Almost everyone likes the idea of making more money, but not everyone has the time to work additional hours at a traditional job. That’s why the idea of passive income has grown in popularity. It’s a strategy that allows you to create one or more additional revenue streams without taking up a significant amount of time in your workweek.
What is passive income?
Passive income is money made with little effort. It is sometimes marketed as a way to “make money in your sleep.” However, most – if not all – passive income activities require at least some work or resources at the start of the venture. And all sources of passive income require you to track or manage your money-making project to ensure it continues to do well over time.
Compared to traditional money-making activities like running a business or working a job passive income is more hands-off and can be a good option for those with more money and resources than time.
Top passive income ideas
Below you will find over 20 ideas to help you get started earning passive income. Choose the one that fits your budget, timeline, and values.
- Become a blogger
Do you have a passion for cooking, know a lot about gaming, or have a unique opinion on politics? Blogging offers a flexible platform for sharing this information and can also make you money. Bloggers who take the time to build an audience and get significant traffic can earn money in the following ways:- Sponsored blog posts.
- Affiliate income.
- Ad networks.
- Other paid partnerships.
Blogging gives you a platform for sharing more than your ideas. If you sell products or services, you can promote them on your blog and give your other endeavors more exposure (and a better chance of success in the long run).
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Open a high-yield savings account
One option for those who want a guaranteed return with little risk or effort is a high-yield savings account. This special type of account is offered by most major banking institutions. Depending on the market rates, money deposited into an account can earn many times what you earn with a standard savings account. Be sure to look at the fine print, and pay attention to the minimum deposit required, how much you have to keep into the account, and if you can make withdrawals without incurring fees. - Rent out your home
Do you have an extra room, a basement, or a mother-in-law suite? If you don’t mind sharing this space with a stranger, you can bring in extra cash. The extra money from the rental can be used for investing or just paying your property taxes.
This same idea can be used for renting any space you own, including an unused office, pool house, or garage. For example, people will happily pay to store a boat over the winter if you have a safe space to store a boat that you’re not using.
Whether you choose a long-term or short-term rental agreement depends on your financial goals, lifestyle, and the regulations where you live. Be sure to check local laws to see if you can rent without a special permit, and confirm what’s required as a landlord.
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Rent out stuff
Space isn’t the only thing you can rent these days. Whether it’s a stand mixer or a weed trimmer, everyday objects have value in the rental space. Do some research to see what items you can rent in your area, and consider any liability for sharing your items with others. With a sound contract and upfront payment, you could have a passive income business that helps others get yardwork or baking done while you enjoy some extra cash. - Open a print-on-demand store
RedBubble, Printify, and Printful are three companies (of many) that will turn your original idea into a t-shirt, mug, or wall hanging. When customers order from you or their sites directly, the custom product gets shipped directly to the customer, and you receive your share of the profit. This passive income idea requires you to build ideas or designs in the beginning, in addition to setting up a store or page for orders. If successful, you can continue to build your inventory of “ideas” that get turned into products for sale.
Some print-on-demand platforms connect directly with popular e-commerce marketplaces, like Etsy, to help you market to more people.
- Write an e-book
Writing a book is not easy, and some people take years to write their best-selling novel. Even then, there’s no guarantee that the book will make you much money. That’s why, if you just want to share an idea with others and have no time or patience for traditional publishing, moving to a self-publishing model may be best. You can create your book on your terms, pick your own covers, and decide how to price it. You can also control the marketing and promotional sales.
Selling an e-book on popular platforms, like Amazon Kindle or KDP, comes with a steep learning curve. Once you’ve successfully set up your first book for sale, however, additional titles are significantly easier. Write once and sell for years.
- Advertise on your car
You might have seen vehicles driving around with large advertising banners or magnets on them. You might have assumed that the person driving worked for that company. What you may not know is that companies pay people who don’t work for the company to place ads on their cars, and in this way the vehicles are used as large, moving billboards.
To get started with this passive income idea, you’ll need to get in touch with an advertising agency that specializes in this type of work. You’ll have to drive your car a set number of miles, or in certain areas, and be willing to give up your car’s aesthetics to whatever wrap the advertising agency requires for the project. Legitimate companies won’t require you to pay anything upfront so this is a very low-cost industry to enter.
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Set up an annuity
When you purchase an annuity, you make payments to an insurance company; then the insurance company invests your money, and pays you a regular sum of income. Annuities are a very passive source of income because once you invest, you don’t have to do anything else. Be sure to read the fine print of the contract because many annuities come with expensive fees and commissions, which can affect how much you earn overall. Also, money in an annuity is difficult to take out once invested. Many annuities are limited to those near (or at) retirement age, so this isn’t a good strategy for most younger investors. - Get into peer-to-peer lending
This type of investing (also called P2P lending) isn’t available in every state. For those who do have access to it, the rewards can be significant. With P2P lending, you get access to a network of consumers or business owners looking for funding in the form of a loan. You act as their lender, and they repay you until their loan is paid off (sometimes at much higher interest rates than what you could get through traditional investing options).
There is risk involved: people can and do default on their loans. You must also pay the lending platform a portion of the transaction to manage the payment process. Some platforms require you to be an accredited investor before you participate.
- Flip domains
The URL for your favorite website may be worth thousands of dollars, but it started as a standard domain name purchased for $10-20. If you have a knack for picking out clever domain names and buying them cheaply, you could resell them to brands and businesses that want them later.
This passive income strategy (called domaining) requires some cash to get started. You could be paying for those domains for years and years. And not all domains will resell for much, so this is a business of picking winners and losers … and being very patient.
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Own vending machines
From bubble gum to phone chargers, you can buy almost anything from a vending machine. Have you considered who owns these machines and what kind of money can be made in this industry? While vending has high costs in the beginning, once you have an established business it’s not a lot of work to maintain. Visiting each machine and restocking takes time, but some successful vendors hire people to visit machines on a route and still earn a tidy profit. -
Flip blogs
Some blogs have sat dormant for months – or even years – but they still get a lot of traffic. This is because they rank high on Google searches. To flip blogs, you must have enough cash to buy the blogs and invest in upgrades – possibly even new content or graphics. But once you’ve upgraded them, you can sell them to the highest bidder. Remember, remodeling blogs requires considerable time and effort. Those with search engine optimization (SEO) and online marketing experience do best in this industry. -
Sell photography
If you have a knack for taking beautiful photos, you could be making money with them. Selling the usage rights for your photos through a stock photography site can get you a few dollars each time your photos are used by bloggers, brands, and designers. The more photos you offer, the more you can make over time, although the marketplace can be highly competitive. -
Sell digital assets
Other options for selling your creative work are digital assets, like fonts, templates, and social media templates. Graphic designers can buy the rights to your assets for use in their creations. If you don’t want to sell to others to adapt and resell, you can sell complete worksheets, planners, or digital tools for consumers to use right away. This type of digital product is called a "printable," and people sell their products on Amazon, Etsy, and their blogs to make money from every download sold. - Try affiliate marketing
What if you want to make money selling things that aren’t yours? You may be a great fit for affiliate marketing. In this arrangement, you promote a product on your blog, social media feed, or other channels using a unique URL code. When someone buys the items, the seller sees that you referred the customer and rewards you with a commission.
Earnings range from 1% to 50% (or more) for each sale, and if you have a large network of followers or friends, the possibilities are limitless. Be sure to read up on the terms of each partnership; affiliate marketers must follow the promotion rules and fully disclose that they receive payment for each sale.
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Invest in real estate investment trusts (REITs)
If you love the idea of owning property but hate the idea of managing it, a real estate investment trust (REIT) may be for you. In this business concept, you invest in real estate with other investors through a trust. Everyone who pools their money is eligible for payouts on the profit from this income-generating property, such as apartments, cell towers, or commercial real estate. This passive income opportunity requires quite a bit of money up-front, but the trust does all the hard work. It’s also much more liquid than owning real estate outright. -
Invest in a bond ladder
Another type of investment is a bond. When you purchase several bonds with staggered maturity dates and reinvest the money from each mature bond into a new bond, you are creating a bond ladder. This strategy reduces the risk of reinvesting in bonds with a low interest rate and helps you collect interest payments over time. Aside from taking the money from mature bonds to buy new ones, it’s very passive. Remember, corporate bonds come with some risk, so choose your bond product wisely and read our Guide to Buying Bonds. -
Buy a local business
If you’ve wanted to be a business owner, but you don’t want to run the business, investing in an existing one may be a good choice. Not all businesses need much hands-on management. If you buy a car wash or laundromat, for example, it’s possible to hire someone to do the day-to-day duties while you take care of the financial and legal aspects. The more hands-off you are, however, the less profit you’ll earn. Every person who works under you cuts into your revenue, making it less likely you’ll find a one hundred percent passive business investment. - Sell a course
Do you know how to do something well? If you have experience in a marketable skill, you could get paid to teach others what you know. Recording or writing a course takes time; marketing it to others also takes time. (Don’t forget your initial advertising budget.)
However, once you have some students in your course, you can grow your reach over time and continue to collect course fees without making any additional course content. Plan on regularly adding updated content to get maximum revenue.
- Take advantage of cashback offers
This tip only applies if you are already using credit cards for day-to-day expenses and shouldn’t be taken as an excuse to rack up a credit card bill. If you already use cards to buy groceries, travel, or securely pay your utility bills, you can maximize cash-back offers.
Look at each card you own to see which pays the most in each category. Some have rewards that change each quarter or month. If you can earn 5% on fuel you buy anyway, go for it! While not a life-changing amount of money, this is a small passive income strategy that can add up over time.
- Get paid to post on social media
Being a social media influencer is hard work. It’s not passive because you need to make videos, edit, and share widely. For many, it’s a full-time job. However, if you have a lot of friends (or a very big family), and they engage with your content, you can make some extra cash by sharing brand messages, hashtags, or links to businesses. Pay ranges from $25 to $2,5000 or more, depending on how influential you are. If you’re already going to post about your family vacation, adding another staged family photo to the mix might be worth it.
How to minimize passive income taxes
Money earned through your passive income projects will be subject to taxes, just like other earned income. If you plan ahead, however, you can avoid paying more than you should. Strategies for reducing the taxes you owe include contributions to an IRA (or other retirement plan) and holding investments for more than a year before selling them in order to reduce capital gains taxes. However, it’s recommended that you consult with a tax professional well-versed in passive income strategies before making any decisions.
Is it truly passive?
Each of these passive income ideas can generate revenue without the 40 (or more) hours of work a standard job requires, but none of these options are a guaranteed source of income. All come with some element of risk, and results will vary from person to person.
To find out if a passive income idea is suited to your personality, risk profile, and abilities, do your research: read blogs, listen to podcasts, and ask questions of people doing these jobs. And be aware that some of those educating others make most of their passive income with their courses teaching others how to make passive income.
