30 Passive Income Ideas You Can Use to Build Real Wealth

 

Passive income is highly sought after and often misunderstood.

Passive income streams require an upfront investment and a lot of nurturing in the beginning. After some time and hard work these income streams start to build and are able to maintain themselves, bringing you consistent revenue without much effort on your part.

Speaking from personal experience, adding passive income streams to your portfolio can help you increase your earnings and accelerate your financial goals in tremendous ways. For example, you can use passive income streams to help you get out of debt or achieve financial independence sooner. 

If you want to get started earning passive income here’s what you should know first.

If you want to skip straight to the ideas, here you go:

What It Takes To Earn Passive Income

Before we get into the passive income ideas I think it’s a good idea to first clear up a couple of misconceptions. Although the word “passive” makes it sound like you have to do nothing to bring in the income this just isn’t true. All passive income streams will require at least one of the following two elements:

1) An upfront monetary investment, or

2) An upfront time investment

You can’t earn residual income without being willing to provide at least one of these two. Because it's important to remember what passive income is NOT. Passive income is not your job, it's not freelancing, or working online. Passive income is doing something once, then earning rewards from it into the future.

Today, I have a big list of passive income ideas you can try regardless of the category you fall in.

Passive Income Ideas Requiring an Upfront Monetary Investment

These types of passive income require you to invest money up front to generate the passive income later. Don't be alarmed though - you can start with as little as $5 with some of these ideas, so it's achievable for everyone.

  1. Dividend Stocks

Dividend stocks are tried and true way to earn passive income. You will have to do plenty of research to find good stocks and invest a significant amount of money to receive large dividend checks. However, if you consistently invest money into dividend stocks you can amass a nice residual income over time.

For any of these investment opportunities, make sure you open an account at the best online brokerage, and get rewards while doing it.

  1. Rental Properties

A cash flowing rental property is a fantastic way to bring in a monthly income. To make this truly passive you can outsource the running of the properties to a management company.

However, the internet has made investing in rental properties easier than ever before. There are a lot of ways you can invest in rental properties depending on what your goals and interests are. You can be a limited partner in large residential or commercial properties, or you can buy homes and be a landlord - all online!

  1. a) Invest In Single Family Homes
  2. b) Invest In Larger Developments

Do you not want to be a landlord, but still want real estate exposure and income? Then consider being a limited partner in a large development. With these options, you can invest in multi-family or commercial properties. You get the income and tax treatment just like regular real estate ownership, but you don't do any of the work

  1. c) Invest In Farmland

Farmland isn't sexy, but it has a lot going for it when it comes to real estate investing. It's slow, steady, pays consistent rent, and everyone needs to eat. Plus, compared to other types of real estate its much less volatile. 

  1. High Yield Savings Accounts And Money Market Funds

If you don't want to think much about your money, but want it to work for you, a basic place to put it is in a high yield savings account or money market fund.

Alternatives - Crypto Savings Accounts

Over the last year, crypto savings accounts have become very popular - simply because they provide much higher rates of return on your money. It's important to note that these aren't really "savings accounts". These are investment and lending accounts that allow you to earn a high yield on your crypto "easily". 

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  1. CD Ladders

Building a CD Ladder requires buying CDs (certificates of deposits) from banks in certain increments so that you can earn a higher return on your money. CDs are offered by banks and since they are a low risk investment they also yield a low return. This is a good option for the risk averse.

For example, what you do if you want a five-year CD ladder is you do the following. Look how the rates rise over different time periods (these are estimated):

  • 1 Year CD - 2.50%
  • 2 Year CD - 2.90%
  • 3 Year CD - 3.05%
  • 4 Year CD - 3.10%
  • 5 Year CD - 3.15%
  1. Annuities

Annuities are an insurance product that you pay for but can then provide you passive income for life in the form of monthly payments. The terms with annuities vary and are not always a great deal so it’s best to talk to a trusted financial advisor if you’re interested in purchasing an annuity.

  1. Invest Automatically In The Stock Market

If you're not interested in picking dividend paying stocks (and I can understand that), there are still ways to invest passively in the stock market. You can automatically invest in various ways through what's called a robo-advisor.

A robo-advisor is just like what it sounds like - a robotic financial advisor. You spend about 10 minutes answering a few questions and setting up your account, and the system will take it from there.

  1. Invest In A REIT (Real Estate Investment Trust)

If you're concerned about investing directly in real estate, or maybe you're not yet an accredited investor, that's okay. You can still take advantage of real estate in your investments through REITs - Real Estate Investment Trusts.

These are investment vehicles that hold property within them - and you as the owner get to benefit from the gains, refinances, sale, income (or loss) on the property.

  1. Invest In A Business

Another way to generate passive income is to invest and be a silent partner in a business. This is very risky, but with risk comes the potential for high returns. For example, several years ago both Lyft and Uber were looking for private investors to invest in their companies. Today, they are worth billions - but you as an investor would only reap that benefit if they go public via an IPO, or get acquired. So, it's risky.

But there are ways to reduce your risk. For example, you can invest small amounts in many companies through lending them money in small bonds.

There are now tools available where you can loan money to a business and get paid a solid return for doing it.

  1. Invest In Student Income-Share Agreements

An Income-Share Agreement (ISA) is an alternative to student loans. By using an ISA, a student’s tuition is paid for in exchange for a percentage of their future income.

Who is funding these ISAs? Private investors and universities fund them. Investors basically take a bet on a student’s future.

  1. Refinance Your Mortgage

This may sound strange in a passive income article, but refinancing your mortgage can be a great way to free up a lot of income and save you $100,000s over the life of your loan. That's a pretty good gain in my book.

Right now, interest rates are still near historic lows, and if you haven't checked out your mortgage lately, now's a great time to shop around and compare rates. If you can save 0.50% or more on your loan, you're potentially adding tens of thousands of dollars back into your pocket. Not many investments can beat that.

  1. Pay Off Or Reduce Debt

Along the same lines as refinancing your mortgage, if you can pay off or reduce your debt, you're making huge progress in building income. But just like other things in this topic - it takes a monetary investment to make that happen.

The great thing about paying off debt is that it's a straight return. If you have a credit card at 10% interest, paying it off is a 10% return on your money! That's huge.

There's two approaches you can take with debt: refinance or consolidate, or balance transfer and pay down.

  1. Peer to Peer Lending

P2P lending is the practice of loaning money to borrowers who typically don’t qualify for traditional loans. As the lender you have the ability to choose the borrowers and are able to spread your investment amount out to mitigate your risk.

  1. Sell an eBook Online

Self-Publishing is mainstream today. When you purchase an eBook off of Amazon there’s a pretty good chance you’re buying a self-published book. Self-publishing is also ridiculously easy. I tried this a few years ago and couldn’t believe how simple the process was.

To self-publish a book you’ll first need to write and edit it, create a cover, and then upload to a program such as Amazon’s Kindle Direct Publishing. Don’t expect instant success though. There will need to be a lot of upfront marketing before you can turn this into a passive income stream.

  1. Create a Course on Udemy

Udemy is an online platform that lets its user take video courses on a wide array of subjects. Instead of being a consumer on Udemy you can instead be a producer, create your own video course, and allow users to purchase it. This is a fantastic option if you are highly knowledgeable in a specific subject matter. This can also be a great way to turn traditional tutoring into a passive income stream!

  1. Selling Stock Photos

Do you ever wonder where your favorite websites, blogs, and sometimes even magazines get their photos? These are normally bought from stock photo websites. If you enjoy photography you can submit your photos to stock photo sites and receive a commission every time someone purchases one of them.

One of the biggest marketplaces to sell stock photos is DepositPhotos. You can upload your photos are earn money whenever someone uses them.

In fact, check out this awesome story of one of our scholarship contestants who turned photography into a stock photo business.

  1. Licensing Music

Just like stock photos you can license and earn a royalty off of your music when someone chooses to use it. Music is often licensed for YouTube Videos, commercials, and more. 

With the amount of YouTube videos and podcasts that are being created, there is more demand than ever for music - and people are willing to pay for it.

  1. Create an App

If you own a smartphone or tablet, then it’s safe to assume you have several apps downloaded. But have you ever had an amazing idea for an app? If so, you could consider hiring a programmer to create your app for you. You could then sell it on the App store for residual income.

  1. Affiliate Marketing

Affiliate marketing is the practice of partnering with a company (becoming their affiliate) to receive a commission on a product. This method of generating income works the best for those with blogs and websites. Even then, it takes a long time to build up before it becomes passive.

  1. Network Marketing

Network marketing, or multi-level marketing, seems to be on the rise. Companies such as Young Living Oils, Avon, Pampered Chef, and AdvoCare are all multi-level marketing companies. You can earn passive income through network marketing by building a team underneath you (often referred to as a down line.) Once you have a large team you can earn commissions off of their sales without having to do much.

  1. Design T-Shirts

Sites like Cafe Press allow users to custom design items like T-shirts. If your design becomes popular and makes sales, you’ll be able to earn royalties.

Even Amazon has gotten into this business. Amazon has a new service called Amazon Merch, where you simply upload your designs and Amazon takes care of the rest (making it, packing it, and shipping it). 

  1. Sell Digital Files on Etsy

I’ve been into home décor lately and I had to turn to Etsy to find exactly what I wanted. I ended up purchasing digital files of the artwork I wanted printed out! The seller had made a bunch of wall art, digitized, and listed it on Etsy for instant download. There are other popular digital files on Etsy as well such as monthly planners. If you’re into graphic design this could be an amazing passive income idea for you.

  1. List Your Place On Airbnb

If you have a house, apartment, spare room, or even backyard, consider listing your property on AirBNB and start earning money when you get your place booked. AirBNB is great because you can earn money on a space you already own. It does require a little work up front to prep your place, list it, and clean up after guests, but it's pretty passive otherwise.

  1. Car Wash

It’s always been a dream of mine to own a car wash. This seems like such a great way to earn a semi-passive income. While regular maintenance will be needed at a car wash it’s something you can either hire out or perform once a week.

As a side note, I'm talking about the really basic car wash that is cinderblocks, a pressure washer, and coin operated. If you're going to run a drive through car wash, it's definitely a business vs. a passive income stream.

  1. Rent Out Your Car

Similar to listing your place for rent, you can also list your car for rent. This can be truly passive because once you list your car, it can earn you income when you're not using it!

  1. Vending Machines

Vending machines are another great low maintenance small business idea. I have a friend who has vending machines all over neighbouring towns. He replenishes and cashes them out once every two weeks. His vending machine business is part of his retirement plan.

  1. Storage Rentals

My cousin owns a set of storage rentals and receives monthly checks for letting customers rent these out. The only time she seems to do any work for these is when she has an opening for one of the storage units.

  1. Laundromat

I debated on listing this one here because while in theory it seems like owning a laundromat would be semi-passive I anticipate there would be a whole lot of ongoing maintenance needed. You be the judge on this one.

  1. Cashback Rewards Cards

If you pay your bills with a credit card make sure it offers cash back rewards. You can let your rewards accrue for a while and possibly put the easy money you earned toward another passive income venture! (Be sure that the card you select doesn’t have an annual fee or you might be cancelling out your rewards).

  1. Cashback Sites

Just like cashback rewards cards you should opt to use a cashback site when shopping online. If you don’t you’re giving up free money that requires little to no work!

30 Get Paid To Have An App On Your Phone

What if you could install an app on your phone, and get paid for it? Yes, this app tracks what you're doing and it sells your data - but what's more passive than that?

If you don't want to do anything out of the norm, check out Neilson Digital. You simply download the app and do what you normally do. The app runs in the background and you are entered to win rewards. Simple, easy way to get money for nothing.

Mobile Expression is a similar app for iPad. You can earn rewards for installing it and leaving it on your device for at least 90 days. And boom! You get paid!