Do you fantasize about living on the beach or traveling the world without the need to punch a clock? Believe it or not, this dream is possible. And these 10 passive income ideas will show you the way!
Money may not be the key to happiness, but having more of it certainly doesn’t hurt. By implementing one or two of these passive income ideas, you can reduce your financial stress and gain the independence to do the things you want when you want.
So whether you’re looking for an extra $1,000 a month or to replace your current job and achieve financial independence, let’s explore the wonderful world of passive income.
What Is Passive Income?
The IRS defines passive income as income from either rental properties or businesses in which you do not materially participate.
For our purposes, we consider it any income that doesn’t require additional work for each sale. That is, you can do the work once and get paid over and over again for the same effort.
If you have to ship a package or service a customer each time you make a sale, it’s active income. If you can make it once and sell it two, three, four, or 100 times, it becomes passive income.
This type of income stream can go a long way towards supporting your goal of FIRE or helping you weather an unexpected job loss.
But remember, creating passive income is not a get-rich-quick scheme. It can require some initial effort to get started, and it can take time for your investment to compound. But if you get started today, you can enjoy the rewards for years and years to come.
Top 10 Passive Income Ideas for 2023
1. Dividend Stocks
When you invest in a company that pays dividends, you become a part owner of a cash-flowing business. It’s almost like you have thousands of employees working for you — without the headache of running daily operations!
And fortunately, you don’t have to be a stock-picking guru to find great investment ideas. Because if you are looking for the best of the best, you will find them among the Dividend Aristocrats.
To earn a spot on this exclusive list, a company needs to have paid and increased its dividend for 25 consecutive years. In addition, they must be part of the S&P 500 with a minimum market cap of at least $3 billion and an average daily trading volume of 5 million shares.
A few examples from this elite bunch include:
- Procter & Gamble (PG)
- 3M (MMM)
- Coca-Cola (KO)
- Johnson & Johnson (JNJ)
- Walmart (WMT)
- Aflac (AFL)
- Chevron (CVX)
- IBM (IBM)
The first four examples above also hold coveted positions in the Dividend Kings — companies that have paid and increased their annual dividends for a minimum of 50 years.
Now that’s consistency!
A dividend-paying ETF can be an excellent option for investors who don’t want to pick individual stocks. Besides offering competitive returns, they carry less risk than investing in an individual company.
Here are a few potential ETFs worth considering:
- SCHD
- VYM
2. Affiliate Marketing
One of the best passive income ideas for beginners is affiliate marketing. This is a partnership in which you promote products or services for another retailer in exchange for a commission or referral fee.
You don’t need to own the product or even handle shipping — all you do is drive traffic using your personal affiliate link and get paid when a purchase is made. And since your link is active 24/7, you can get paid even while you sleep!
Plus, with affiliate marketing, there are no overhead costs. You can set up shop for free on your blog, podcast, YouTube channel, or social media page and start promoting with minimal effort.
To get started, sign up for popular programs like Amazon Associates and the eBay Partner Network. These websites offer tens of thousands of products, so you can always find something that fits your niche.
Affiliate marketing is ideal for those with an established audience, like bloggers with existing traffic or influencers with 50,000+ followers. But if you aren’t quite there yet, don’t worry. That doesn’t mean you can’t earn a nice side income while you build up a following.
Before long, you can expect to make a few hundred dollars a month. And in time, as you gain experience, you can scale that to a few hundred dollars a day which may rival your current job.
And the top affiliate marketers? They can earn upwards of six figures a month. That’s right — per month!
3. Real Estate Investing
Investors have used real estate to generate passive income for hundreds of years. And it’s easy to see why.
Besides providing steady cash flow, a well-located and well-maintained property can also appreciate over time. Plus, real estate offers tax breaks you won’t find with other investments.
If you’re new to real estate investing, consider starting by renting a room in your house on Airbnb. Or, if you want to enjoy real estate’s benefits without the headaches of being a landlord, consider investing in crowdfunding sites or Real Estate Investment Trusts (REITs).
Crowdfunding sites like Crowdstreet and Fundrise allow you to start building passive income for as little as $10 per month. These platforms help investors access commercial real estate deals and participate with only a fraction of the capital usually required.
REITs, on the other hand, are funds that invest in cash-flowing real estate. They can be purchased on stock exchanges, and they typically pay pretty significant quarterly dividends. Through a REIT, you can diversify across many different types of real estate — including commercial buildings, hotels, and shopping malls — many of which are otherwise out of reach for the average investor.
4. Peer-To-Peer Lending
Peer-to-peer (P2P) Lending platforms such as Prosper and Lending Club connect individual lenders (like yourself) with borrowers.
Lenders earn passive income in the form of interest payments, while borrowers benefit from access to more capital than traditional lending institutions may offer. It’s a win-win for everyone involved — and one of the best passive income ideas if you have the money to spare.
This type of lending first became popular during the 2008 financial crisis when many borrowers couldn’t qualify for traditional bank loans due to tightening credit requirements. But in the coming years, it is poised to explode in popularity.
According to a report published by Acumen Research and Consulting, the P2P market is currently valued at around $82 billion and is expected to reach $800 billion by 2030.
You can get started with P2P Lending for as little as $25. Of course, borrower default is always a risk when lending money. However, some sites offer contingency or provision funds that payout in the event of a default.
Otherwise, because the loan minimums are so low, it is easy to diversify your risk across a large number of borrowers! That way, even if one or two were to default, your overall portfolio would still return a healthy profit.
5. Start A Blog
Are you looking for great passive income ideas with little money?
Start a blog!
Blogs are not limited to just one income stream. They have the potential to combine the best of several passive income ideas — affiliate links, advertising, and course sales. And with free online tools like Wix and Blogger, getting started is easier than ever.
First, pick a niche you’re passionate about. Then create your website using a free template. Usually, you can set up the barebones in just a couple of hours.
But this is where the real work begins. If you want to make money blogging, you’ll need to consistently create high-quality, compelling content.
In the beginning, this responsibility falls squarely on your shoulders. But as your blog grows, you can hire freelancers to help create listicles, how-to posts, and more. This will free you up to oversee strategy, backlinking, and marketing.
And don’t forget to capture emails. Offer some free value in the form of a newsletter, ebook, or course, and use it to encourage signups. Then, you can use your list to promote new posts, affiliate offers, and more.
Blogging is a slow grind. It’s probably the most time-intensive passive income idea on this list. However, you only have to build an audience once! After you establish yourself as a trusted source, you will be able to monetize your readers and followers for the rest of your career.
6. Write An eBook
Move over, Stephen King. Because you don’t have to be a famous author to write a successful eBook. In fact, some of the best-selling eBooks aren’t novels at all. Rather, they are how-to’s that help readers solve common problems.
If you’re not sure what to cover in your eBook, head over to Google Trends. This handy tool will show you what topics are becoming more popular and help you brainstorm ideas for your book. Or, you could consider writing a sequel or spin-off of a public domain work such as Winnie-the-Pooh, The Great Gatsby, or The Adventures of Sherlock Holmes.
Once you decide on your topic, you can either write it yourself or hire a freelancer to help you. Popular programs like Canva, Google Docs, and Adobe Express make it easy to draft, structure, and design your eBook.
And although this process is simple — don’t take it lightly!
To increase your probability of success, it’s essential that your eBook looks professional and is packed with value. An eye-catching cover will increase your conversion rate and your overall sales numbers. And genuinely engaging content will improve your reviews and increase the chance your readers recommend it to friends.
After you finish writing, you can easily upload your eBook to Amazon and Apple. Then, you can sit back and watch the passive income roll in!
7. Sell Stock Photos
Are you the designated photographer of your family? Do you have an eye for capturing the perfect candid shot?
If so, turn your hobby into a business by selling stock photos online. Popular sites like Shutterstock, Getty Images, and Vecteezy make it easy to get started, even if you’re new to the idea.
Most of these platforms will host your photography for visitors to buy. And every time your pictures sell, you will earn a cut of the income. But be aware that rates vary significantly from site to site, so always do your homework before signing up.
You’ll also want to pay close attention to the types of images you upload, as this can have a significant impact on your earnings. Stick with popular topics like travel, cityscapes, food, and DIY projects to maximize your potential passive income.
But with an estimated market of $4 billion and demand increasing by more than 5% yearly, there’s a market for nearly any type of photo. So go ahead and turn your next project, vacation, or meal into a money-making opportunity!
8. Rent Your Parking Space
Did you know you can turn your extra parking space into a passive income source?
People are often willing to pay up for a consistent parking spot when commuting to and from work, and others will pay for a convenient place to store their vehicle when they travel. And if you have the space, you can even provide long-term RV parking.
Many university districts, city centers, and airports lack adequate parking, making this one of the most accessible passive income ideas around.
You can advertise your space on Craigslist or Facebook Marketplace. Or you can use platforms like Parkify, JustPark, and SpotHero to connect with potential tenants.
With parking spots quickly becoming an endangered species in many metropolitan areas, renting out your space can be quite a lucrative source of extra income.
9. High-Yield Savings Accounts
Once shunned by investors for their pathetically low-interest rates, savings accounts are making a comeback. Specifically, high-yield savings accounts.
These accounts typically do not offer ATMs, in-person banking, or the ability to write checks. But they do provide interest rates that are 50x to 100x higher than traditional savings accounts.
Plus, high-yield savings accounts are typically backed by FDIC insurance (up to $250,000), so you don’t have to worry about losing a dime! This makes them a great way to build an emergency fund or save for retirement.
Another advantage of high-yield savings accounts is that they are relatively easy to manage. Many online banks require no minimum balance and some even provide budgeting tools to help you track your spending.
And unlike CDs, which impose penalties if you withdraw your funds early, high-yield accounts don’t have any restrictions. Many even offer a debit card so you can access your funds while on the go!
10. Create An Online Course
Do you like learning, teaching, and sharing ideas with others? Then consider creating an online course to turn your expertise into an ongoing income stream.
With the online course market exceeding $315 billion in 2021, there has never been a better time to share your knowledge with the world. Whether you want to create how-to videos or digital downloads, here is the best way to get started:
1. Pick the right topic. You don’t have to be an expert in this subject, but you should be passionate about it. Because before you produce your course, you will want to read, learn, and digest as much as you can on the topic.
2. Do your research. Check sites like Reddit and Quora to see what your potential customers are asking about your chosen subject. Look at any existing courses and see what gaps you might be able to fill in the market.
3. Determine the outcome. What can your students expect after taking the course? Will they have a new skill, be able to build something, or simply gain knowledge on the topic? Use this outcome to create a compelling marketing message.
4. Create your course content. All-in-one platforms like Teachable and Thinkific make creating and structuring your course easy. And when you’re ready to launch, they handle all the administrative functions so you can focus on growing your community of students.
5. Market your course. Use social media, email, and other channels to spread the word about your course. You can also reach out to influencers and ask them to review your course and provide feedback.
Best Beginner Passive Income Ideas
While all of these passive income ideas are excellent ways to make money, some are more suited to beginners than others.
If you are just starting and don’t have much capital to invest, these beginner passive income are the best place to start:
- Affiliate Marketing: No need to create a product or deal with administrative headaches.
- Rent Your Parking Space: Turn your parking space into cashflow without any additional investment.
- Start A Blog: Perfect if you have more time than money — start small and build your audience.
- Rent A Room On Airbnb: Test drive being a landlord without a long-term commitment.
Final Thoughts
Passive income provides a level of security that you will never experience with a traditional job. And building passive income streams has never been easier.
So stop trading your time for dollars. Take one of these passive income ideas and make it yours.
Be patient. Focus on learning and gaining experience. And don’t worry if you don’t find success immediately. In time, your knowledge, skills, and hard work will compound.
And once the income becomes truly passive, start the process over again with another opportunity. Before you know it, you will be able to exit the rat race and finally toss that annoying alarm clock.
Just imagine the freedom you will feel choosing how to spend your time, instead of being told what to do. That’s the power of passive income.
