20 Best Passive Income Ideas

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Best passive income ideas

There are two basic ways to make money. The first is the traditional way: getting out of bed in the morning and working for it.

But the second way is a lot more fun because it means you get to earn money while you're sleeping, or reading a book, or in the middle of a lake on your kayak, or anywhere. Once you've gotten them set up, the best passive income ideas require little to no active effort from you.

Most of these passive income ideas require a bit of startup capital, so your first step will be building up some savings. After that, get ready for your money to start making you money! How to create passive income with no money is a bit trickier and narrows your options, but there are still things you can do.

Without further ado, let's dive into 20 of the best passive income ideas!

1. Investing

Investing is one of the most common and accessible methods of generating passive income. Over the long term, the stock market has consistently generated steady returns, even if it has ups and downs in the short term.

There are a couple of ways to earn money from stocks. You could buy high-dividend stocks for regular cash payouts based on company earnings. Or, hold onto ordinary low-dividend stocks and let them grow in value until you're ready to sell at a profit. It's also possible to buy shares of REITs (real estate investment trusts) and earn a share of income from the real estate projects they hold. You can get started investing with as little as $100!

2. Crowdfunding real estate

As mentioned above, REITs are a simple way to earn a share of income from real estate, but with those, you don't get to choose specific properties to invest in. If that sounds interesting to you, the next level up is contributing to crowdfunded real estate. Through programs like Fundrise and RealtyMogul, you're able to buy a stake in specific real estate projects from the comfort of your couch and earn a share of the income from them too. Most platforms require a minimum investment of at least $1,000, and sometimes more.

3. Owning managed rental properties

The top tier of the real estate methods—owning your own! But if you're not up for the job of screening tenants and being a landlord, you can turn this into a passive income strategy by hiring property managers. Of course, this costs a fee, but it takes a lot of work off your hands. Owning rental properties is not without risk, though. For instance, the property could stay vacant for too long or repairs might cost you a lot of money. Even so, with caution and due diligence, owning real estate can be very lucrative. Learn more about how to get started with real estate.

4. Buying bonds and/or CDs

Bonds and CDs (certificates of deposit) are two very low-risk ways to get your money making money. The tradeoff for this safety is usually fairly low returns and having your money committed for a certain amount of time. For instance, checking current CD rates shows that you can earn about 2% for a one-year CD. There is usually a penalty if you need to withdraw early, so make sure you don't need the cash soon.

With bonds, how much they pay mostly depends on how stable the bond issuer is. U.S. savings bonds are guaranteed by the government and are very safe. Corporate bonds depend on a variety of factors to determine their risk factor and interest rate. Generally, you can expect to see anywhere from 1-4% as a bond's annual interest rate.

5. Publishing ebooks

When it comes to how to create passive income with no money, you'll have to invest effort upfront instead. Passive income ideas like this and the next few only become passive over time.

Self-publishing books on Kindle is one popular way to monetize fiction or nonfiction writing. Actually writing the book will require the most time and effort of the process, of course. You'll probably also want to research some marketing strategies to get your title out there. After that, you get to sit back and make sales! Even if you only charge a couple dollars, it can add up as people continue buying copies for years into the future.

6. Building a niche affiliate website

The upfront work of this method includes finding a niche to write about, creating an attractive website, researching keywords that will drive traffic to you, and joining affiliate programs. Once it's set up, you'll earn ongoing income from any affiliate sales your content generates. You might want to make occasional updates to keep the site active and update keywords. When it comes to websites like these, think small and specialized. Review websites for a specific type of product can be successful and easy to monetize.

7. Coding apps/software to sell

If you already have tech skills, think of a program that would improve people's lives or be fun to use. Even simple apps can be successful. For instance, look at the story of Flappy Bird: an extremely simple yet addictive game that went viral and at one point was earning its creator $50,000 a day from ad revenue. This story is an exception rather than a rule, but it demonstrates that you don't have to build the fanciest, most complicated apps to earn a profit. Once your app is available for sale, there's little ongoing work besides making any necessary updates.

8. Selling stock photos

This isn't a passive income idea that will usually make you rich, but it is relatively easy. Once you've done the work of taking photos and listing them on a stock photography site like Shutterstock, your photos can bring you a little cash on the side for years to come. These days, most smartphone cameras are capable of producing high-quality images, so you don't necessarily even need to upgrade your equipment (unless you're already a hobbyist photographer and have a DSLR on hand!).

Think about the types of photos companies might want to use for websites, articles, etc. The subject matter might not always be the most exciting, but getting paid is exciting, right?

9. Owning a vending machine or ATM

This is one of the more unusual passive income ideas that not as many people realize is possible. You find vending machines and ATMs everywhere, but might not stop to consider who owns them!

When you buy or rent an ATM, you can place it in a location you own or negotiate to share profits with someone who has property in a more lucrative location. You make profit from ATM fees charged each time someone uses the machine. You're responsible for keeping the machine stocked with cash, but you can turn this into a passive income source by outsourcing this work to a trusted third party.

Vending machines are similar. You'll want to place it somewhere with a decent amount of foot traffic, and you can outsource the restocking of snacks or drinks inside the machine. Inventory costs can be very low when you're buying in bulk, so it's a chance for a decent profit margin.

10. Flipping domain names

Domain names are like the real estate of the internet: everyone wants a good one, but there's a limited supply. Most people want a .com domain that's memorable and relatively short so it's easy for people to type. If you're a creative type with a little business acumen, a good passive income hustle could be buying domain names you think could be profitable and in-demand and listing them for sale. You can often do this relatively cheaply, but it's not without risk since you could find yourself paying for a domain name that just won't sell.

11. Subleasing to roommates

If you currently own a house or apartment (or are in the market for one), renting to roommates can drastically increase your passive income. For the cost of sharing your space, you'll add hundreds of dollars (potentially $1000+ depending location) to your monthly income. This is a form of "house hacking," which is essentially canceling out your mortgage payments with rental income.

If you don't want a full-time roommate and live in a popular area, you can list a room on Airbnb open to shorter-term travelers; you'll just need to do some cleaning between stays.

12. Renting out your car or parking space

When you're not using your car, why not let it make money for you? You can offer your vehicle for short-term rentals to travelers on a service like Turo. Or, you can help someone out with their own side hustle journey by making your car available on HyreCar, where it can be connected with drivers for services like Uber, Lyft, DoorDash, and Instacart. Insurance is built into these services, making it less risky to have a stranger drive off with your car!

And if you live in a high-traffic area, like a city or beach town, you can even rent out your driveway or dedicated curb parking using services like these. It's a great idea if you have a two-car driveway, a guest parking spot you rarely use, or you have a space but not a car!

13. Installing money-saving apps

There are a lot of apps available today where you can earn cash back, find coupons, etc. Most require some ongoing effort, so they're not passive. However, Dosh is an example of a totally passive cash-back app. Just link a card in the app, and if you spend money at an eligible store or restaurant, you'll get money back automatically. Similarly, Paribus will work behind the scenes to scan your email inbox for online shopping receipts and issue partial refunds if the price drops shortly after your purchase.

14. Earning credit card rewards

Who doesn't want to earn money just from doing their normal spending? A lot of credit cards offer sign-up bonuses and a certain percentage of cash back for various purchase categories. This is a great passive way to earn extra money or save up credit card points to use toward travel.

The one caution of this passive income method is that you have to be careful and disciplined with your spending. Treat it like a debit card and don't spend more than you have in your bank account. This way, you'll be able to pay your balance in full each month and avoid getting into high-interest credit card debt.

15. Renting out your tools

When it comes to renting, you can look beyond your home and your driveway, and into your shed! Offering community rentals of some bigger-ticket items like lawnmowers, power tools, etc., can be a great idea on multiple levels. It allows everyone in your neighborhood to get things done efficiently, without each shelling out thousands of dollars for individual sets of equipment that only get used once in a while. And if you happen to be the owner of some of these things, you can reduce your cost burden just by sharing equipment for a fee when you're not using it.

You can try to organize something like this on a local level (as long as you trust your neighbors!), or try out a peer-to-peer rental app. Beyond tools, you could list things like camping equipment, kayaks, furniture in college towns, etc. Just make sure to consider any legal implications if you rent something that could lead to injury.

16. Housesitting

This is another semi-passive income idea since housesitting isn't all just literally sitting around. Depending on the arrangement, you might be living at the property while the owner is away, or it might just require you stopping by to get mail, water plants, feed a cat, etc.

The beauty of this is that if you have work you could get done online, you can do it at the same time while you housesit—essentially making two income sources at once! You can also housesit as a way to travel for free. Making a profile and getting verified on a website like TrustedHousesitters can help you start finding gigs around the world, especially if you have some references.

17. Get cash back for online shopping

If you tend to do a lot of your shopping online, you can save a ton of money with a single click, thanks to online cash-back portals. Rakuten, formerly called Ebates, is the big one in this space. Just install their cash-back button on your browser, and you'll be notified when you're on websites where cash back is available. Thousands of retailers participate in Rakuten's program, from clothing stores like Macy's to travel booking sites like Priceline to electronics retailers like Microsoft.

18. Lend money to peers

Just like you can get a loan for a car or mortgage and pay interest on it, you can be the lender who charges interest. If you have some liquid funds that you're able to part with for a while, this is another way your money can make money. There are a variety of P2P (peer-to-peer) lending websites where this can be done with contracts and personal verification methods to help make sure that borrowers and lenders are legitimate. However, there's still a risk that a borrower can default on a loan, so don't put all your eggs in one basket here.

It's also not usually a good idea to do this with your personal friends and family unless you're prepared to consider it a gift. Plenty of relationships have been ruined over borrowed money.

19. Keep your savings in a high-interest account

High-yield savings accounts are a very secure place to keep your money. However, the drawback is that you usually won't earn significant amounts of passive interest income. Sometimes you can get up to 5-6% on limited amounts at credit unions or other special accounts like Netspend, as outlined here. Otherwise, you can usually expect to see 1-2% on regular online savings accounts like Chime or Credit Karma Savings.

These rates are partially determined by the Federal Reserve's target interest rate, so they can go up and down. In fact, as I write this, most interest rates have been cut to beneath 1% as a pandemic response to stimulate spending. Only time will tell how these rates change in the future.

20. Buy a blog

Instead of starting a blog from scratch, you may be able to buy one that's already earning income. Then, you can turn it into passive income by outsourcing the labor to writers and digital assistants. Some active management and communication might be necessary, especially as you try to scale. However, if you focus on putting out evergreen content with monetized affiliate links, this can turn into a very lucrative passive income idea.

It can take a couple years of hustling to start bringing in a significant amount of passive income each month. If the best passive income ideas were easy, everyone would do them! But with enough determination and creativity, you can set your future self up for a life of kicking back while the money rolls in.

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