Most people have a job. You go to work, put in your hours and get paid for it. That’s active income. You’re actively involved in the work that you get paid for. But the other, much more awesome way to get paid is with passive income. As the name suggests, passive income is when you earn income while not being actively involved.
Soooo basically it’s making money without having to work for it? Well, yes and no.
Creating a passive income stream requires putting in money or work (or both) up front. While you may not realize the pay off immediately, you’ll be able to make money off of it potentially forever.
So how can you add some passive income to your life? Read on!
Collect Interest and Dividends
One of the simplest ways to earn passive income is to let your money work for you. Instead of sitting on cash, put it in the bank or invest it. Money in the bank earns interest, although at a very low rate. Check out online banks like Ally that offer higher interest rates while still federally insuring your money.
For a longer time horizon, investing is a much better route to go. Regularly investing money in a low cost index fund (especially at a younger age) is the best way to build massive wealth in the long run. All the while, you’ll be earning greater dividends thanks to compound interest.
Invest in Real Estate
One of the more popular ways to create passive income is by investing in real estate. While it requires money up front and ongoing maintenance (depending on your level of involvement), the pay off is potentially huge. Getting those monthly rent checks is a lot better than writing them. All the while, renters are paying off your real estate asset.
Not everyone is cut out to be a landlord though. You can still get in on the real estate action indirectly by investing in REITs (real estate investment trusts). These are funds that invest in real estate securities and typically pay out higher dividend yields.
As the number of websites continues to explode (more than 1 per second created in 2017!), the demand for stock photography has never been higher. While it’s a crowded marketplace, you can potentially sell the same photos over and over again with no effort after your initial upload. The more photos you put in your portfolio, the more potential passive income you can reap.
Write a Book
Writing a book has the potential to be very lucrative. It’s a lot of work up front but it has the potential to generate royalties forever. Nothing says passive income better than royalties.
It may seem like a daunting task but there are so many things that you can write about. Self help and romance novels tend to sell well, but there are also huge audiences for fantasy, sci-fi, fan fiction, how to’s, humor, parenting and many more. Are you a good cook? Write a book on healthy meals you can make in 20 minutes or less. Good with relationships? Write a book on how to make marriages last. Have a creative mind? Write a Batman vs. Zombies vs. Dinosaurs story. I don’t know, this is your book. Write something that you would want to read and chances are others will want to read it as well.
Write an eBook
Finding a publisher for a book can definitely be a difficult process with a lot of competition. Self publishing an eBook is a much easier route. There are several platforms that you can publish on, with Amazon being the largest. Why fight for space on a bookshelf when you can put your work directly in front of 300 million customers?
As an example, I have a side hustle on Amazon Mechanical Turk. After having several friends ask me how I make money on there (shameless plug alert), I decided to write an eBook, Side Hustle From Home: How To Make Money Online With Amazon Mechanical Turk, about exactly what I do to maximize income on the site. So now I make money from my own side work, plus passive income from showing other people how to make money with a book I’ve already written. What’s better than that?
Start a Blog
Nowadays you can find blogs about anything. Pop culture, science, money, religion, finding the secret to eternal life and selling products that will definitely help you to achieve immortality too…literally anything.
But the really cool thing about blogs is that there are many ways to monetize them. From ads, to selling your own products to affiliate marketing, you can generate multiple passive income streams from one place. Of course the challenge is growing your viewership up enough to be significant, but with quality content in the right niche, it’s certainly possible.
Buy a Blog
If you don’t like to write or don’t have the time to build an audience from scratch, you can buy an established blog. The value of a blog is typically 12-24 times their monthly income so if it pulls in $100 a month from ads and affiliates, you can expect to pay $1,200-2,400 for it.
Why would people sell if it’s bringing in passive income? Maybe they want a larger sum of money up front. Maybe the blog has been abandoned entirely. This article talks more about how to go about purchasing a blog if it’s something that interests you.
Start a YouTube Channel
There’s a lot of money in video these days. The big YouTube channels pull in millions of a dollars a year with sponsored videos and ads. The top ten earners are people doing comedy sketches, original music, playing video games and a 6 year old who opens toys and reviews them. That kid made $11 million in 2017…seriously.
Obviously these people put in a lot of time in creating and editing videos with legitimate equipment. Once the video is posted though, it’s all sweet, sweet passive income rolling in. Find something you’re passionate about or enjoy sharing with others and get the camera rolling!
Create an App
There’s over 2 million apps in the Apple and Android stores. Why not join the fray and see if you can create the next big thing? Apps can generate revenue from charging to buy it, in-app purchases, subscriptions and advertisements. All you need is a good idea. The coding and development can be contracted out if that’s not within your skill set. It can be a big investment up front but a good idea can pay off for years.
Rent Your Stuff
Everyone owns stuff and it’s a safe bet that others would pay to use that stuff. Own a house? Rent out a room on the whole thing on Airbnb. Car? Try Turo. Clothes, bikes, tools, cameras, even parking spots. There are markets out there for all kinds of things. We’re living in a sharing economy right now. May as well make use of all of those assets lying around and let them generate passive income for you.
Create an Online Course
Online education is expected to be a $240 billion industry by 2021. That’s a lot of money to divide up for the people who create online courses. Time for you to get a piece of the action.
Have you ever solved a technical problem? Wrote a successful book? Are you good at explaining complex subjects? Do you have an area of expertise where others could use your know how? There are countless topics on which you can teach a course. It doesn’t even require any certifications.
Host the courses on your own website or on a site like Udemy where millions of customers are already searching for online courses.
Get Cash Back Rewards
This may not fit the description of passive income exactly, but getting cash back for things you already buy is a good way to make money without doing much. The easiest way to do this is with a cash back rewards credit card. If you’re disciplined enough to pay off the balance each month, you can get 1-5% cash back on all of your purchases.
Ever see a witty slogan on a t-shirt and think to yourself “psssh, I can think of something funnier than that”? Well here’s your chance, hot shot. There are tons of sites that allow you to submit your own designs and they do the rest. You don’t have to worry about inventory, selling or customer service. All you do is cash the checks. Check out sites like Zazzle, Tee Spring and Amazon Merch to create a passive income stream from your own line of t-shirts.
Rent Ad Space on Your Car
Typically more of an option in bigger cities or for those who drive a lot, some companies will pay you to put advertisements on your car. Many sites that advertise this are scams and want you to lay down money up front (never do this). Carvertise is a legitimate one that pays around $100/month for campaigns lasting 3-6 months.
It can be hard to land one of these gigs due to not living in a desired location, not driving enough or too many applicants in the area. Uber and Lyft drivers may have an easier time landing a gig because they drive more miles.
Buy a Vending Machine
This is a bit of a quirky option and requires some active management (restocking, maintenance), but a good way to make some side money. Vending machines can be purchased for as little as a few hundred dollars. Talk to businesses in your area (obviously the bigger, the better) to see if they’d be interested in having one set up there. Once it’s filled, there’s little left to do but let it sit there and make money.
Why stop with one? You can buy a few or even start your own vending machine business. Buying in bulk will lower the cost of inventory and would increase profits if you find the right locations.