Whether you’re trying to make ends meet or are just looking to supplement your income, passive income can be a terrific method to help, especially as inflation starts to bite. When things are good, passive income can help you make more money. It can also support you in the event of an unexpected layoff, a voluntary leave of absence from work, or a persistent decline in purchasing power due to inflation.
If you are able to establish a steady source of passive income, you may wish to take a little time off from your primary career. However, passive income can also provide you with income as you pursue your primary job. In any case, having passive income adds an added layer of protection.
Additionally, accumulating wealth through passive income is a strategy that may be appealing to you if you’re concerned about being able to preserve a sufficient portion of your wages to fulfill your retirement goals.
Regular profits from a source other than an employer or contractor are considered passive income. According to the Internal Revenue Service (IRS), there are two ways to earn passive income: renting out real estate or taking part in a business but not actively running it, such as receiving stock dividends or book royalties. Although that is accurate in law, passive income can actually arrive in other forms.
According to financial advisor and former hedge fund manager Todd Tresidder, “Many people think that passive income is about getting something for nothing.” It has an appeal to “get rich quick.” But in the end, work is still required. You simply provide the labor up ahead.
In reality, you might have to put in a lot of work upfront, but earning passive money frequently requires additional work in the process. To continue receiving passive income, you might need to maintain your rental property or keep your product updated.
However, if you stick with the plan, it can be a terrific method to make money and you’ll end up with some extra financial security.
If you’re considering developing a passive income stream, take a look at these tactics and discover what it takes to succeed with them while also being aware of the hazards involved with each concept.
1. Create a print-on-demand store
If you’re an artist, designer, or entrepreneur, print on demand can be a profitable income stream and monetize your creativity. It involves working with suppliers to customize white-label products like t-shirts, posters, backpacks, or books and selling them on a per-order basis.
Similar to dropshipping, you only pay for the product after you sell it. There’s no buying in bulk or inventory needed. Print-on-demand stores are a good passive income stream because:
- You can create products quickly and put them up for sale in minutes
- Shipping and fulfillment is taken care of by your supplier
- Once your store is set up, you can automate many marketing and sales processes
With a print-on-demand company like Printful, you can quickly and easily create products to sell in your Shopify store. Overall, print-on-demand is a simple, low-risk passive income source you can get up and running fast.
2. Sell digital products
Digital products are assets or pieces of media that consumers can’t touch physically. These include downloadable or streamable files such as Kindle books, templates, plug-ins, or PDFs.
Digital products are great income sources because they have high-profit margins. You only have to make the asset once, and you can sell it repeatedly via your online business. There’s no storage or inventory needed.
You can sell as many digital products as you want. Many creators scale passive income from digital assets by selling kits, printables, files, and other materials professionals can use.
3. Teach online courses
It’s easier than ever for educators to create an online course. Whether it’s marketing, illustration, or entrepreneurship, you can create pre-recorded courses and start selling with few limitations. You can sell online courses repeatedly without holding any inventory or stock, generating passive income.
Teaching online requires some upfront investment in time. You’ll need to outline your course, record it, and create downloadable assets like templates for students to walk away with.
Whichever way you look at it, teaching an online course is a great way to generate income at a low startup cost, other than an investment of time.
4. Become a blogger
Starting a blog can be a challenging venture, but the blogging business model is only becoming more successful as a passive income stream. It takes a little bit of time to build a blog. But if you create quality content and promote it through your platforms, you’ll build an audience big enough to generate a significant income stream.
You could earn passive income from blogging by:
- Selling affiliate products
- Creating sponsored posts
- Selling your own products
- Running ads through Google AdSense
The best part? You don’t need any design or coding skills to start a blog. With a content management system and hosting service like Shopify, you can get a blog up and running in no time.
5. Sell handmade goods
There are hundreds of online sites you can sell on. Some have specific niches, like video games or handcrafted goods, while others let you sell whatever you want.
Some popular online selling sites include:
- Ruby Lane
The upfront investment is twofold. You’ll need to invest in materials and time to make and sell DIY goods like pottery or clothing. You’ll also want to create an online store to house your products.
Selling from your own store reduces the amount of fees you pay on each sale, plus, you can create a brand for yourself. The benefits of building a brand compound over time as you grow an audience and connect with more customers. It’ll help you sell more over time and make money online.
6. Run an affiliate marketing business
Affiliate marketing involves recommending a product or service to an audience. It’s a great source of passive income because you earn a commission whenever someone uses your referral link to buy the recommended product or service.
Online entrepreneurs become affiliate marketers for a few key reasons:
- It’s easy to execute. You just handle the marketing side of things. The brand will develop products and fulfill orders.
- It’s low risk. There’s no cost to join an affiliate program. You can sell established profits without any upfront financial investment.
- It’s scalable. Affiliate marketers typically don’t hire extra help. You can introduce new products to an audience and create campaigns while your past work makes money in the background.
Earning money with affiliate marketing can be a rewarding way to add new revenue streams to your business. All it costs is your time. Once the hours are invested, you can reap the rewards continually.
7. Sell stock photos online
Unlike many of the other passive income ideas on this list, photography is a service-based business, which typically means you get paid for your time. You must be at an event or photoshoot to make money with photography, which, even if you’re making a killing, can be tiring after a while.
However, if you’re a full-time photographer or own a good camera, you can generate passive income from photography by selling photos online. Stock photo sites like Pexels, Shutterstock, and other online media houses will pay for high-quality photos and videos.
If you run your photography business on Shopify, you can also easily tie in digital products like prints or print-on-demand products like shirts and hats, giving you even more passive income streams so you can work less and make more.
8. Become a social media influencer
To become a social media influencer—someone who can sway another person’s buying decisions—you’ll need to build a community of people who enjoy similar topics.
Are you a comics fan? You can create an Instagram account and start posting consistently about the latest Marvel and DC shows. The same applies if your interest is in sports, scuba diving, home décor, or even general culture.
If you have an engaged audience, you use that engagement to support a variety of passive income ideas. For instance, you can partner with large and small businesses to promote their products to your followers. Or you can make money through selling your own merch.
9. Buy a rental property
Real estate investing is one of the oldest ways to build long-term wealth in general, and passive income in particular.
If you have enough money, you can buy apartment buildings or some other form of real estate and lease them out for rental income. But since the job of being a landlord is pretty active, you can hire property managers to manage tenants, maintain properties, and collect monthly payments or rent.
As a bonus, your properties will appreciate as the housing market rises, increasing your profits in the event of a future sale.
10. Invest in the stock market
Although the stock market might have a steep learning curve and can be confusing, it’s a great way to build lasting wealth. A common mistake most people make with investment funds is thinking short term instead of playing the long game to reach financial goals.
The goal for investing in stocks is to diversify your portfolio and reduce risk. You can do this through investing in mutual funds, index funds, exchange-traded funds (ETFs), and high-dividend stocks that earn you capital gains over time.
To start investing in the stock market, you need to open up a brokerage account at a quality financial institution and fund it. It’s recommended that you also speak with a financial adviser to help plan and hit your passive income strategy goals.
11. Rent out your spare room
Maybe you don’t have the startup capital to invest in rental properties. But do you have an extra room in your apartment? Or are you going on a three-week road trip and don’t want to leave your house empty? You can partner with a rental company like Airbnb or VRBO to put your free space up for rent.
Airbnb connects homeowners with people who are looking for their next getaway. People prefer Airbnb because they’re sometimes cheaper and often more convenient than hotels, meaning a high demand for your free space as an Airbnb host.
While renting out one spare room to earn passive income is great, renting out 10 is even better. If you want even more income from Airbnb, you can (depending on local laws) buy apartments for the sole purpose of renting them out. You should note, though, that renting your space out often requires work upfront. You might have to furnish or renovate your space before putting it up for rent.
12. Rent out your car
Your home is not the only thing you can rent out to earn passive income. You can also offer your car up for rent with a service like Turo. If you already use your car as an Uber, you can sign up with platforms like Carvertise or Wrapify to earn extra money as you take trips around town.
Another way to turn your car into an income stream is to look for someone who needs a car for Uber or Lyft. So instead of actively driving around in your free time, you can pull up a Netflix show while your car works for you.
13. Lend money to peers
Have extra cash that’s not working for you? Try peer-to-peer lending as a side hustle. Peer-to-peer lending involves lending money to borrowers or small businesses. To make the process easy, you can sign up on a website like LendingClub, Prosper (for individuals), or Worthy (for businesses) that connects borrowers with lenders.
These sites usually host loan requests along with interest rates based on the borrower’s history. The return on these loans is usually around 5% to 6%. The more you lend, the higher your cash flow will be.
14. Earn while shopping online
Cashback reward sites like Swagbucks, MyPoint, and Rakuten allow you to generate passive income when you shop online. After signing up, you don’t have to do anything extra, aside from shop, to make money from these sites. The more you shop online, the more points you gain. And the more money you can make.
A note of caution: don’t exceed your monthly spending budget or max out your credit card in a bid to earn some reward.
15. Buy and sell websites
Websites abound on just about any topic you can think of. The best part? A lot of them make a healthy income through the likes of affiliates, ads, memberships, or products—and they’re often put up for sale.
Sites like BizBuySell make it easy to buy and sell online stores securely once you open and verify an account. It’s a great way to own a business that already has some sales and traffic coming in. Once you complete your purchase, you also get access to seller support afterward to ensure you do well.
There’s only so much time in a day, so figuring out how to make a lot of money more quickly can help you reach your financial goals by giving you financial flexibility. Whatever that level is—it could be going on a fantastic trip or getting that amazing pair of shoes—adding passive income sources with distinct underlying economics can allow you the flexibility to pursue it.