32 Ways to Earn Passive Income (and Barely Lift a Finger)

WhatIsPassive Income?

Passive income is a way to earn steady money with little to no daily effort. Note that we didn’t say no effort at all. Earning passive income is not a sit-on-your-butt-and-make-fast-money gig. You’ll need to put in the work—at least on the front end.

Some passive income ideas—like building a blog or an app—take time (and sometimes money) to get up and running. But if you play your cards right, they could eventually earn you money while you sleep.

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What Passive Income is not

❌ Your job

Obviously. The whole idea of passive income is to supplement, augment or get you out of your job so you can retire, travel or spend more time with loved ones.

❌ Side hustles

Side hustles are great ways to make money, but not all side hustles are passive. Side hustles are usually active, and maybe with systemization, they can turn into passive income streams.

If you need to continually invest the same (or more) amount of time for the same amount of financial output, the venture is not passive. Be careful here, because remember, in the beginning, a passive income stream could require more time, money, or work than it produces.

You have to evaluate the passive income opportunity in its long-term state for you.

❌ Consulting

Consulting is just another job – perfect for a side hustle, but not exactly passive. For consulting to be passive, you’ll need to build the practice with other people, and be able to step away from the work eventually.

❌ Investing for speculation

Here’s where I split hairs. I do not consider stock investments for capital appreciation only to be passive income. Why? Because stock appreciation is not income. On the other hand, investing in stable companies that throw off cash in the form of dividends is definitely a passive income strategy. The difference is, are you getting a cash-on-cash return, or will you only see a return if you sell the investment?

Also, investments like cryptocurrencies and commodities are reserved for price speculation. There are many times when these investments should get some allocation of your portfolio, but investing like this is not a stable passive income strategy unless you are earning yields or grit bot trading.

How to Get Started

While it can be tempting to want to pick five passive income ideas to get started with I’d really encourage you to pick one in the beginning. You need time and the ability to focus to really a grow a passive income stream. Master one thing before moving on to the other.

It’s going to take a substantial amount of time or money in the beginning but I promise earning passive income is everything it’s cracked up to be! Pick an idea, make a plan, and dedicate yourself until that income stream comes to fruition.

Which passive income source is best?

The question of which passive income source is best depends on several factors, but some of the most important include the amount of money you have to invest, the total opportunity size, your interest and ability in the area, the amount of time you need to invest and the potential to succeed. Typically, the lower the barriers to entry, the more crowded the field of competitors and the lower likelihood of success.

So you’ll need to weigh the opportunity against these factors and see which passive income strategy works best for you. But it can be helpful to have natural ability and an interest in your target area, because these can help motivate you in the early days when things are likely to be tougher.

There are passive income opportunities for people who are starting out with some money and even those who have no money to start.

How can I make passive income with no money?

If you have little or no money to start, you’ll have to rely mostly on your own time investment to power you through, at least until you build up a little money. That means focusing on passive income sources that take advantage of the following traits:

  • An area where you’re an expert. Here you can build your expertise out into a useful product or service for consumers, e.g. design, software coding and others.
  • An upfront work-heavy opportunity. You’ll need an opportunity that requires a time or work investment, such as creating a course, building out an influencer profile or other options.

In effect, you’re substituting your time for your lack of capital, until you can get enough capital to expand your set of opportunities.

How can I make passive income with money?

Money can provide you with more passive investment opportunities. If you have money to invest in a passive opportunity, you have not only the opportunity set above but a new range, too. Money is a prerequisite for taking advantage of the following passive income areas:

  • Investing in dividend stocks or REITs. Investing in stocks means you need money upfront, but you’ll receive some of the most passive forms of income around.
  • Save with bonds or CDs. Other purely passive activities include buying bonds or CDs.

Here you can use your money to make money with little or no effort on your part, if that’s what you’d like to do. Of course, you could pair your money with a lot of time investment to move into an even more lucrative niche, too.

Active income vs. passive Income: Which is best for me?

In theory, all of your income sources carry similar weight. But when it comes to achieving financial freedom, passive income leaves active income in the dust.

You see, active income is the money generated from all those efforts you’re currently making. And you need to keep working if you want to continue making a living. If you quit, you don’t get paid. Your time literally equals money.

And then you have passive income. An income that doesn’t require you to work actively. And the money continues to flow in for years and years. If you’re looking to design a dream life where you are financially free, it might be better for you to focus on passive income.

Just remember, while you might be able to build a passive income stream with a small investment, you’re not making any less of a commitment than someone investing their time. Making passive income comparable to income earned from active efforts requires a good amount of work upfront.

How to Start Building Passive Income

There’s no magic trick that turns your time directly into money. Instead, you plant seeds so your money will grow, even when you’re sleeping or at the park walking your dog.

The initial downtime you put into passive income can be as involved as starting a blog or as simple as logging into a robo-advisor platform and investing $100. You can earn passive income whether you’re an entrepreneur with a brilliant business plan, a talented artist, or just happen to have extra cash to invest.

1. Start building a nest egg

Remember earlier I said to create passive income you need time, money or skills? Let’s start with money. Open a high-interest savings account and park even $100 dollars in it. Boom, you just made passive income!

It may not be much, but you’ll earn interest on that money and many online banks even offer cash bonuses for opening accounts. Our favorite right now is CIT bank.

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2. Assess your skills

When I started GoodFinancialCents I was a Certified Financial Planner looking to grow my business and answer common client questions. I figured out that I could use these skills to create great content online, and that I could make money with this blog over time.

I have friends who were stock traders and now have communities around that skill or write for financial publications. Other friends have gotten good at management, and now are building career websites.

What are you good at? What are you passionate about? Take a quick inventory, and research the ways others have used those skills to build income streams.

3. Assess your time, money and effort. Be realistic about your commitments

Time is a tricky one, because it’s our most limited resource. Trying to make more money or create passive income can be a trap because it usually requires you to learn new topics or new skills, and that can be a time suck. Remember, you may have to bite the bullet in the short term, but in the long term your goal is to minimize your time investment.

Are you fully committed? Current work, family and social activities eat up a lot of time. If you don’t have much time, you’ll need to lean more towards investing or getting someone else to do the work for you.

In this guide, we’ve labeled each idea with an effort level (1-5, 5 requires the most effort) to help you match your current abilities to the idea.

4. Ideate and choose

The final step is to put some ideas down on paper and choose how to begin. We created the following list to help you kick off your brainstorming. To help with that, we’ve created this list of ideas to get you started. Here’s to your wealth and freedom!

Passive income FAQ

How can I generate passive income?

You can generate passive income ideas in myriad ways. For instance, you could write down all the things that interest you and research how other people build businesses around them. Another idea is to brainstorm how to solve a common problem you have and build it into a passive income idea. 

What passive income ideas can I start with little money?

There are many passive income ideas you can start with little money. These include dropshipping, affiliate marketing, print on demand, and selling your unused things.

How much passive income can I earn? 

You can make as much or as little passive income you want. However, it’s not a get-rich-quick scheme. You’ll need to put in some hours, effort, and capital initially to create a passive income source. The good news is that nailing these things early allows you to sit back and enjoy the financial rewards for years to come. 

You may invest as little as $100 in the beginning, then reinvest your profits until your passive income grows to a sustainable figure. With a high-recurring income, you can make enough money to live a happy, healthy life.

What are the best passive income ideas for 2022?

  1. Start a dropshipping store
  2. Sell courses online
  3. Monetize a blog
  4. Create a job board
  5. Invest in the stock market
  6. Create a print-on-demand store
  7. Sell stock photos online
  8. Become an affiliate marketer
  9. Flip websites for a profit
  10. Own a rental property

What is not passive income?

As we mentioned, passive income is often misunderstood and confused with side hustles. While a side hustle or second job is a great way to boost your income streams, unless it’s operating in a way that allows you to step further and further back (while earning more and more cash), then it’s not truly passive.

Your passive income is not…

Your job – The idea of a passive income stream is to boost your regular earnings or allow you to retire early. Your main job is not a passive income stream.

A side hustle – While a side hustle can potentially generate passive income, they’re more often an example of active income as they require your attention and effort to maintain. However, if your side gig allows you to step back over time without losing traction, this could become passive income over time.

Consulting – Consulting is an excellent side gig or online business if you have a specialist subject that you can share with the world, but it’s not a source of passive income. If you want to make passive income by coaching or consulting, you need to build your practice with others who could take on the hands-on element while you step back and enjoy the benefits.

E-stores are going to make the big bucks this year.

You can do it too.

You can do it too.

Show me how

Investing for speculation – You’ll often hear people tout investing in the stock market as a source of passive income. However, we disagree that investing for speculation is one of the best passive income ideas for one simple reason… Stock appreciation is not income. That said, investing in high dividend-yielding stocks is an example of passive income as this provides you a regular income injection without you needing to do anything.

A good trick for figuring out whether an investment is passive income or appreciation/speculation is whether you’ll see a cash on cash return like dividends (passive income) or if you only get a monetary benefit once you sell the investment (appreciation).

Put your passive income to work

Once you’ve found the perfect passive income opportunity that fits with your lifestyle, skills, and passions, it’s important not to let that extra cash get lazy. Make sure every cent is working for you by placing the money you earn into a high-interest bank and letting it continue to work no matter what you’re doing.

It’s also worthwhile to reinvest some of your passive cash back into the business. For example, you could buy additional vending machines or another storage unit to give you more passive income opportunities and boost your investment.

No matter how you choose to boost your income, make sure it works around your schedule, and don’t be afraid to try a few different options. There are no limits to the number of streams of income one person can have, so mix things up and enjoy the returns.

You’ll be sipping mimosas on the beach in no time.  

About the Author

Jami Farkas holds a communications degree from California State University, Fullerton, and has worked as a reporter or editor at daily newspapers in all four corners of the United States. She brings to GOBankingRates experience as a sports editor, business editor, religion editor, digital editor — and more. With a passion for real estate, she passed the real estate licensing exam in her state and is still weighing whether to take the plunge into selling homes — or just writing about selling homes.

Build Wealth That Lasts

Did any of these ideas for creating passive income spark your interest? Want a clearer picture of how to build wealth? Connect with an investment professional who will help you create a game plan for your specific goals. Having a financial pro in your corner is the best way to make a plan that meets your specific needs. 

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