Content of the material
- What is passive income?
- The golden rule of passive income protect your time
- 4. Do Airbnb rental arbitrage
- Passive income is not
- How to Make Passive Income: Getting Started
- Build Your Own Brand
- The Types of Passive Income
- 5. Start a YouTube channel
- 13. Self-Publish an Online Book
- Examples: What is and is not passive income
- Strengthen your financial future with these passive income ideas
- How to Get Started
- 3. Start an online store
- How many income streams should you have?
- Passive income FAQ
- How much money can I earn from passive income?
- What is the easiest source of passive income?
- How can I generate passive income?
- What are the different sources of income?
What is passive income?
Passive income is money you earn that doesn’t require you to do a lot of “active” work to continue making it. In essence, you can do most of the work upfront and put in some additional effort along the way to earn an income.
For example, if you create an online course, you just need to update its content to keep the money flowing.
You’ve probably heard the expression “make money while you sleep.” That’s the biggest draw that entices people to earn passive income.
You can create something (a blog, course, ebook, videos, or an online store) that generates money even when you’re not working. Or you can make passive income investments (property or stocks) that allow you to earn passively. (We’ll tell you more ways to earn like this shortly.)
The golden rule of passive income protect your time
Passive income is more about time than anything else. You could do a lot of things to make money, but not all income streams are passive.
I’m all for you actively building a business or a side hustle, but for the income stream to truly be passive, it must require less and less effort to produce income, eventually requiring no effort (or very little to maintain).
For example, if it takes you 2 hours to generate $100 today, and it takes you the same 2 hours to generate $100 next week or a year from now, that income stream is not passive, because it takes the same effort (money, time, etc).
On the other hand, if I open an investing account today that takes some effort. But as that account grows and I check it 4 times a year, my returns go up, and my effort goes down.
Same if I build an online course. At first, I’m earning no money and my effort is very high. But I expend a ton of effort at first.
Once the course is complete, I do some continued marketing and client support which amounts to just a few hours per week, while sales roll in month after month.
You get the picture? Now let’s talk about what passive income is not.
Passive Income is all about protecting your time.
4. Do Airbnb rental arbitrage
If you dream of getting into real estate but don’t have the capital to erect your own rental properties, you can try Airbnb arbitrage. This involves you renting a property long-term and then putting it up on Airbnb for people who need short-term stays.
As Redditor u/LiveAwake1 states, you get to pocket the cash that comes in from Airbnb. Of course, this would only work if the rate you charge on Airbnb is enough to cover what you paid as rental fee for the property and your profit margin.
Something to keep in mind is that some cities do not allow rental arbitrage. These include Los Angeles, New York, Santa Monica, Las Vegas and San Francisco. Therefore, make sure to check with your state and city regulations before adding this on your reddit passive income ideas. Also, check with the owner of the property to ensure that they are okay with the arrangement. Some prohibit arbitrage completely and even include its ban in their lease agreements.
Passive income is not
- Your job. Generally, passive income is not income that comes from something you’ve been materially involved in such as the wages you earn from a job.
- A second job. Getting a second job isn’t going to qualify as a passive income stream because you’ll still need to show up and do the work to get paid. Passive income is about creating a consistent stream of income without you having to do a lot of work to get it.
- Non-income producing assets. Investing can be a great way to generate passive income, but only if the assets you own pay dividends or interest. Non-dividend paying stocks or assets like cryptocurrencies may be exciting, but they won’t earn you passive income.
How to Make Passive Income: Getting Started
Now that you know what’s up, you have three options:
Option #1: You could do nothing. The truth is, when you do the same ol’ things you’ve always been doing, you’re going to get the same ol’ results—but I know you don’t want that, or else you wouldn’t be here on this website and you wouldn’t have gotten this far down the page. This choice is obviously not yours.
Option #2: You could keep searching for more information on the web. There’s a TON of information, good and bad, all over the place. But why would you continue searching? All of the information you need to get started I’ve organized for you here on the blog, the podcast, and other resources I’ve created for you.
Option #3: You can take action now. You can do it right now with the free course I created called Build Your Own Brand. I built it specifically for beginning entrepreneurs—like you—to make it easy to figure out what your brand is going to be and how to build a website. It’s all in a lesson-by-lesson, easy-to-follow (even if you’re scared of technology), on-demand course. It’s free to access right now, and it’ll show you just how easy getting started is, compared to what you may expect.
Imagine having a website up and running in less than a week. It will happen, but only if you get access to the course—and remember, it’s free. You have nothing to lose!
Click here to sign up and get instant access to my Build Your Own Brand course now!
Build Your Own Brand Join this free 5-day challenge to help you build a brand and website that you can be proud of. Ideal for those just starting out and in need of a website. Free For Beginners Start a Business Learn More
The Types of Passive Income
Now let’s get more specific. Here are three of my most popular podcast episodes that go into detail about each type of passive income, including which products and services you could potentially offer to your audience. As you listen, ask yourself, “which of these product types are most interesting to me?” Keep notes as you listen.
SPI fans tell me all the time how much these episodes helped them understand the types of passive income opportunities that are out there. I guarantee they’ll help you too.
5. Start a YouTube channel
YouTube creators can make a lot of money – and it doesn’t necessarily require a lot of expertise. You can create how-to or explainer videos on virtually any subject or go more personal and put yourself in the videos. You can interview subject matter experts, provide tips and tricks, or even just show yourself playing various video, mobile or board games.
The important thing is to find a niche and build a following. You can then integrate Google Ads, become a YouTube Partner, and even make money off memberships, live chats and subscriptions.
13. Self-Publish an Online Book
Are you a relatively creative writer and artist? If the answer is yes, then you could be selling books you have self-published online with Amazon and Kindle Unlimited. Reddit user says they’ve been making a full-time living wage selling low content books directly to the Kindle Unlimited Platform and Amazon.
Write a book about a topic you are familiar with or passionate about before editing it and uploading it to the online platform. This is a great way to make extra income while honing in on your writing skills! Who knows, you may even be recognized for one of your books in the future. However, keep in mind that you may have to spend a lot of time in the beginning before you can begin making a passive income with this job.
Examples: What is and is not passive income
|Active Side Hustle Income||Passive Income|
|Consulting by the hour||A course on your area of expertise that you sell online|
|Freelance computer programming||Building a program you can sell over and over|
|Freelance writing||Writing a book|
|Working construction||Investing in real estate|
|Driving for Uber||Renting out your car|
|Photography sessions||Building your photog Instagram account|
Strengthen your financial future with these passive income ideas
Passive income can really help elevate your earnings and fill in the gaps that your 9-to-5 job can’t fill on its own. If you’re looking to create an additional income stream so you can strengthen your financial future, the ideas on this list can help you do that.
And it’s OK if you like your full-time gig too. The work that goes into earning passive income tends to be manageable when paired with a 9-to-5. So, yup, you can do both.
Whether you’re looking to start a dropshipping store, start your own agency, or create profitable content, you’ll find that there’s money to be made in all these areas. All you need to do is get started.
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.
3. Start an online store
If you’re the creative type, you can start up an Etsy shop. Etsy sellers offer everything from jewelry and clothing to artwork, invitations, yard signs and more. If that’s not your style, you can start a drop-shipping store. With this strategy, you essentially operate a storefront. When a customer makes an order, you order that product from a third party (typically a manufacturer, vendor, or a wholesaler) and ship it directly to the customer. Shopify has a whole dropshipping walkthrough you can use to get started (and you can use their platform to create your store, too).Get access to drop shipping services for your online store Start your online store today!
How many income streams should you have?
There is no “one size fits all” advice when it comes to generating income streams. How many sources of income you have should depend upon where you are financially, and what your financial goals for the future are. But having at least a few is a good start.
“You’ll catch more fish with multiple lines in the water,” says Greg McBride, CFA, chief financial analyst at Bankrate. “In addition to the earned income generated from your human capital, rental properties, income-producing securities and business ventures are a great way to diversify your income stream.”
Of course, you’ll want to make sure that putting in effort into a new passive income stream isn’t causing you to lose focus on your other streams. So you do want to balance your efforts and make sure you’re choosing the best opportunities for your time.
Passive income FAQ
How much money can I earn from passive income?
Passive income spans a big spectrum. There are some people that make a few bucks each day, and others that make $100,000+ each year. It depends the passive income channels you choose and how much time you put into them.
What is the easiest source of passive income?
The easiest source of passive income could be investing in dividend stocks. These stocks offer payouts each quarter just for buying and holding them. If you want to build a business that provides passive income, affiliate marketing would be a good route for you.
How can I generate passive income? Start a dropshipping store Create a print-on-demand store Teach online courses Start blogging Sell handmade goods Run an affiliate marketing business Sell digital products Sell stock photos online Become an Instagram influencer Buy a rental property Invest in the stock market What are the different sources of income? These are the seven most common sources of income: Dividend income from stocks Earned wages Rent from real estate Royalties Capital gains from selling assets Profit from business Interest earned on savings