Are you tired of trading your time for money? Then it’s time to explore the world of passive income! It can be a great addition to your active earned income.
But first, let’s understand what it takes to generate passive income and what passive income really means.
Passive income is the money you earn with little ongoing effort or active involvement. It’s like having your money work for you while you sleep or enjoy your life. In other words, it is income that continues to be earned even when a person is not actively working or trading their time for money.
Today, I’ll cover my list of passive income sources that can earn you money while you sleep. From rental properties to affiliate marketing, we’ll take a deep dive into these opportunities and give you the tools to start generating passive income for yourself.
But before we look into these different options, I want to tell you that what may work for one person may not work for another depending on their skills, interests, and financial situation.
The ideas I am going to share have varying degrees of passivity. Some may require more upfront money than your time commitment, while others may require more of your time than money. However, all of these options will provide you with passive income in the coming years after the initial few months of time, effort, and investment. So let’s dive in.
1. Dividend-paying stocks:
Dividend-paying stocks are a type of investment that pay you a portion of the company’s earnings as dividends on a regular basis. For example, if you own 100 shares of a company that pays a $1 per share dividend each year, you’ll earn $100 per year in passive income.
Of course, investing in the stock market always carries some risk, so it’s important to do your research and diversify your portfolio. One way to do that is to invest in index funds or ETFs: Index funds are investments that track a market index, such as the S&P 500.
Investing in an index fund can earn passive income from the dividends paid by the companies in the index. How much money you make from dividends, obviously depends on the amount you invest and which type of index funds you chose.
Many index funds and ETFs track dividend indexes, which are comprised of stocks that pay dividends. For example, the iShares Select Dividend ETF (DVY) tracks the Dow Jones U.S. Select Dividend Index, which is made up of 100 high dividend-paying stocks.
On their website, it says “The iShares Select Dividend ETF seeks to track the investment results of an index composed of relatively high dividend paying U.S. equities.”
By investing in an index fund or ETF, you can get exposure to a diversified portfolio of dividend-paying stocks with lower risk than investing in individual stocks. Additionally, many index funds and ETFs offer relatively low expenses, making them a cost-effective way to invest in dividend-paying stocks.
I have written several posts explaining what index funds are, so you can check those out here.
2. Rental Properties:
Rental properties are another popular form of passive income. By owning a rental property, you’ll earn rental income each month from tenants. You can also build equity in the property over time, which can increase its value and your passive income.
While rental properties can be a great source of passive income, there are also some disadvantages to consider like high upfront costs. Investing in a rental property often requires a large amount of upfront capital, which can be a significant barrier to entry for some investors.
Also, Rental properties require ongoing maintenance and management, which can be time-consuming and expensive. This includes routine repairs, handling tenant complaints, and managing rental payments.
In addition, there is always a risk of tenant problems, such as non-payment of rent, property damage, or legal disputes. These issues can be stressful and time-consuming to resolve.
Also If a rental property is not occupied, the owner may not generate any rental income. Turnover is also a common issue, as tenants may choose to move out at the end of their lease.
So, It’s important to carefully consider these potential disadvantages before investing in rental properties as a form of passive income. However, with proper management and a long-term investment mindset, rental properties can still be a lucrative source of passive income for many investors.
3. High-Yield Savings accounts:
3rd option is saving your money in a High yield savings account than saving your money in a traditional savings account. High-yield savings accounts are designed to help customers earn more interest on their savings while still having the flexibility to withdraw their money when they need it. So if it is paying 4% and you have $10,000 saved in it, you will get $400 as interest income at the end of one year vs getting $25 in a traditional saving account that pays 0.25 percent.
One of the primary advantages of high-yield savings accounts is that they typically have lower costs because they are online banks and not brick-and-mortar banks so they can pass those cost savings to their customers through higher annual percentage yield or APY this means that customers can earn more interest on their deposits over time which can help their money grow fast.
Marcus by Goldman Sachs, Capital One, Sofi, Lending Club, and Ally Bank are a few banks that offer high-yield savings accounts. You can check their website, but the interest rate they currently offer ranges from 3.75% to around 5% as of May 18, 2023.
Just keep in mind that Some, high-yield savings accounts may have certain requirements or restrictions, such as minimum balance requirements or limits on the number of withdrawals allowed each month, so you can check those out at their website.
Also, remember the interest rates on these accounts can fluctuate over time, so it’s important to monitor them regularly. But usually, they are a better option than traditional savings accounts as they also have atm services.
4. Create an online course:
This can be a great way to earn passive income from your expertise. Once you create the course, you can sell it on platforms like Skillshare, Udemy, or Teachable and earn passive income from each sale.
The initial work of creating the course and setting up the platform will require significant time and effort, but once the course is created and available online, it can generate income with minimal ongoing maintenance. So that’s when you will start earning passively.
Of course, the success of the course will depend on various factors such as the demand for the topic, the quality of the course material, the marketing strategies you use, and the competition in the market for that subject. However, if the course is well-made and marketed effectively, it can attract a large audience and generate a consistent stream of income.
Overall, creating an online course can be a viable passive income option for those willing to put in the initial effort and have expertise in a particular area.
5. Create a blog:
By creating a blog and attracting a large audience, you can earn passive income from advertising, affiliate marketing, or sponsored posts.
This can be a good passive income option for those with a passion for writing and a willingness to put in consistent effort over time. Starting a blog requires setting up a website, creating quality content, and marketing the blog to attract readers.
Once the blog gains a following, it can generate income through various channels such as affiliate marketing, sponsored posts, and advertising revenue. However, it may take a while for the blog to gain traction and generate substantial income, so you have to be patient about that. I do have a blog called your everyday economics. I enjoy writing and sharing my knowledge with others, so this was something I started doing exactly and year ago.
Again, like online courses, the success of the blog depends on various factors such as the quality and relevance of the content, the audience size and engagement, and the marketing strategies you use. Also, it’s essential to keep the blog updated with fresh and relevant content to maintain the readers’ interest.
So you can give it a try if you enjoy writing, and like keeping yourself updated about the topic, and most importantly you are willing to spend a couple of hours on the blog each week to keep it running. You will start earning on previous posts that you have written, and it can be a great source of income. In fact, Several bloggers have quit their full time and made blogging their full-time profession once they saw good results.
6. Renting out your unused space (such as a spare room or parking space):
This is another option for passive income but can only work for some individuals who have the space to rent. But if you have that extra space you are not using, it won’t harm to advertise it for renting purposes.
7. Investing in rental storage units:
This can be another good way to earn passive income. Once the units are built, you’ll earn rental income each month without having to actively manage them.
This option can be a viable passive income option, especially if the investor can acquire the units at a reasonable cost and in a prime location. Rental storage units can generate steady rental income with relatively low maintenance costs compared to other types of rental properties.
However, there are a few drawbacks to investing in rental storage units. The demand for rental storage units can fluctuate depending on the economy and season, which can impact the occupancy rate and rental income. Also, investing in rental storage units requires significant upfront capital, including the cost of acquiring the property, property taxes, insurance, and maintenance costs.
Investing in rental storage units can be a viable passive income option if done correctly, but it requires significant upfront capital and ongoing effort to maintain profitability.
8. Sell digital products:
Selling digital products can be another good option to get passive income: If you have skills in design, photography, or writing, you can create digital products like e-books, templates, or stock photos to sell online.
There are several online marketplaces where you can sell your e-books, templates, and stock photos. I will share Some of the most popular options, one of which I have used myself.
When choosing a platform to sell your digital products, you should consider factors like fees, payment options, and audience reach. You may want to try out a few different platforms to see which one works best for you and your products.
- Amazon Kindle Direct Publishing – This is a platform that allows you to self-publish and sell your e-books on Amazon.
- Etsy – This is an online marketplace for handmade and vintage items, including digital products like templates. I myself have an Etsy shop for handmade high-end fashion clothing. I will put its link in the description below. I have seen many shops selling digital products like templates, themed birthday party supplies, and party games that you can download and print.
- Creative Market – This is a platform that sells a variety of digital products, including templates and stock photos.
- Shutterstock, Stock, and Adobe Stock – These are platforms where you can sell your stock photos and earn royalties each time someone downloads your image.
- Sellfy – This platform allows you to sell digital products directly to your audience, including features like payment processing and marketing tools.
When choosing a platform to sell your digital products, you should consider factors like fees, payment options, and audience reach. You may want to try a few different platforms to see which works best for you and your products.
9. Royalties:
If you’ve written a book, recorded music, or created other types of intellectual property, you can earn passive income through royalties. These are payments you receive based on the sales or usage of your work.
10. Make a Youtube channel
I would rate starting a YouTube channel for passive income as a good option, but it requires a lot of effort and time to be successful. The competition on the platform is high, and it can take time to build an audience and generate consistent income.
However, if you have a passion for creating content, and are willing to put in the work, it can be a rewarding way to earn passive income. The channel should fulfill one of two criteria, it should be either entertaining or educational.
YouTube’s Partner Program allows creators to earn revenue through advertising and other monetization strategies like affiliate marketing and sponsored videos where the creator is promoting a specific product.
As for me, right now my channel is not monetized, and I can’t reap any rewards of passive income yet, but hopefully, in the future, I will. I know many other successful YouTubers do it as a full-time job earning hundreds of thousands of dollars.
Conclusion:
So these are all the options, hope you find something you like and can make it work. Just remember that while passive income may not require constant active effort, it often requires initial setup, sometimes money investment, ongoing management, and occasional maintenance to keep it sustainable and growing.
