On the first paid vacation day of my initial full-time job with benefits, I experienced a seminal passive money-making experience: getting paid while not at work. I was hooked!
I moved on to putting money in a U. S. Treasury bill that, in 1986, yielded a 7% risk-free return of compound interest. A few years later, my husband and I rented out our house when the U.S. Navy sent us to a new duty station.
These experiences with passive income production delighted us, especially because our full-time jobs necessitated long hours, hard work, evil bosses and bad coffee, just like your full-time job today.
Passive income is money paid to you that you did not actively work for. Most of us rely on full- or part-time jobs where we work by the hour or the week for wages paid in exchange for the work we do. If you can set up income streams that don’t necessitate your continued hourly effort, you’re earning passive income.
You might not be able to generate enough passive income to quit your 9-to-5, but supplementing that income with passive revenue sweetens the credit side of your budget. We share some possible passive income ideas here that might work for you.
1. Produce and Sell Information
In our online world, the opportunities to create what I call eternal content are limitless. You can find other human beings the world over with interests similar to yours who will pay for knowledge you share. You can create content in any area you are interested in or have a skill in, and the types of content range widely from e-books, learning courses, videos, contests, podcasts, poetry, music, tutorials and others.
Often, the more niche your market as an influencer, the more devoted your followers. For example, there are lots of cat videos out there, but if you concentrate just on 1 breed and become very good at and knowledgeable about that sliver of cat love, you may have better luck earning money.
Creating content is relatively simple and fast if you create content in areas you love. Getting the content out there in our crowded online world is harder, and the sales part of promoting yourself will not be passive. But once you are on a roll, your audience will grow, and that eternal content can make you passive income forever.
2. Rental Properties
As you move forward in your financial life, real estate investing that you can rent out for income could produce lucrative streams of passive income. It is true that you need to maintain your rental properties, but you aren’t going to be hammering fence posts 40 hours a week. Research the area you want to rent in, buy a property you can afford, advertise and select a renter, and start collecting monthly passive income.
Just like there is no guarantee that stock prices will rise, you don’t know for sure that you will be able to consistently find renters, and you will still need to make that rental property mortgage payment even if no rental income is coming in. But when it works, rental properties are one of the best forms of passive income you can choose.
This is a testimonial in partnership with Fundrise. We earn a commission from partner links on Benzinga.com. All opinions are our own.
- Best For:Commercial Real Estate Investorssecurely through First National Realty Partners's website
3. Rent in Your Home
If you are not quite in a place where you can buy a rental property, you can start filling your passive income coffers by renting a room or space in your own home. Renting a room, basement apartment or garage in your home can help pay your mortgage and generate new cash flow. If your lease does not prevent it, you can even rent to others if you are a renter.
Be creative in figuring out what space you can rent. It might be intermittent nights rather than a full-time renter, or maybe you could rent garage space for someone’s boat, a field for a horse or a well-lit art studio.
Renting spaces in your home requires no cash outlay, so it’s a great introduction to nailing down passive income profits. While there can be risk involved, you can manage those potential pitfalls with common sense and reasonable care.
4. Sell Online
We talked about selling content for passive income, but you can also sell tangible items you already own. That old box of baseball cards you collected a decade ago might be worth something now.
If you or people you know have things that others may want to buy, you can sell them online through places like eBay, Facebook or other sites, or you can sell them from your yard. If these are things you already own, you make a profit from every sale. This side hustle is another one where you don’t need money to make money in passive earning experiences.
To get the best return for your stuff, do some research to figure out how much others are charging for similar items. If you are shipping something away, you want to be sure to collect the buyer’s money before you ship, and remember to price in the cost of shipping. Regardless of your method of sale, this source of passive income is low in risk.
- Best For:People looking for a convenient, secure way to sell their itemssecurely through Decluttr's website
5. Stock Market
Participating in the stock market is the penultimate form of passive income. The stocks you own do all the heavy lifting — either by paying you cash dividends or by rising in price and netting you a profit after sale.
You can learn more about dividend stocks from our recent article, but briefly, a stock dividend is money paid out by a corporation on a regular schedule, usually quarterly, to holders of the stock.
When you own a dividend-paying stock, you’ll receive a set amount of cash flow per share of stock you own at set times. If using dividends to pay yourself passive income interests you, check out this Benzinga article to learn how to start. Not all stocks pay dividends, and dividend yields vary widely.The other, less-reliable way to get passive profit from the stock market is the profit you earn when you sell stocks at a share price that is higher than what you paid for the stock. It’s such a great feeling if you buy Nike (NYSE: NKE) at $122 per share, it goes up to $145, and you sell it for a lovely passive profit. If only that kind of profit could be a sure thing! But when it works, it creates a satisfying form of passive income.
6. Higher-Yield Savings and CDs
Not to dash your dream of risk-free returns, but in 2021, the passive income you’ll earn from higher-yield savings accounts or certificates of deposits (CDs) is so small as to almost be missed. Putting money in one of these investment accounts is not bad in any way, and it will certainly generate passive income, but the amount may disappoint you.
If you could time-travel back to the high interest rates of the 1970s, these alternatives would be great options. But the trade-off of an 11% interest rate for a home mortgage doesn’t make me want to go back to drinking Tang in my bellbottoms.
7. Sell Business Leads
Selling business leads is a way to snag some extra passive income for your small business. It’s a niche income avenue that is really only available to business owners, but if you as a business owner have valuable contacts in clients or vendors, you can parlay those connections for dollars.
8. Monetize Your Website
If you already have a website or if you are thinking of setting one up, you might be able to use it to collect a strong passive income stream. Placing display ads, CPC ads and even affiliate ads on your website (or someone else’s) can produce reliable and extremely passive income.
The hard part of this tip is continually creating fresh content that sustains current subscribers and entices new ones. You need to have followers in order to get companies to advertise on your site. Using actions like creating email lists, hosting sponsored posts, teaching concepts and connecting with affiliate ads are a few ways to succeed.
9. Drop-Shipping
Dropshipping is a clever potential moneymaker that has come of age in the burgeoning e-Commerce retail boom. You access different types of apps to use an online store to create a method to become a 3rd-party seller. You earn a small portion of that sale and depend on volume to nail down substantial passive income. It takes time to set up and watch over the site, but it’s simpler and financially safer than owning a business with a big warehouse and many employees.Dropshipping is not without risk. If things go wrong, you can be liable for the expense of making them right. Additionally, the drop-shipping business is rife with scammers, so even if you do everything right, you can still be a target for fraud.
10. Learn a New Skill
As you explore ways to earn passive income, consider learning a new skill that will open more doors to passive income. If you love the stock market, take the free training offered by your brokerage site (TradeStation, E*TRADE and many others). Khan Academy, the Massachusetts Institute of Technology (MIT) and many others offer free training for writing blogs, creating websites and generating passive business ideas. Lynda from LinkedIn.com teaches you coding, Excel and accounting that you could use to analyze projects and figure out other passive profit opportunities. Let yourself start small, but go ahead and get going now.
- Cost-conscious investors
11. Robo Invest
When most people think of investing, they primarily think to buy stocks and bonds on the New York Stock Exchange or NASDAQ. While investing in stocks can be a fantastic way to secure your financial future, choosing which individual stocks and funds to invest in can be a major challenge for a beginner.
A robo-advisor is a class of financial investors that can make investing easier and more welcoming for beginners. Simply create a portfolio, answer a few questions about your risk tolerance and employment, and your robo-advisor will generate a portfolio customized to your needs based on your answers. Most robo-advisors also allow you to invest on an automatic schedule that allows you to see returns without even opening your app.
If you’re interested in robo-investing, we recommend starting with Betterment. Betterment is a robo-advising hybrid platform that provides you with a complete shop for all of your financial needs. Set future financial goals (like a college fund or new home renovation) and watch your investments grow to fit your needs.
Explore Opportunities
Passive income offers a way to earn money without actively working for it, and can supplement traditional sources of income. There are various avenues to explore, such as producing and selling information online, investing in rental properties, and participating in the stock market. Monetizing websites, drop-shipping, learning new skills, and utilizing robo-advisors are also viable options. While not all passive income ideas may lead to quitting a 9-to-5 job, they can contribute positively to financial goals and create greater financial security and independence.
Frequently Asked Questions
How can I make $1,000 a month in passive income?
To generate $1,000 a month in passive income, consider exploring various avenues such as investing in dividend-paying stocks, creating and selling digital products, or building a website with affiliate marketing. Additionally, rental properties or peer-to-peer lending platforms can provide steady returns. However, it’s crucial to conduct thorough research, diversify your income streams, and exercise patience, as building a reliable passive income usually takes time and effort before significant results can be achieved.
How can I make passive income with no money?
Passive income generation without startup costs is a challenge. Raking in stock dividends requires capital to buy shares with; collecting rental income depends on your owning a place you can rent.
The easiest way to start making passive income is to sell things you already own. Once you’ve made some money that way, you can use that income to move onto other passive income generating ideas.
The easiest way to start making passive income is to sell things you already own. Once you’ve made some money that way, you can use that income to move onto other passive income generating ideas.
How many income streams should you have?
The number of income streams one should have depends on personal financial goals and needs. It’s recommended to have at least two to three income streams to diversify and protect against potential financial risks, but some individuals may choose to have more or less. Ultimately, it’s important to assess one’s financial situation and goals to determine the appropriate number of income sources.