Are you looking to earn extra income while you sleep?
We’ve got 11 passive income ideas for you to start earning additional income today.
In this post, we explain the various passive income strategies available and the pros and cons of each one. The majority of the extra income ideas mentioned are passive income online strategies that you can implement and pursue from anywhere in the world.
We selected a diverse variety of passive income streams so that you can surely find one to help you increase your income. Before we dive in, let’s get the basics for generating passive income.
Since you are here, you might also want to check out these posts:
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- How to Make Money Fast with these Side Hustle Ideas
- Financial Freedom – 12 Steps For Beginners
- Digital Nomad Guide to Make Money Online
Some of the links in this post are affiliate links. If you use them to make a purchase, we will earn a small commission. There are no additional costs to you, but it helps us keep this blog alive. The products and services we recommend are based on our own opinions. Enjoy!
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What is passive income?
Passive income is any source of income you have that does not require you to work for it. Investopedia defines it as “money being earned regularly with little or no effort on the part of the person receiving it.” Essentially it is money you can be earning while you are sleeping.
Traditionally, the most common examples would be money earned through landing money out and receiving an interest, rental income, or dividends income from stocks. These days, there are plenty of other method you can earn passive income, which we’ll dig deeper into below.
It is about having your money work for you. Using your earnings to create even bigger earnings, and continually grow your portfolio of passive income.
Although we call it passive income, in most cases there is a minimum requirement of involvement and time you do have to put it to it. Therefore, there is nothing that is absolutely 100% passive.
Invest time and effort now to get passive income later
With most of the passive income ideas that are described below, it is required that you invest more time and effort now in order to reap great returns in the future.
Whether you use money to create passive income or you are building something (e.g. blog) to create passive income, there is always a big investment of time and effort at the beginning.
If you want to invest your money into an income generating asset (e.g. a rental apartment), you will need to spend a lot of time doing research and find the best option within your budget. Depending on your experience and knowledge in the field you are investing in, it may take a huge amount of time or very little. In any case, you will need to invest your time to create passive income sources.
If you are building a blog or writing a book for passive income, then it is quite obvious you will need to spend time on creating the asset.
With both monetary and non-monetary passive income strategies, you will be rewarded with passive income after putting in the initial investment of time. Once you have put the time to find the right investment or create an asset, you could reap off the benefits for a long time in the future.
It is all about investing your time now for the future pay off.
Money investment passive income ideas
For the passive income idea listed below, you would need to invest money in order to earn passive income.This is a monetary investment income strategy. The investments required vary, however you can start with as low as $100 and go as high as possible.
That being said, the more you investment and the more risk you take, the more the reward is likely to be. In most cases you cannot expect your passive income per month to exceed your initial investment. Depending on the investment, it may take a few months or years before your initial investment is even earned back.
If you are starting out, we would recommend you that you understand the investment vehicle you would like to use. Additionally, we strongly discourage investing big portions of your savings initially. Take the first steps and figure things out. Lastly, don’t put all your eggs in one basket. It is best to invest your money in different options and not all into one of the passive income strategies below.
Without further ado, here are the passive income ideas that require a monetary investment.
Real estate investment
Real estate is a great source of passive income, and probably one of the oldest strategies out there. Earning money from real estate is done through the purchase of a real estate property and the rental of it.
For instance, you may buy an apartment at a good location in the city you live in, and then rent it out for an amount that is higher than the costs of owning the apartment. The difference between the costs and rental income is in fact your passive income (profit). Learn here how to maximize your income from rental properties.
Real estate investment requires you to invest quite a bit of your savings into the asset. Therefore it may take you longer to attain a real estate asset. You could finance it through loans, which there are various forms of. It may be a bank loan or a private loan, and the interest rate you have to pay on the loan will vary according to the option you choose.
In some countries you could get a 100% loan from a bank, while as other countries might require a downpayment of a certain percentage. A good first step is to find a reliable financial advisor to help you understand your options.
You don’t have to be a pro, but at least know the basics
Real estate investment is a whole field on its own. Nonetheless, you do not have to be a professional in the field to participate. We are generating most of our passive income from real estate, without having done any certifications or taken any courses.
It is however important that you understand and are familiar with the market you are investing in. If you live in the city, know the various neighbourhoods, and rental prices, chances are, you’ll be able to spot a good deal. This is how we started off with real estate investment in Amsterdam.
Lastly, although real estate investment is considered a source of passive income, you will have to get involved from time to time. If something breaks, or tenants change, you will need to spend some time working for that passive income. However there are also property managers that could do the job for you, but then you will be less profitable.
A book we recommend to start off with real estate inviting is The Real Book of Real Estate by Robert Kiyosaki. You can use this link to get a $5 discount on your first ebook or audio book purchase on Kobo.
Bonds are essentially a loan to an institution such as a public traded company or a government. They are traded in the market, and can be purchased and sold by any individual using a broker. They are considered to be a relatively safe form of investment in comparison to stocks.
Basically, you buy a certain amount of bonds that offer a specific yield. The yield is a percentage of the sum you buy the bonds for that you can expect to receive annually.
Bonds are quite a safe bet when it comes to generating passive income. Nonetheless, since they are safe, they usually provide a lower return. This means that you will have to invest quite a lot into bonds to make it a significant income source.
A great place to start in understanding bonds and how they work is through this Investopedia’s article about bonds.
There are apps that help you easily get started with investing in bonds. We are using DeGiro, which are considered to have the lowest rates for buying online stocks in The Netherlands. They are operating all over Europe.
If you sign up with our DeGiro link, you will get a 20 Euros credit to your account to buy bonds.
If you don’t live in Europe, we recommend you check out RobinHood.
Dividends received through stocks is a great source of passive income. Essentially you buy stocks of a publicly traded company, and therefore become part-owner of the company. The company pays quarterly a portion of their profits to investors like you, which is referred to as dividends.
While this is a good way to create passive income and potentially grow your net worth, be aware that stocks are a relatively riskier form of investment and the dividend of most companies is not extremely high.
Yahoo Finance is a good platform to explore different stocks and see their dividend yield. The stocks dividend yield is the annual percentage you can expect to get paid on the money you invest in the company. You will notice that not every company pays out dividends and some pay higher yields.
Make sure to do thorough research before investing in stocks. High dividend yields is not always a good sign to invest. You need to understand why the company is paying high dividends instead of re-investing profits back, and are those dividends stable or is it a one-off thing?
A book that helped us understand the world of dividends is The Little Book of Dividends by Charles Carlson. You can use this link to get a $5 discount on your first ebook or audio book purchase on Kobo.
For investing in stocks, you will need a good broker to start off. We are using DeGiro, who are considered to have the lowest rates for buying online stocks in The Netherlands. They are operating all over Europe.
If you sign up with our DeGiro link, you will get a 20 Euros credit to your account to buy stocks.
If you don’t live in Europe, we recommend you check out RobinHood.
Crowdfunding was the biggest hype 5 years ago, but it’s still here and growing strong, so maybe it’s not just a hype. There is one main way you can create passive income through crowdfunding.
The form of crowdfunding loan is where you will get a return on your money. Essentially you will lend money to companies or individuals seeking to raise capital for a particular project, and earn a certain interest percentage on the money you lend.
Be sure to check the projects and the people behind them well before making an investment. While the crowdfunding platforms create pretty good contracts, there is always a chance of someone defaulting on their debt if the project goes south. Before you invest, make sure you believe in the project and the people behind it.
Buy an online business
There are many online businesses that require little to no maintenance and still provide a nice source of passive income. Online businesses can vary from online shops to blogs with affiliate revenue.
Buying an online business is similar to buying any other type of businesses, the only thing is that the entry level is usually much lower. If you want to skip the setting up of a shop or blog, and all the fuss of creating content in the first few months, buying an existing website might be ideal.
Online businesses can sell for as cheap as $50 and can go beyond a million dollars. Obviously the cheaper businesses generate less passive income or are in early stages and still require some work to get off the ground. Nonetheless, it is possible to find an online business that already generates income for a reasonable price.
Take a look on flippa.com, which is one of the largest online business marketplace. You can find businesses in any industry and for a range of prices. As always, do your due diligence before making a purchase.
Time investment passive income ideas
The passive income ideas mentioned below do not necessary require a monetary investment. Sure you may need to buy a hosting and a domain to start a blog, or a camera to sell photos, however this is more of an investment in equipment to create your passive income generating assets.
Time investment passive income ideas require much more time and effort than the money investment ideas. You will need to invest your time to create an asset that can generate income passively for the foreseeable future.
Different passive income ideas require a different amount of time. It also depends on your experience, skills, and knowledge.
Here are passive income ideas that require a time and effort investment.
Start a blog
Starting a blog to create passive income is a good strategy. However, it is important to note that there are millions of blogs out there trying to do the same. We are not trying to discourage you, but beware that it takes a lot of effort and hard work to bring a blog to a level of providing passive income.
Essentially blogs make money through selling products, either your own or others’ products, and advertisements placed on the blog. You can get paid per click for advertisements place on your blog.
Affiliate marketing is another common option, where you recommend others products to your audience and earn a commission on every sale made through your blog. Additionally, many bloggers create their own product, such as an ebook or a course, which they then sell through the blog.
We have written a detailed article on how to start a profitable blog, which we recommend you read if you want to pursue this passive income idea. One of the fastest ways for growing your blog is through promotion on Pinterest.
We have written two blog posts on how to use Pinterest as a blogger, which we recommend you read:
- Pinterest Marketing: How to Drive Pinterest Traffic to your Blog
- How to Increase Blog Traffic with Pinterest SEO – From 0 to 87k Monthly Viewers in 2 Months
There is no doubt that Youtube is a good source of passive income. Yet, as with blogging, the competition is vast, and it is not that easy to get ahead. Nonetheless, new Youtube celebrities pop up every year, which means that with hard work and dedication it is indeed possible.
You will need to find a niche that is underserved on Youtube and start to create video content within that niche. Make sure that the niche is not underserved because no one is interested in it, but rather because there is room for improvement.
Once you start getting sufficient views and followers to your channels, Youtube will offer you to include ads in your video content. If you choose to include ads, you will get paid for every time someone watches an ad on your Youtube channel. Essentially earning passive income for every view.
Ebooks are fundamentally like traditional books. Yet the difference is that it is much cheaper and easier to publish them. Whereas traditionally you would have to get a publisher to support your book by printing it, marketing it, etc, these days you can just publish the book using any word processor on your laptop.
Writing a good ebook requires a lot of time and effort. Once you have written the book and it is of good quality, you can publish it yourself and sell it on your site or through Amazon independent publishing company.
When the book is out, it is there to stay and can earn you passive income for as long as you live. Your passive income will of course depend on how popular the book becomes.
Creating an online course for passive income is similar to writing a book. You will need to spend a lot of time to create a good quality course that is worthy for people to buy. Once you create it, you can publish it on various platforms such as Udemy or Fiverr Learn, to name a few.
Although an initial investment of time and effort is required once the course is ready to ship, it will be there forever and could earn you passive income.
We all take photos these days. If you own a modern smartphone, you have a pretty good camera that can take high quality images that you can sell online. You do not have to be a professional photographer to sell photos online. Sometimes it just requires being in the right place at the right time.
Also, amateur photographs are sometimes even desired over professional photographs for certain reasons. We always take photos while on holiday. We published some of them on Eyeem, and guess what, after months that we have forgotten about them, they started to sell.
As with anything else, the passive income you can generate depends on the effort you put in. Yet, once you publish a couple of photos online for sale, you have created the chance to earn passive income.
As with other options in this list, you create something worthy once, put it up for sale online, and with that you create an opportunity to earn passive income. Selling t-shirts online is not different.
You can create a unique and original t-shirt design using online software such as Teespring, and then put it up for sale on their platform. You will have to make a t-shirt that will actually sell to earn passive income of course, however if you have some creativity and can express it right, you could create a passive income t-shirt asset.
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