Are you looking for ways to make extra money next year? If so, passive income could be for you. But what is it? How do you generate passive income? We’ve got all the answers you need right here.
From 10 ideas to earn passive income to our top tips for achieving a great cash flow, keep reading for some handy tips and advice.
What Is Passive Income?
A passive income stream is a form of regular income that you receive that requires little to no work to maintain. The word passive means the funds from passive income streams are constantly coming in, even when you’re not working.
It’s quite different from an active income that comes from a business or job that takes time and effort to keep.
A good example of passive revenue is investing. You invest funds in company stock, and in return, you receive dividends and appreciation on your investment. Another example is real estate. You’ll buy a rental property, and then the rent will be your passive revenue.
We’ll look at some other passive income investments in more detail below.
10 Best Passive Income Ideas
1. Dividend Stocks
The first of our best passive income strategies is dividends. Company shareholders that have dividend-yielding stocks receive payments at regular times from that company.
The companies pay cash dividends from their profits quarterly, and you just need to be the stock owner. Dividends are then paid for each stock share, so the more you have, the more you’ll earn.
2. Affiliate Marketing
Affiliate programs are another passive income idea that doesn’t need much effort on your part. This type of marketing is where social media “influencers,” bloggers, or website owners promote and advertise a third-party company’s product by providing a link to it on their social media pages.
Affiliate programs work by promoting other companies’ products through email or social media marketing.
3. Blogging
Another great method of creating passive revenue is by starting a blog. Although it’ll require a bit of work at first, such as registering your domain name and organizing the hosting, it’s worth it in the long run.
4. Renting Property
Upfront investment property means real estate that’s purchased upfront to earn income through renting or future resale. Adding rental properties to your investments can be a great source of passive revenue.
For example, you can purchase rental properties and get your rental income from your tenants each month. Even better, your tenants will essentially pay your mortgage!
5. Stock Market Investment
If you like taking risks, then stock market investing could be an excellent way of earning passive revenue. But, if you only have under $1000 to spare, you can start slowly, reducing the risk.
If the stock market seems too scary, there are beginner courses you can take that teach you everything you need to know about investing. Even better, lots of these courses won’t cost you anything!
6. CD Ladder Investment
Creating a CD ladder involves purchasing CDs, certificates of deposits, from banks in specific increments that allows you to have a higher return on your investment.
Banks offer CDs, and because it’s a low-risk investment, they also give a low return. So this is the perfect option if you don’t like taking risks.
7. App Creation
Creating a new app could be a great way of making the investment of time count and reap the rewards in the long run.
Your app could be a fun game or one that helps your users perform tricky functions. Then, once your app goes public, people download it, and you earn money from it.
8. A High-Yield Savings Account
If you want your money to work for you without having to put too much thought into it, a great place to put it is in a high-yield account.
The difference is where the account is located and what type it is. Usually, these high-yield accounts are found in banks and have FDIC insurance.
9. Selling Stock Photos
Budding photographers rejoice! As long as you have a good camera and decent editing skills, taking great photos is perfectly achievable. If you’re already experienced in photography, why not turn this skill into a business idea of selling your photos?
10. Investing In A Business
Lastly, investing in a business and becoming a silent partner could be an excellent way to generate passive revenue. This does involve a significant risk but also the potential for great returns. An example of this is Uber and Lyft who were both searching for private investors.
Today, both companies are worth billions each. But, as an investor, you would only be able to benefit from it if the business goes public through an IPO or if they get acquired, making it extremely risky.
Our Top Tips For Making Passive Income
Trying to generate income without actually doing anything can seem like an impossible idea at first. Although passive income ideas require a bit of thought, it’s perfectly doable. To generate a steady stream of passive revenue, follow our top tips:
- Start small
- Pick just one idea at the beginning
- Research different ideas
- Keep your day job at first
- Be patient! Don’t expect results immediately.
FAQs
How can I make passive income?
Although it can be tempting to get excited and pick five different income ideas, it’s highly recommended that you choose just one to begin with. Pick an idea that will suit you best, create a plan and dedicate the time to it until you make a decent passive income.
How can a college student make passive income?
Living on a student budget can be tough at times, and it can be hard to fit in a full-time job to earn an extra income stream. Good passive revenue ideas for students include:
- Creating an app
- Blogging
- Affiliate marketing
These ideas don’t require much time, and they can provide a good income, making them perfect for student life.
