24 Jun 13 Ways to Easily Create Passive Income
You may imagine passive income to look like sipping cold margaritas on a sandy beach.
You’re not entirely wrong.
While there is some effort and time involved in generating it, passive income is a great way to supplement your income and help you reach your financial goals faster.
Having passive income during your retirement years is ideal in creating a comfortable and secure life, but you can also use it to pay off debt, fund your emergency account, or save for that beach vacation.
Whether you are paying off debt, saving for retirement, creating an emergency fund, or saving for that beach vacation, this is a simple way to contribute.
What Is Passive Income?
Passive income is receiving continuous payment after the work is done.
Royalties from books, movies, or songs are some examples. Revenues from real estate or business investments are also considered forms of passive income.
13 Ways to Create Passive Income
#1 Start a YouTube Channel
YouTube is in its prime, and getting in on the action now is a great way to earn passive income.
You can offer content via tutorials, vlogs, how-tos, and more. Creating your own ads to sell on the platform is also a way to make some extra cash.
To attract millions of views and maintain a healthy income based on YouTube ad revenue is not easy…unless you know how to do it right.
The good news is that there is another way to utilize YouTube.
Instead of looking at it as a money-making medium, think of the platform as a means to other money-making options.
- Use Shopify to sell your own items. Have a good product to sell? Create simple and engaging videos to promote sales. This funnel will work almost every time.
- Direct traffic to affiliate links. Static blogs are one way to drive people to affiliate links. Another is creating an appealing YouTube channel using it as the primary platform. With video moving towards the primary form of content on the internet, you can start benefiting now.
- Attract sponsorships. A big component of successful YouTube channels is having sponsorships and advertisements in the videos. You can negotiate whatever contracts you want based on impressions and the size of your audience. Plus, you don’t have to give YouTube a cut. Generally, the amount of revenue you generate from sponsorships is quite a bit more than YouTube ad revenue. Meanwhile, you can still generate ad revenue…two-in-one sources of passive income.
#2 Invest in Real Estate
Real estate is one of the best passive income strategies.
Investing in rental property helps bring in a steady flow of money.
There are several steps to do this.
- Research properties that are in good condition and preferably in good areas to attract tenants.
- Avoid money pits and fixer-uppers to limit money and time spent on the investment.
- Take care of repairs to ensure the property is in its best possible condition.
- If possible, hire a trusted property management company to handle rent collection, documenting and paying for maintenance, etc.
With turnkey investment properties, most of the work is already done.
Just purchase the investment property and let the professionals manage it. You will collect your monthly cash flow checks while your tenants help you build equity.
#3 Sell Products Online
If you have items you can sell online, you can make some serious extra cash. Look into platform options to decide which is best for you.
Amazon is a great way to generate passive income if you have your own product to sell. That being said, there is quite a bit of upfront work.
To get it set up, you have to choose a product, do some branding work (name, logo, etc.), find a supplier, order, and then launch on Amazon.
Once your product is up, the goal is to have it viewed by potential customers. One way to do this is by accessing your Amazon pay-per-click ads. These are less expensive than Google ads.
Amazon makes things easy by storing your inventory, accepting payments for you, shipping your products, and even dealing with returns!
eBay is the place for selling “one of a kind” items such as unique vintage pieces.
Unlike Amazon, eBay also accepts used clothes and some larger items like cars and furniture. The listing of items to sell is a bit time-consuming, so check to see if it is worthwhile before making this your selected platform.
Etsy is the hub for independent sellers who have handcrafted, unique items to sell. Art, jewelry, and home decor are some of the popular categories among buyers.
Etsy Ads are available to advertise products showing up in Etsy search results and Google. Their Web Analytics lets you track your stats.
Sell on your own website. You can also promote sales of your items on your own ecommerce website. Platforms like Big Cartel, Shopify, and Wix make starting your online store easy. Many also help you manage marketing tasks like sending email announcements.
The costs and features vary so do research to find the best fit for you.
#4 Create and Sell Online Content
Selling information products online like an ebook or audio or video course is a popular way to make passive income.
The biggest challenge is creating the content.
With an increasing market, there is no room for mediocrity if you want to make good money.
Creating a financially viable option means making a strong effort to put out valuable online content.
To support this, you need to build a strong platform and market your products well.
Your online content can be sold on your own website, which is a multistep process that is time-consuming to start.
You’ll need to have an online website platform like WordPress, a hosting service like Bluehost, plug-ins that relate to your information product, and an online payment system like Paypal to accept payment.
These platforms take a percentage of the sale, so make sure to do the math before sharing your content.
#5 Sell Your Clothes Online
Secondhand clothing has exploded into a $16 billion industry.
With numbers like that, it’s no wonder that selling clothes online is a great way to make some extra cash.
To create a successful experience:
- Pick your platform. There are a number of places online to sell your clothing. They vary in level of involvement and effort, so it’s key to find the one that calls to you. ThredUP and Poshmark have an easy set-up, for example.
- Select and prepare your items for sale. Each platform attracts a certain audience. Make sure the items you sell reflect your buyers’ needs. Have clothes in good condition and have prices that reflect the market.
- Create eye-catching posts. Good photos are key to making a sale. Using a plain backdrop helps your items stand out. Also include descriptive captions to inform your potential buyers of the quality of your item.
#6 Become a Referral Source
Is there a local business you love? An online bank you prefer? An Airbnb spot you enjoyed?
Become a referral source, and you can earn passive income.
A 2016 Nielsen Study shares that 82% of Americans say they seek recommendations from friends and family when considering a purchase.
67% say they’re at least a little more likely to purchase a product after a friend or family member shared it via social media or email.
Most companies have referral programs already set up.
Reach out to businesses you know or use, and see if they pay referral fees. Ask your landscaper, accountant, and plumber if they are open to an arrangement.
#7 Peer-to-Peer Lending
Offering a peer-to-peer (P2P) loan can be an effective source of passive income. This is a personal loan made between you and a borrower that is facilitated through a third-party intermediary.
As a lender, you can earn good income on the interest payments made on the loan. This often can be higher than conventional investments, with an average of returns at 10%.
For example, Credible requires that borrowers have a credit score of 640 or higher. This encourages more trustworthy borrowers.
If a borrower defaults on a loan, it is reported to the major credit agencies, and there are established collection agencies to go after the money for the lenders.
#8 Purchase High-Dividend Stocks
Possibly one of the easiest ways to earn passive income is to own dividend-yielding stocks.
As a shareholder in a company with dividend-yielding stocks, you’ll receive regular payment from the company.
The only thing to do is own the stock and then see the money come in. Cash dividends are paid on a quarterly basis out of the company’s profits.
Since these are paid per share of stock, the math is simple. The more shares you own, the higher your payout.
The catch is choosing the right stocks.
It’s important to investigate companies–especially as a novice. A work-around this evaluation process is to invest in ETFs or exchange-traded funds.
ETFs are investment funds holding assets like stocks, commodities, and bonds, but trading like stocks. They are easy to understand, very liquid, and inexpensive.
All of these are reasons they are a good choice for the beginner investor.
ETFs also have better potential returns because of their much-lower costs than mutual funds.
Whether investing in ETFs or stocks, the risk remains of significant drops, especially during times of uncertainty.
#9 Rent Out Unused Space
Renting an unused space like a home or room is another easy way to earn passive income.
With the pandemic limiting movement, this option poses some challenges right now. However, as businesses and travel open up, this could once again be a good moneymaker.
You will need to make the initial effort of getting your space rental ready.
For a bit of extra work like cleaning and establishing a check in protocol, you will collect a payment for a space that otherwise would sit empty.
There are little risks involved. The online rental sites are strongly based on host and guest reviews, and guests are required to pay a security deposit in case there are damages or something goes missing.
There is both added effort and risk if you’re renting a space on your own. However, you would pocket the rental payment completely without having any fees to pay.
#10 Rent Your Stuff
One of the easiest ways to earn passive income is to rent out your unused stuff.
How much you make depends on the items and whether you’re renting through a company like Loanables or on your own.
According to FatLama.com, you can earn up to $3,000 a month renting out your stuff.
The platform allows you to rent practically anything. You can list your items for free and offer a $30,000 insurance policy for damages or other issues.
Craigslist is an option to consider if you’d rather have full control of the items and contract of your rental.
#11 Advertise on Your Car
If you tend to put on mileage from driving around town, why not tap into a passive income opportunity?
A specialized advertising agency will evaluate your driving habits including the length of time you drive and where. If favorable, they will pay you by the mile to “adorn” your car with ads.
Agencies are on the lookout for newer cars and for drivers with a clean driving record.
With payment by the mile, you could cash in hundreds of dollars a month depending on your route.
#12 Sell Your Photos
If you have a knack for taking good photos, why not sell them online?
This could be a good source of passive income–possibly hundreds of extra dollars monthly.
Your earning potential depends on the extent of your portfolio, your experience level, and the number of stock photo agencies you work with.
Diversification is key. The more photos you have spread across agencies, the better your chances to earn passive income.
#13 Sell Your Music
Much like selling stock photos, you can sell your music online. This goes for jingles and sound effects.
In the beginning, it may be a trickle of extra cash. But, by building your portfolio and audience over time, there’s a chance for a bigger passive income stream.
Epidemic Sound pays an upfront rate and offers a 50/50 streaming revenue split. The company works with artists to distribute their music across multiple platforms.
Soundcloud pays you for uploaded tracks directly every month. Your audience is able to stream songs as soon as they are uploaded.