Earning money while you're sleeping is incredibly appealing. But just what exactly is passive income?
For many, making money is tied to the idea that you are actively working. With passive income, there is still an investment made (either in time, money, or both), but the work gets done initially, and then that investment starts working for you with little to no effort moving forward. With money coming in on autopilot, you can start paying down debt, saving for retirement, or meeting other financial goals.
Ready to add passive income streams into your life? Here are 24 passive income ideas to start building wealth today.
What Is Passive Income?
Passive income can be earned automatically with little to no work to continue making money. For example, if you create and list digital products for sale, the active part of the work is done once the digital product is complete.
Each sale made from that one-time investment of work is considered passive income. Another example is interest earned on savings accounts or investments. Once you have made an initial deposit, the interest earned from that money then becomes passive income– your money is making you more money without any more work required.
What Is the Difference Between Active and Passive Income?
Active income is money earned in exchange for time or service performed. Common examples of active income are hourly wages, salary, commissions, or services.
Passive income is money earned when completing the work upfront or with some initial investment but then continues to make money with minimal effort in the future. Some examples of passive income sources would be returns on money invested in mutual funds, rental income monthly payments, and returns on real estate investments or commercial properties.
How to Start Earning Passive Income
Passive income can work for anyone. A stay-at-home mom, a recent college grad, or a retiree– passive income is a great option to increase your monthly cash flow.
The key to earning passive income is planting seeds from which your money can grow.
Take stock of what you have available to you in terms of time and money to invest. Look at what skills or resources you have to offer. Make a list and jump in.
Here's a list of 24 ways to make money passively.
Create an online course
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Start a YouTube channel
Enjoy making video content? Consider starting a youtube channel. You can earn passive money via video display ads once you meet the threshold of viewers and watch time.
Rent out a spare room or home with airbnb
If you have a home or even just a room in your home, you can list your space available for rent on Airbnb. One couple transformed their in-law suite into a profitable income stream for their family.
Rental properties are a great way to build passive income. Each property brings in monthly rental income, giving you extra money. While managing a rental property isn't entirely passive, you can mitigate the day-to-day work by hiring an excellent property manager.
Open an online store
Etsy, Shopify, and WooCommerce have made it easy to start your own small online business. If you are a graphic designer or a creative at heart, there are many opportunities to make extra cash with digital products.
Buy and sell domain names
The price of domain names fluctuates based on demand. Buying and holding domain names you think will become popular in the future is an easy way to make some extra money with minimal effort.
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An individual investor gets matched with individuals or small businesses looking to borrow money with peer lending websites. These loans are structured as installment-type loans that pay interest. While there is some risk involved, these interest-earning loans may provide better returns than what would be available with other savings and investment opportunities.
Sell photos to stock photos sites
Rent your parking space
Do you have an extra space in your driveway or a designated parking spot you aren't using? Sites like Spot Hero or Spacer allow you to list and rent out your space for a fee every month.
Start a blog
Becoming a blogger requires an upfront investment of time and money. Still, display ad revenue and affiliate income are two revenue streams that can provide residual income.
If you are looking to shortcut this process and have money to invest, purchasing an established blog is also possible.
Invest in dividend stocks
Dividends are profits paid to stock owners. However, this passive income option does not come without risk. As with any investment in stocks, there is no guarantee of returns, and there is a risk of losing money. But with some companies paying dividends regularly, dividend stocks could become a consistent revenue stream.
Open a high yield savings account or CD.
Traditional brick and mortar banks, as well as online platforms, offer both high yield savings accounts as well as CDs. While the interest rates aren't typically very high, they are passive. They also benefit from your money is protected if you invest with an FDIC-insured account.
Utilize cashback apps
Cashback apps allow you to earn cash back on spending that you were already planning to do anyway. One such example is Rakuten. It will enable you to earn money back at over 3,500 stores when you shop through their site or app, and it's entirely free to join.
Credit card rewards
Some credit cards allow you to earn money, points, or other rewards on purchases you make with their credit card. Some reward credit cards will be better than others, depending on your financial priorities. It's essential to research each card and compare what they offer to get the best deal.
Sell storage space
Peer-to-peer storage sites like Neighbor allow you to turn space you aren't using into a monthly cash stream.
Write an ebook
Amazon has made self-publishing more accessible than ever with Kindle's Direct Publishing. Earning royalties percentages is dependent on the publisher. Still, once the ebook has been written and published, the money made becomes completely passive.
Advertise on your Car
Car advertising agencies have requirements about the types and years of vehicles they'll use. Still, your car becomes a moving billboard, earning money as you drive around town.
Rent out your Car
Turo works similarly to Airbnb, but for vehicles. According to Turo, “the top-performing models on Turo are economically priced” and are experiencing !00+% of annualized ROI. More expensive car models ($30K+) are still experiencing returns of 70+% in annualized ROI. So wherever your vehicle falls, this is a passive income stream worth investigating.
Licensing music is a passive activity that's easy to get started. Contact a music licensing company and turn your music into royalty payments.
Flipping products could be considered a semi-passive income. Thrift stores, flea markets, Buy Nothing groups on Facebook, or your house– are all great places to find products to flip. Knowing the types of products in demand can be critical with this revenue stream, but finding these items, cleaning them up, and selling them can be a quick and easy way to earn extra cash.
Rent Your Tools or Equipment
Are you an avid DIYer? You may have a garage full of tools sitting around. You can turn that garage full of tools into a revenue stream with minimal effort, thanks to peer-to-peer tool lending sites.
Petsit at your home
Kennels and other pet boarding facilities can charge anywhere from $15 to $75 a day. By providing this same service in your own home, you can earn a similar fee, but from the comfort of your own home. While this is not entirely passive as you care for someone's pet, there is typically very little upfront work.
Housesit for someone
Collecting the mail, taking trash cans to the street, watering plants, or simply not wanting to leave a house vacant– there are many reasons homeowners are willing to pay a fee for someone to housesit. Housesitting is relatively simple. Friends, family, or sites like Housesitter.com can be an excellent way to get started.
Invest in a business
Want to own a business but don't want to be tied up with the day-to-day dealings? Consider becoming a business investor. You invest in the business for a share of the profits and partial ownership.
The Bottom Line
Passive income is a great way to diversify your income. While there is some upfront investment to be made, you can have a viable way to build wealth and achieve the financial goals in your life with a bit of planning and creativity.
This post originally appeared on Savoteur.
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