much of a return on investment you’d like, what the minimum investment is that you can make, and what the financial risks of owning the property might be.
You can then use that information to price your rental unit strategically.
Also bear in mind that economic downturns can pose challenges and you might not be able to rent out the home as quickly as you’d like – while real estate investing, particularly in rental properties, has its perks, you’ll want to make sure you have some solid contingency plans in place, too.
5. Peer-to-Peer Lending
Also known as P2P, peer-to-peer lending is a personal loan that is made between you and someone who needs to borrow money.
Don’t worry – this isn’t something you’re expected to do alone!
Most peer-to-peer lending is conducted through third-party services such as LendingClub or Prosper. LendingClub will let you invest your money as an individual investor. Not only that, but this company also has an exclusive high-yield savings account as a thank-you to its investors, too.
You’ll earn income based on interest payments on the loans. However, the loan is unsecured, so if the borrower defaults, you’ll wind up with nothing.
6. Invest in the Stock Market
There are countless ways you can invest in the stock market to make residual income. However, dividend-yielding stocks are some of the best because you’ll receive a payment at regular intervals.
On a quarterly basis, companies will pay out cash dividends to you so that all you need to do is own a stock and reap the rewards. The more shares you own, the higher your payout will be. It can be tricky to find the right stocks, but with a little legwork, you can find the perfect fit.
An REIT, or real estate investment trust, is another great way to generate passive income.
You can purchase a real estate investment trust on the stock market just like any other dividend or company stock. You’ll receive whatever the REIT pays out as its dividend so you can earn a growing stream of passive income over time.
8. Invest in a High-Yield Savings Account or CD
One of the easiest ways to generate passive income is to put your money in a high-yield certificate of deposit or savings account.
You can do a quick search of the top savings accounts or CD rates. Usually, going with an online bank is best for this passive income idea, since this will allow you to tap into the best rates in the country.
9. Sell Designs
Do you have design skills? If so, you can generate passive income by selling items with your printed designs. Look for companies like Zazzle and CafePress, who will allow you to sell items like hats, t-shirts, mugs, and more.
10. Try a Bond Ladder
A bond ladder is a classic idea to earn passive income that retirees have taken advantage of for decades. It’s a series of bonds that mature at different times over many years, with these staggered times decreasing your overall risk. You just sit back and collect the payments!
11. Make an App
If you have a bit of a creative flair to your personality, another one of the best ways to generate passive income is to create an app. You can come up with a game or an app that helps mobile users perform some kind of task.
Once the app is public, you’ll begin to earn passive income for every download.
The risk here is that you might be wasting your time if you come up with an app that isn’t unique or profitable enough. You’ll have to pay attention to privacy laws, too, and there’s the technical aspect of coming up with such a program.
The good news is that there are services out there that will help you get your idea off the ground. Mobincube is one such program. This will help you create native mobile apps for Windows, iOS, and Android phones, with built-in monetization features that are easy to activate.
12. Sell Digital Products
Selling digital products is another one of the best passive income ideas. You can sell things like templates, PDFs, eBooks (as we mentioned earlier), Kindle books, or plug-ins.
These are great passive income streams because you only have to make the product once and it will continue to bring in passive income for you in the future. You can sell your product on eBay, Etsy, or a whole host of other online shops.
13. Rent Out Your Home
If you’re willing to allow strangers to live in your home for a few weeks or months out of the year, then this passive income idea should appeal to you.
This works particularly well if you live in an area dominated by tourism. By setting the rental terms yourself and using a service like Airbnb, you can bring in passive income quickly and efficiently.
Which Business is Best for Passive Income?
If you’re looking for the best passive income idea, then don’t worry – all of these passive income ideas can help you make lots of money. None of them is better than the next – it’s all about which way of generating passive income appeals the most to you, your strengths, and your financial standing.
You don’t even have to settle for just one! There’s no one-size-fits-all approach to generating passive income. However, you will be more successful if you have several irons in the fire.
Once you get one passive income stream up and running, consider adding another – you want to make sure that putting effort into new passive income ideas doesn’t affect the ones you already have.
However, by balancing your efforts and getting creative in your approach, it is possible to earn passive income that can fully replace your full-time job. So dive in and start hustling!