For many of us, earning money while sleeping or sipping mimosas on the beach is a fantasy (and those who say it isn’t are definitely lying!) . Is it, nevertheless, feasible to get wealthy without ever having to work?
You’ll be one step closer to living your dream life with all the money you need thanks to these brilliant passive income ideas!
What is “passive income”?
Before we get into the greatest passive income options for your lifestyle and skills, it’s important to define what we mean by passive income, as the term is commonly abused or misunderstood.
Although passive income isn’t a miraculous money-making system that will make you rich without doing any effort, it is a method of maximizing returns so that you can work less and less over time. In other words, as time passes, effort decreases while earnings increase… Isn’t that fantastic?
Purchasing a house to rent out is an excellent example of a passive income source. While it takes time and effort to discover the correct property, deal with the legal side of things, and get it ready for renters — not to mention financial investment in the form of a mortgage and deposit – once your tenants are in, you can start making money with little effort. Sure, you’ll have to deal with the occasional property inspections and tenant changes, but the majority of your time as a landlord will be spent enjoying the passive income generated by the rent.
In essence, passive income is a long-term investment with short-term trade-offs. If you’re ready to put in the time, effort, and money necessary to achieve your objective of earning passive income and even retiring early, you could end up making thousands in the long run.
What isn’t considered passive income?
As previously said, passive income is sometimes misinterpreted and confused with side jobs. While a side hustle or second job is a terrific way to supplement your income, it isn’t truly passive unless it allows you to stand back (while making more and more money).
Your passive income, on the other hand, isn’t…
Your work – The goal of a passive income stream is to supplement your normal income or enable you to retire sooner. Your primary source of income is not a side hustle.
A side hustle – While a side hustle can potentially create passive revenue, it’s more likely that it will take your attention and effort to maintain. However, if your side work permits you to take a step back without losing traction, it could eventually turn into passive revenue.
Consulting – If you have a specialty subject that you can share with the world, consulting is a great side gig or online business to start, but it is not a passive income source. If you want to make money coaching or consulting, you’ll need to expand your practise to include individuals who can handle the hands-on work while you sit back and reap the rewards.
Investing for the sake of speculation – Many people promote stock market investing as a source of passive income. We disagree, however, that speculative investing is one of the best passive income strategies for one simple reason… Stock appreciation isn’t the same as income. Investing in high dividend-yielding equities, on the other hand, is an example of passive income because it provides you with a steady stream of money without requiring you to do anything.
If you see a cash on cash return like dividends (passive income) or if you only get a monetary gain once you sell the investment, that’s a good way to tell if it’s passive income or appreciation/speculation (appreciation).
Also Check: Start an Online Business
How to start building passive income?
While it’s nice to have a lot of passive income ideas and ambitions, keep in mind that not every one of them is a good one. Even if you’ve seen other people make money in a certain method, it doesn’t mean it’ll work for you, your skills, or your lifestyle.
You need to start with some clear goals and ideas if you want to identify the best strategies to create passive money. You’ll need to know how much money and time you’re willing to invest. You’ll also need to be willing to make short-term sacrifices in order to achieve your long-term goals.
Top 10 passive income ideas
Passive income may appear confusing, but there are so many options for passive income in 2022 that you’re sure to discover one that fits your abilities, commitments, ambitions, and passions. Here are some of the top passive income ideas that practically everyone may take advantage of to help you on your journey to financial freedom.
1. Invest in real estate
For almost as long as real estate has existed, real estate investing has been a well-established means for accumulating wealth. Real estate investing used to be a difficult business to get into, taking a lot of time, effort, and knowledge. Real estate investment apps, on the other hand, have simplified the process and made it possible to become a real estate mogul from the comfort of your own home.
If buying properties is out of your price range, consider investing in a real estate investment trust, or REIT. These investments typically pay out large dividends and track the stock market’s success. Your investment value will rise and fall in this manner, much like actual property, but it will be significantly easier to buy and sell, and you will be able to diversify your portfolio by investing in multiple markets.
2. Invest in dividend stocks
We previously said that we do not consider investing for the sake of capital appreciation to be a passive income source. If you invest in firms that pay out significant dividends to shareholders, on the other hand, you could possibly make a lot of money. Hopefully, the value of your shares will rise while you own them, allowing you to benefit from dividends as well as capital gains when you sell.
If you’re not a stock market specialist, you might want to explore using a broker or even Robo-advisors for a really passive investment method.
Keep in mind that investing carries a significant level of risk, and you might lose more than you put in. Before starting an investment portfolio, always seek counsel.
3. Buy or start a blog
A blog is a terrific method to make money with little effort. Naturally, this will take time and work to establish, since you will need to write a blog on a regular basis and develop a following. Even so, you may make a lot of money with a blog by doing affiliate marketing or selling ad space on your site.
If you don’t know how to build a blog, you could make money by purchasing one that already exists. This is a fantastic “hack,” since you can take advantage of the traffic and cash flow that has already been generated.
4. Start an affiliate marketing
Partnering with a firm to exhibit and promote its products or services is what affiliate marketing entails. You get paid when someone clicks on one of your affiliate links and visits your partner’s website.
There are a few strategies to create passive money from your affiliate marketing connections. You may mention sponsors on your YouTube channel or podcast, make buying advice with links to the company’s items, compile product reviews, video unboxings, and a variety of other things.
To locate the ideal firm to become an affiliate for, do some research and find a brand that aligns with your fundamental principles and the demands of your target audience. If your blog’s major readership is vegans, for example, becoming an affiliate for a butcher is pointless.
5. Write an eBook
While having a blog and selling it is an excellent way to generate passive income, producing a book or eBook is much better because you only have to write it once!
Rather of creating a blog, spend some time sharing your creativity or specialized knowledge by writing and selling a book or eBook. You’ll get royalties every time someone buys a copy, which might quickly pile up if you strike the correct target.
The royalties on a printed book usually range from 5 to 20% of the book’s price. eBooks are much more profitable, with a profit margin of roughly 25%. Royalties for audiobooks are normally between 10% and 25%.
To make a career as a writer, you obviously need to publish a fantastic book. A few sales, on the other hand, could help you earn the extra cash you need for a planned holiday or to get closer to your early retirement ambitions.
6. Create an online course
Creating an online course that people can buy again and again, similar to authoring a book, is a wonderful way to create passive revenue. Sure, it’ll take time, work, and talent to construct the course, but once it’s done, you can put it online and profit from every sale.
There are essentially no boundaries to the topics you can cover with your online course these days. Personal trainers could make a series of exercise videos, chefs could launch an online cooking course, and accountants could teach people how to keep track of their finances. Simply put, if you have a skill or specialised knowledge, you may create an online course and profit from it.
To create an online course that can sell, you may need to demonstrate necessary qualifications and/or expertise. Even if you’re not formally qualified, you might be able to make money with a YouTube channel… Everyone enjoys a good life hack!
7. Sell stock photos
If you always have your camera with you and are known for capturing great pictures, you may make money from your hobby by selling your photos to stock photography firms. With them, you’ll get a cut of the earnings if someone buys your photograph through a third-party site.
The most well-known companies are the finest to sell your photos to (as these have the most customers who might see, love, and buy your images). Try Adobe Stock, Shutterstock, Alamy, and other similar sites.
Even if you simply have a smartphone, several stock image companies will buy good-quality photos taken with it, so expensive equipment isn’t required for this passive income concept.
8. Create an app
Instead of leasing out your programming and IT abilities on an hourly basis, you might turn your technical skills into a passive income stream by creating a downloadable app. To make money, the software doesn’t have to be groundbreaking or even cost anything to download… Angry Birds is a free-to-download smartphone game that was released in 2009 and grossed €272.3 million in 2020!
Even if you aren’t a tech whiz, you can make money by developing an app. You could learn some basic coding (which is surprisingly intriguing and useful), or you could form a partnership with someone who has the necessary abilities and split the earnings. Sure, if you do it alone, you’ll make more money, but if you create the next Fruit Ninja, you might not mind sharing!
9. Start a YouTube channel or podcast
Where would we be if we didn’t include YouTube as a potential passive revenue source?
While it takes time to acquire a large enough audience to monetise your YouTube channel, you may earn a lot of money from advertisers and affiliate marketing partnerships.
The amount of money you can make on YouTube depends on a variety of factors, including the number of subscribers, engagement rates, average viewers, and so on. Most YouTubers may expect to earn between $0.01 and $0.03 each ad view. Many YouTubers monetize their channels by requesting donations through Patron.
If YouTube isn’t your thing, you may monetize your podcast by offering paid membership tiers, selling sponsorships, joining an ad network, or even selling VIP episodes.
10. Buy a rental property
Rental properties may have been the first source of passive income, and they continue to be a valued asset today. You can outsource daily operations and upkeep to a management company to make the rental property truly passive… So all you have to do now is arrange the mortgage and watch the money roll in!
It’s also feasible to purchase turnkey homes, which allow you to bypass the renovation and tenant-finding processes that most landlords must take before earning rent. When you purchase a turnkey property, you are purchasing a property that already has tenants occupying it. That means all you have to do to keep the tenants pleased is make sure the building is adequately maintained. You could, once again, employ a management firm to handle this.
Passive income, believe it or not, is the principal source of income for the majority of the world’s wealthiest people. Passive income streams are an important aspect of any prosperous entrepreneur’s portfolio because they allow them to make money with little work, reinvest it intelligently, and keep track of their spending.