Whether you’re running a side hustle or just wanting to make a little extra money each month, passive income can be a terrific approach to help you produce extra cash flow. Passive income can help you earn more during the good times and tide you over if you are abruptly laid off or deliberately take time off work.
You can have money flowing in while working your primary job, or you can relax a little if you’ve built up a steady source of passive income. In either case, a passive income provides you with additional security.
Building wealth through passive income may also appeal to you if you’re concerned about being able to save enough of your salary to achieve your retirement objectives.
- Passive income ideas:
- Create a course
- Write an ebook
- Rental income
- Affiliate marketing
- Flip retail products
- Sell photography online
- Peer-to-peer lending
- Dividend stocks
- Create an app
What is passive income?
Regular profits from a source other than an employer or contractor are considered passive income. Passive income, according to the Internal Revenue Service (IRS), can originate from two sources: rental property or a business in which one is not actively involved, such as receiving book royalties or stock dividends.
“Many individuals believe passive income is about getting something for nothing,” says Todd Tresidder, a financial counselor and former hedge fund manager. “It has a ‘get-rich-quick’ appeal… yet it still requires work in the end.” “All you have to do is give the work up front.”
In practice, you may undertake some or all of the work up front, but passive income frequently necessitates some additional work along the way. To keep the passive cash flowing, you may need to keep your product updated or your rental property well-maintained.
However, if you stick to the method, it may be a terrific way to earn money while also providing you with some extra financial security.
Passive income isn’t the same as…
- It’s your responsibility. In general, passive income does not come from something in which you have been actively involved, such as earnings from a job.
- Getting a second job. Getting a second job will not qualify as a passive income stream because you will still be required to show up and perform the work in order to get paid. Passive income refers to generating a steady source of revenue without having to put in a lot of effort.
- Assets that do not generate income. Investing in dividend-paying or interest-paying assets can be a terrific method to produce passive income, but only if you own assets that pay dividends or interest. Stocks or investments that do not pay dividends, such as cryptocurrency, may be intriguing, but they will not provide you with passive income.
Ideas for generating passive income to help you build money
If you’re considering starting a passive income stream, take a look at these ideas and learn what it takes to be successful with each one, as well as the risks involved.
Write an E-book
Writing an E-book can be a smart way to take advantage of low-cost publication and even use Amazon’s global distribution to bring your book in front of millions of potential buyers. Because they rely on your own skills, e-books can be quite short (about 30-50 pages) and inexpensive to produce.
You’ll need to be an expert on a specific issue, but it could be niche and require some unique skills or qualities that few people possess but which many readers require. On an online platform, you can quickly design the book and then test-market multiple titles and price points.
Investing in rental houses is a great method to make money while you sleep. However, it frequently necessitates more effort than individuals anticipate.
According to John H. Graves, an Accredited Investment Fiduciary (AIF) in the Los Angeles region and author of “The 7 percent Solution: You Can Afford a Comfortable Retirement,” if you don’t take the time to learn how to make it a profitable endeavor, you could lose your investment and then some.
Website owners, social media “influencers,” and bloggers use affiliate marketing to promote a third-party product by providing a link to it on their site or social media account. Although Amazon is the most well-known affiliate partner, other big brands include eBay, Awin, and ShareASale. Instagram and TikTok, in particular, have grown in popularity among those trying to build a following and market their products.
You may also explore establishing an email list to draw attention to your blog or otherwise steer people to items and services that they might like.
Retail products are flipped.
Make use of online marketplaces like eBay or Amazon to sell items that you’ve found at a discount elsewhere. You’ll be able to arbitrage the difference between your purchase and sale prices, and you could even be able to establish a following of people who follow your offers.
Online photography sales
Selling photography online may not seem like the most obvious location to start a passive business, but it can help you grow your efforts, especially if you can sell the same photographs multiple times. You might do so by collaborating with a company like Getty Images, Shutterstock, or Alamy.
To begin, you must first be accepted by the platform, after which you must license your images for use by anyone who downloads them. The platform then compensates you for each time your photo is used.
Stocks that pay dividends
Shareholders in firms with dividend-paying stocks receive a payout from the company at regular periods. Companies pay cash dividends out of their profits on a regular basis, and all you have to do is own the stock.
Dividends are paid per share of stock, so the more shares you own, the more dividends you’ll receive.
Make a mobile application
Making an app could be a method to make that initial time investment and then reap the benefits in the long run. Your app could be a game or one that assists mobile users with a difficult task.
Users will download your software after it is made public, and you will be able to earn money.
A real estate investment trust, or REIT, is a fancy moniker for a firm that owns and manages property. REITs have a unique legal structure that allows them to pay minimal or no corporate income tax if they distribute the majority of their profits to their shareholders.
Beginner’s passive income ideas
- Savings account with a high rate of return. A high-yield savings account can be a simple method to improve your savings above and above what you’d get from a traditional checking or savings account. It won’t be much, but it’s a straightforward approach to begin earning passive income.
- Deposit certificates. CDs are another way to earn passive income, but they will bind your funds more than a high-yield savings account would.
- Real estate investment trusts (REITs) are companies that invest in real estate. REITs are a method to invest in real estate without having to deal with the hassles of property management. REITs typically pay out the bulk of their earnings in dividends, making them a good choice for income-seeking investors.