Best Passive Income Ideas

What is passive income? In financial terms, it’s a one-time investment that continuously generate income even without requiring the investor to actively participate, monitor, or adjust their initial investment. Why build a passive income? Your income is your greatest wealth when it comes to wealth building. Even if you love your job, we know that you wouldn’t mind earning some extra cash without having to actually do any work. Few benefits of having passive income are to increase your wealth, allow you to retire much sooner, protect you from sudden loss of income, and provide additional source of income in case you outlive your retirement fund.

Passive income is a way to earn steady money with little to no daily effort. There is effort involve, but typically it’s done on the front-end. You’ll still need to put in the work, and some passive income ideas such as building a blog or an app would actually take some time to get up and running. However, if you’re willing to put in the initial work, they could eventually earn you money while you sleep, literally.

How much potential money can you actually make in passive income? It won’t’ make you super wealthy overnight though, so it’s not one of those get-rich-quick schemes. Yet it’s a steady and profitable passive income option that can build you some serious money over time. Most people with passive income earn anywhere from a few thousand dollars to hundreds of thousands of dollars, which depends on the option you go with.

What is passive income like? Here’s a few examples:

• A course on your area of expertise that you sell online

• Building a program you can sell over and over

• Writing a book or e-book

• Investing in real estate

• Renting out your car, and/or

• Building your photographer Instagram account

For the best passive income ideas, here’s eight (8) which I personally recommend:

1. Dividend Stocks

The first passive income option is dividend stocks investing. Dividend stocks are one of the simplest ways for investors to create passive income. As public companies generate profits, a portion of those earnings are passed off and funneled back to shareholders in the form of dividends. You as the investor can decide to either pocket the cash or reinvest the money in additional shares, which in turn build you more potential dividends in the future.

Dividend yields can vary from one company to another, and they can also fluctuate from year to year as well. If you’re unsure which dividend-paying stocks to choose from, you should stick to the ones that are reputable and that consistently pays dividend to shareholders where it increases annually. These dividends are typically companies in the S&P 500. Some examples of this companies are the following:

• AT&T (T)

• Exxon Mobil (XOM)

• Walgreens Boots Alliance (WBA)

• AbbVie (ABBV)

• IBM (IBM)

• 3M (MMM)

• Caterpillar (CAT)

2. Real Estate

One way to build passive income is to buy real estate and rent it out to tenants, provided that you’re debt-free and have some cash saved up. But before you buy a rental property, pay off your own home first and purchase your investment property with cash. It’s never recommended to go into debt just to buy rental property. Despite fluctuations over the recent years, real estate is still the preferred choice for investors looking to generate long-term returns. The idea is to acquire a property for a 20% down payment, then have the property rented out where the tenants will be covering the mortgage payments.

With real estate as your passive income, you can consider Airbnb as well. Airbnb allows people to travel all around the world and to stay in accommodations that are a lot less expensive compared to traditional hotels. Airbnbn rentals can be broken into three categories: private room, shared room, and entire home.

3. Peer-to-Peer Lending

Peer-to-peer lending also known as P2P lending is to lend money to individuals or a business. They then pay you back, plus interest. For example, someone needs to borrow $10k to consolidate their debt. They create an account with Lending Club, for example, and it depends on their credit history, income, etc. they are then given an interest rate on the loan. The investor (you) would also create an account with Lending Club and buys the debt. When the borrower makes monthly payments, the principal and interest are paid to you in your Lending Club investment account.

Although the P2P lending industry is just over a decade old as of this writing, it has grown by leaps and bounds because it’s considered as the act of directly lending money to a person or a business entity, where the lenders and the borrowers are connected via online platforms such as Prosper and Lending Club. Returns typically range from 7% to 12%, and there’s very little the investor must do after initially funding the loan.

P2P lending programs have fewer barriers to entry than other types of investments. For example, investors can fund loans with investment as small as $25. While Title III of the Jumpstart Our Business Startups (JOBS) Act allows both accredited and nonaccredited investors to invest through crowdfunding, just keep in mind each P2P platform has its own set of participation requirements.

4. Invest in the Markets, Passively

Investing in public stocks and bonds is the main way people build long term wealth and income through their retirement plans or brokerage accounts. The data is pretty good that the average person is likely to invest through ETFs and index funds that have low fees. For example, these are your Roth IRA, Index Universal Life, and/or Fixed Index Annuity, which are my favorite investment vehicles for retirement savings.

5. Start a Blog/YouTube Channel

If you have talent that appeals to a specific audience, you could create something like an educational blog or a YouTube tutorial video series that doesn’t require constant new material to generate online traffic. If your content is engaging, and it generates daily or consistent traffic, you could sell ad space on your blog or ad spots on your video channel. After putting the work on the front end, you can sit back and relax by enjoying the streams of passive income for every set of eyeballs that watches or reads your content. Amazing right?

If you’re looking for an extremely cheap, yet highly scalable way to create a passive income for yourself, you might want to take a moment and consider starting a blog. If you can consistently use your blog and create a lot of value for a lot of people, you can generate an extraordinary amount of passive income doing it. As you post to your blogs, your site will start bringing in traffic whether you put in any additional time or not. A blog is the most cost-effective method to create pure passive income stream because hour after hour, day after day, your blogs are out there doing work for you, even while you sleep.

6. Teach What You Know

Online learning is an exploding business opportunity because you can create a course on just about anything. From how to tie a fishing knot to cat grooming, it’s all there. One simple way is to start your online course by producing and sharing them in Teachable.com. Teachable has over three million students, and it’s a great way to get your content in from of others.

Here are some ideas what to include in your online course:

• video lessons

• checklists for completing steps you recommend in your video lessons

• small e-books to supplement the lessons

• audio files for people listening while traveling

• informative interviews with like-minded experts

• and more just to name a few!

With online courses sites like Udemy, you can use your expertise to create a course on their platform. Once it’s published, it doesn’t require any additional maintenance from you, and you’ll get paid when people take your classes. It’s a low-front end work way of making some extra income while helping people at the same time. That’s a win-win situation in my book.

7. Sell Digital Products

If you’ve discovered how to create content that produces enough traffic to host ads, think about how you could turn that content into a product. It could be anything from a simple e-book or meal-prep guide. You could also sell something creative like a good photographer by selling stock photos on sites like Shutterstock, Adobe Stocks, Alamy, Foap, etc. You can also create and sell preset photo editing filters for people to download. If you are creative with music production, you could license your tunes and sell them to podcasters or YouTubers to use for their content.

For the creative writers, self-publishing options have been accessible more than ever before, including Kindle Publish Direct (KPD) which is free. If you have some marketing skills and good at promoting your books, then go for it. You could still see royalties trickle in years down the road after writing your original book. Now, that’s a real passive income for you.

8. Join Independent Marketing Organizations or IMOs

What is Independent Marketing Organization or IMO? It’s a kind of network marketing business model that depends on a person-to-person sales by independent representatives or agents (if licensure is required) who often work from home. An IMO marketing business may require you to build a network of business partners or salespeople to assist with lead generation and closing sales. All this can be done either full-time or part-time. IMOs often confused with a pyramid schemes; however, IMOs are one of the most regulated industries in the US, and it’s definitely not illegal such as a pyramid scheme. While network and multi-level marketing programs have been accused of being pyramid schemes, there are some important differences. While those who can recruit more members into the program are often able to enjoy greater residual commissions, for instance comparing with their original recruiter. IMOs are legitimate and legal business structure that offers real products and services sold to customers.

Additionally, not all IMOs are created equal. There are some special considerations before joining any IMO, and you need to do your own due diligence before a deciding. Things to consider are the following:

• Was it pitched as a chance to make money by selling products or by recruiting others?

• What is the track record of the company's founders?

• Are you personally enthusiastic about the products?

• Are people you know enthusiastic about the products?

• Is the product being promoted effectively?

• Do you foresee a relatively fast pathway to profits or a long-time treading water?

What financial benefits can you potentially make when joining IMOs? Some people in the insurance industry enjoy great success at network marketing because of their ability to recruit more members to the network and just by simply producing. In fact, the insurance industry is one of the careers that produce millionaires. There are two main revenue sources from IMOs: selling the products yourself, and with commissions from sale made by your team downline.

How is IMO passive income? It becomes passive income for you when you’re able to recruit more team members in your downline. The more people there are downline from you, the more money you will accrue and can make without directly producing yourself.

Final Thoughts

The list of passive income ideas could go on and on. Yet as you search for the best fit for you, you’ll want to ask yourself these questions:

• How much time will this actually take me after the initial setup?

• Do other people make money doing this?

• Does this idea show a positive long-term track record?

• Which passive income strategy would I be best at?

• Has this idea ever come back to bite someone who tried it?

Make sure to not fall for any passive income ideas that promise a quick return or require huge amounts of money up front. I recommend doing your due diligence when considering jumping into any passive income idea. You want the passive income to be steady, profitable, and legit. Passive income can work for you whether you have million of dollars to invest and no time to spare, have $0, have free time, etc. You just need that spark of ingenuity. Whether you choose to invest, buy a business, get paid for your daily routine, you can prosper from passive income. Even though they might take some funding and fortitude to get started, the moneymakers on this list will continue to earn you income long after you’ve put in the initial work.

I’ll leave you with a Simon Sinek’s quote, “Dream big. Start small. But most of all, start.”