What is Passive Income?
“Passive income is earnings derived from a rental property, limited partnership, or other enterprise in which a person is not actively involved.”
Taken from Investopedia.
Okay, let’s rephrase that:
“Passive income is any income or money you earn or receive (with minimal or no efforts) while binging on Netflix or playing League of legends, having put up efforts or money in the beginning.”
There, much better.
Read the line again, and carefully read the bolded fonts.
You absolutely and I repeat absolutely need to put up some quality efforts and/or money before you even think about earning passive income!
I see too many people getting turned off by the idea of putting in some effort at all. Passive income is all about saving time while earning those dollars.
But that doesn’t mean putting in no effort at all.
You can earn a million dollars by driving Uber (exaggerated I know, but you get my point) but that is not exactly passive income. As time goes by your efforts are less required while your earnings stay the same or go up.
Why is it important?
“If your salary is your only source of income, you are one step away from poverty” –Warren Buffet
Ever heard that quote before?
That is why it is so necessary to build multiple streams of income. You never know what will happen to your job the next moment. As scary as it sounds, we all know what happened after the pandemic came around.
Many people I know lost jobs that lived a life of luxury, resulting in financial problems. They weren’t in the slightest prepared for uncertainty.
Even if passive incomes don’t make you a millionaire, they at least provide you a cushion for a downfall.
Passive Income Ideas
Some passive income ideas require more time, effort, and money than others, but they also yield higher benefits.
Of course, how could I not include this in the list?
Blogging is a great way to earn passive income, but of course, it requires some solid efforts in the beginning.
Starting a blog is very easy and it’s really not a big deal. I have made a detailed step-by-step post about how you can start your own blog from scratch in case you are interested. It doesn’t require you to have any technical experience.
Bringing traffic and marketing is where you would need to put your effort. And if you love to write or even find it tolerable, and you want to provide something of value then it’s worth it!
It’s a great passive income source as you can earn through a blog in many ways that include but are not limited to selling your own products, sponsorships, affiliate marketing, ads, etc.
Are you confused if blogging is the right fit for you?
If my post is not the first one you’re reading about passive incomes, then surely you must’ve come across dropshipping.
Those who have no idea, let me explain:
Dropshipping is basically an e-commerce business that requires you to an online store in which you showcase selected products from third parties (aka sellers or suppliers).
When the customer buys something from your store, you purchase the product from the supplier (it’s automated), and then the product is shipped to the customer directly.
The highlight is that you don’t directly handle the product or own the inventory. You only purchase when the customer buys something from your shop.
“But who ships the product then?”
The third-party(supplier) you’re buying from.
Here is a diagram that explains it well;
“Uh-huh! Easy peasy!”
Well, not so much.
But it’s worth it. All the people I’ve come across who have started dropshipping stores don’t regret it. It’s a high-return business that requires serious dedication but once it takes off, it soon turns into passive income.
There are many programs developed for it, making it even easier to start than ever before.
Some common challenges dropshippers come across are product research, chargebacks, and Facebook Ads.
Product research: Finding a winning product seems challenging when you are a beginner. You have to list multiple products before you accidentally find a winning one.
Chargebacks: Chargebacks are normal when you run an online store BUT too many and your accounts and finances take a huge hit.
Facebook Ads: Facebook ads are costly and there is a steep learning curve. You need to know how to create and run ads that convert.
“But it’s a store; surely it must cost lots of money?”
It depends. Around 1000$ on average. It could be more or less depending upon your variable expenses and how aggressive you are in your marketing and running Facebook ads (usually takes lion’s share of your capital)
3. Affiliate Marketing
You earn commission by promoting products.
It’s just that simple.
BUT why would anyone listen to what you are recommending, I mean who are you exactly?
So to make yourself known, you need a blog or a platform like Youtube, Instagram, etc.
This is because you need some credibility before promoting products or recommending something to others.
I am sure you must’ve come across spammy affiliate comments on Instagram, Facebook, or just anywhere on the web.
I can never really wrap my head around this though. Mindlessly spamming the links just about anywhere doesn’t yield high returns (if any at all) so I really can’t understand all the effort.
Please don’t be that person and construct a proper plan to promote your affiliate links. The product you would be promoting should be one of high quality and something you’d believe in and know about.
There are A LOT of ways to promote products and earn passive income.
Here are a few ways:
- Starting your blog
- Reddit & Quora
- Instagram & Tiktok
- Google Ads
What you should pick greatly depends on your niche, personality, and marketing methods. Just remember that you need to put quality effort (no shortcuts)
I know I am starting to sound like a broken record…
Youtube is one of the best passive income ideas on the list.
You would need to make a video on any topic of your choice and upload it on the platform. You are required to have at least 1,000 subscribers and 4,000 valid public watch hours to monetize your youtube channel through Adsense.
After that your real journey starts. You need to make entertaining or informational content to grow your subscribers.
It’s a nice and creative way to earn passive income while you sleep or just go about your day.
Currently, Youtube has over 1 billion traffic monthly.
Just think about how many videos you watch each day. For how many people you make money for. And you could be one of them too.
Just a decent amount of views could get some nice cash rolling in.
Now that is not to say it’s easy. Yes, it can be a great source to earn passive income but I never said it was easy. In fact, nothing on this list is easy.
Youtube is very competitive and if you don’t know what you are doing and have no idea how it works, it will be pretty hard to establish yourself.
You don’t need an expensive phone, a high-end camera, and video recording equipment in the beginning. This is not where you should focus your time and energy.
Rather you need to learn about video editing, creating trendy content, and understanding youtube algorithms and SEO.
And once you understand the ropes and establish yourself, you can gain passive income from videos even made 5 years ago.
Since it’s a free platform, I don’t see why you shouldn’t give it try.
I always encourage people around me to try different things. Even if they don’t get any income out of it, they gain confidence to try something new.
5. Publish an E-book
Self-publishing an e-book is a great way to earn extra money on the side. In this time and age, you don’t need to run from publisher to publisher, begging them to give you a chance.
Self-publishing your ebook on amazon doesn’t require startup costs nor does it limit your creativity or imagination.
You just need to publish a book that serves value to your target audience. Your income would be author royalties whenever someone buys and downloads your book.
To test yourself, you can try Kindle publishing (it’s free). It’s a nice way to earn a side income as well as test your book writing skills.
Alternatively, you can also hire writers to write an ebook for you. So all you need to do is access the market and see what’s selling.
6. Online Courses
Just like publishing an e-book, selling an online course is another similar great way to earn passive income. Especially for people who want to teach others and want to earn while doing so.
Find out what you are good at and see if there is a demand to learn it. Create and sell your course.
Or you can share your journey and provide tips and guidance.
For example, if you recently went through a pregnancy, you can make a course about dealing with morning sickness and postpartum depression, how to stay active and fit, how to deal with weight gain, exercises for an easy labor, etc.
You can Google all the questions to know what aspiring moms are asking.
Make sure your online course genuinely includes all the solutions your target audience is searching for. There are numerous ways you can make your course helpful like including a video lesson, checklist, audiobooks, small ebooks, downloadable guides, etc.
7. Stock Photography
If you are someone who just whips out the camera from the case at any given opportunity, then why don’t you put that talent and passion to good use and earn some side income for yourself?
Many third-party sites allow you to upload your photos and earn a commission through them. Popular ones are Istock and Shutterstock among many others. You can also upload free photos on Pexels or Unsplash to gain exposure.
And if you feel like taking it to the next level then, you can build your own site and sell your stock photos and photography services.
These days stock photography is more in demand than ever.
8. Licensing Music
If you are passionate about music and want to somehow earn through it without having to pursue it as a profession then licensing your music could earn you a nice passive income.
To get started, you would need to produce your music and give rights to people or companies to use your music in exchange for cash.
You could sell to YouTubers, wedding videographers, and ad corporations to name a few.
To gain exposure, you can upload it on Youtube and Tiktok and also make youtube shorts or edits. Bring your talent in front of people.
TIP: Instead of making regular music videos, which don’t get much exposure easily, you can make aesthetic cooking, traveling, or on any other trending topics and play the music in the background.
I have observed thousands of comments on such videos asking for the track.
If you have a spare room or house, why not rent it for travelers? This has enabled many people to earn some nice passive income.
Sites like Airbnb allows travelers to stay in the country inexpensively instead of booking hotels.
You can also set your own rate. So there is really nothing to lose. Its closest example would be renting out your property.
Most travelers prefer living in Airbnb to hotels for a variety of reasons. Most of the reasons include wanting to feel the culture, inexpensiveness, security reasons, and much more.
Investing in dividend stocks and real estate is a sure-fire way to earn passive income. The top wealthy people mostly earn their passive incomes in this way.
Real estate is a preferred choice to generate high returns since its value appreciates over time. Investing in real estate would include but is not limited to Rental properties, REITS (real estate investment trusts), and Crowdfunding.
Investing in dividend stocks means that when the public company you invested in earns a profit, they pay you back a portion of it in the name of dividends. The amount can vary from company to company and from year to year.
It doesn’t have to take a lot of money. You can start by investing small amounts each month to get an idea and gradually increase.
So, there you have it.
Honestly speaking, there are thousands of ways you can earn passive income. This list just includes the top ten.
I could’ve included grocery deliveries, freelancing, and many other ways but they should not be confused with passive incomes as they are active side hustles.
I see that many times people confuse the two.
Earning money in this day and age is not as difficult as it was years ago. Everything requires effort, but once you really desire it, it FEELS effortless.
So what are you waiting for?
Pick one that suits your interest, plan how much time and effort you are willing to put in, and get going!
Share this with someone interested in earning a passive income!