Passive Income Ideas That Earn Income While You Sleep So You Can Travel More & Live the Life of Your Dreams!
Are you looking for passive income ideas? If you’ve ever had a job in an office working away at the 9 to 5 grind, you might have daydreamed about a lifestyle sipping cocktails on the beach while steady checks come rolling in. You probably couldn’t wait until your weekends rolled around or your 2-week vacation so you could escape for awhile and have some time to relax.
What if you could create several streams of income that replaced your current salary, allowed you to travel more, and gave you the freedom to enjoy life on your own terms? Creating this type of income is possible with these passive income ideas!
Several years ago, I read the book “4 Hour Work Week” by Tim Ferris and vowed to create that type of passive income lifestyle for myself. The book talks about ways to set up businesses and income streams that run on autopilot and afford you more flexibility and freedom in your daily life. The book really shatters the average 9 to 5 working mentality and shows you what’s possible.
Best Passive Income Ideas: What is Passive Income?
Some people are confused by the idea of passive income. They’re used to only earning regular paychecks from a regular 40-hour per week job. It’s easy to become used to making money the traditional way; however, passive income is something anyone can create.
Active income is the type of money you make from a regular 9 to 5 job. You clock into work and get paid for your time served, either on an hourly or a salary basis. This is the type of income more people have.
Passive income is money that you may work for upfront and then get paid on that work down the road on a regular basis. For example, you might put the time in to purchase and renovate a rental property. After you find a renter to lease your property, you make passive income in the form of monthly rental checks. There are hundreds of ways that you can start building this type of passive income stream.
Why Passive Income?
Do you plan on working until you’re 65+ years old? What if you could create several passive income streams and retire early? How would it feel to build passive income that allows you to pad your retirement or savings account?
Passive income is something that everyone should strive to build. If you create passive income, you can have the freedom to do more of what you want in life. Take that 3-week vacation to Italy in the summer. Spend the holidays with family and don’t worry about rushing back to work. Build a legacy that allows you to pass assets down from generation to generation. This is the reason you should create passive income!
How Much Can You Earn?
The amount you earn with passive income varies depends greatly on the type of asset you set-up and how long you allow it to appreciate. For example, if you decide to create a blog as a form of passive income, you might not make much money at first. However, as you continue to grow your blog, you can make thousands of dollars over the following years. Several bloggers make anywhere from $1000 per month up to $10,000+ per month in passive income.
On the lower side of the spectrum, I recently switched to a high-yield savings account and made $18 in my first month. Of course, this isn’t much money; however, that’s $18 I didn’t have to work for!
Best Passive Income Ideas
If you’re looking to start creating passive income, I’ve put together some of the best passive income ideas below. Several of these ideas I’ve tried myself and others I’ve found online after doing extensive research. Start putting a few of these ideas into practice and watch the passive income start coming in!
Passive Income Ideas: #1 Invest in REITs
Did you know that you can invest in real estate with as little as $500? Traditionally, if you wanted to invest in real estate, you needed to purchase a property with a down payment and have excellent credit. Now, the door has opened to anyone who wants to start investing in real estate and receive the ongoing benefits of passive income.
What is an REIT? The acronym standards for “Real Estate Investment Trust” and is similar to a mutual fund for stocks. An REIT is a company that owns incoming-producing real estate and could specialize in either commercial or residential properties. When you invest in an REIT, you are able to receive benefits in the form of quarterly dividends and appreciation of the properties.
Personally, I invest with Fundrise and started my account with $1000. They offer an easy-to-use platform where I can log-in and see what’s going on with the portfolio. On a regular basis, I get updates on how my account is growing and what properties the fund is investing in. Fundrise has a strong track record of above average returns on investment and charges a very minimal fee to manage your account.
Passive Income Ideas: #2 Invest with Robo-Advisors
Have you ever wanted to invest in the stock market but have no idea where to put your money? You’re not alone! Introducing: robo-advisor, a smart platform that automatically invests for you based on your preferences.
Most robo-advisors ask you a series of questions to understand your risk appetite. Then, they allocate your money across several investment products, including stocks, bonds, futures, commodities, and funds. They make it easy for you to invest in funds without having to spend hours researching which stocks are best to buy.
Personally, I invest with Betterment which is a top robo-advisor platform. When I joined, they asked me several upfront questions so that they could gauge how risky I want to get with my investments. Then, I funded my account with $1000 and set-up auto investments to come out of my bank account on a monthly basis. I just log-in periodically to see how the portfolio is performing and growing.
Passive Income Ideas: #3 Open a High-Yield Savings Account
The average interest that most savings account yield across the United States is around a measly 0.01%. It would take forever to earn any real money from your neighborhood bank’s savings rate. Thankfully, many banks have introduced high yield savings accounts that offer up to approximately 2.0%, which sounds a whole lot better! Just switch your current account over to high yield savings, and you can instantly start earning more passive income.
How can these banks offer high yield savings? Many of the banks offering a high yield savings account to their customers are online banks without physical branches. Because they’re able to cut out those expenses, they can offer a more attractive interest rate to their customers.
My favorite online savings account that offers around 2% annual interest is Betterment (same as my robo-advisor). My old account was earning basically nothing. Once I moved my savings account balance over to Betterment, I immediately started earning more. In fact, I made more interest with Betterment in just a few months than I made with my old bank over several years.
4 Peer to Peer Lending
Did you know that you can loan out funds to people as a peer-to-peer investor through platforms like Lending Club? You decide how much you want to loan out, and Lending Club matches you up with interested borrowers. Most borrowers use peer loans to consolidate their own credit card or student loans, improve their homes, or finance major purchases, like a car.
But is peer to peer lending safe? It can be as safe as you like it to be. It’s recommended to start out small, maybe loaning out $1000-$2000 to see how it works. Then, if the pay-off seems worth it, you can begin lending more. According to Lending Club, the average return on a peer loan is 5% to 7%, much higher than putting your money in a savings account (but with higher risk).
5 Invest in Bonds
Investing in bonds has been a staple of the typical American’s investing portfolio for decades. According to Investopedia, a bond is:
“…a fixed income instrument that represents a loan made by an investor to a borrower (typically corporate or governmental). A bond could be thought of as an I.O.U. between the lender and borrower that includes the details of the loan and its payments.”
Bonds are known as a safe, stable investment that provides a fixed return on your money. Worthy Bonds is an online investment platform that invests its members’ funds into a combination of investments and asset-backed small business loans. Investors put in their money, allow it to appreciate, and Worthy Bonds offers back a fixed 5% interest rate. It’s a sure-fire way to safely generate passive income.
6 Invest in CDs
Certificates of Deposit (CD) are also a safe investing method that have been used for decades. They’re known as a safe way to earn interest on your money with little to no risk. The benefit of CDs is that they are insured by the FDIC up to a $250,000 limit, so you can rest assured that your money is safe while growing and earning passive income.
Most CDs offer around a 1% interest rate, so they’re not going to grow your money quickly. CDs can be used as part of an investing strategy to generate extra income safety, but slowly. For example, you might be saving up for a down payment on your home and can’t risk any of the funds you currently have. You could put that money into a CD for a few years and use that interest toward your new home.
7 Purchase Rental Property
If you’re in a position where you can buy a piece of property, then real estate is one of the best ways to generate passive income. There are a few ways that you can make money through real estate. The first is to buy a piece of property that is below the average selling price and then re-sell it at a higher price for profit (aka: property flipping). Sometimes you will need to put money into improving the property first.
You also make money from real estate when you purchase a piece of property and let it appreciate over time. For example, you might buy a house for $100K today and sell it for $130K five years from now because property values increase.
Finally, you can generate income from real estate by buying property and then renting it out. At first, the rental income you make may only cover the price of your loan payment and annual taxes. However, once you pay the property off, the rental income you make will be pure profit. Collect several properties over time, and you could generate significant passive income that even lets you retire early.
If you’ve ever read the book Rich Dad, Poor Dad, then you’re familiar with this passive income strategy. The author talks about how investing in property changed his life and entire outlook on how money works. Buying assets (for example, real estate) rather than liabilities (for example, an automobile or a boat), lets you build a portfolio that creates passive income. I highly recommend giving it a read!
8 Rent Out a Spare Room on Airbnb
Do you have a spare room in your house that goes unused? Thanks to Airbnb, you could turn that room into profit by renting it out on the platform. Airbnb makes renting simple with an easy-to-use platform that matches potential guests with hosts.
According to Airbnb, hosts can earn approximately $572 a month just by renting a room with a 2-guest occupancy. If you have an entire house or condo that you can rent out, the average host earns around $1500 per month. Under the right scenario, using Airbnb to rent your room or house could be the perfect opportunity to generate some great passive income.
Interested in becoming an Airbnb host? You can find out more about the opportunity here.
9 Rent Out Equipment on Parachut
If you have some quality camera gear sitting around your house, you can now rent it out through Parachut.
Wonder how it works? First, see if your gear qualifies for Parachut’s program. If it qualifies, Parachut will send you a box to fill and send back for professional cleaning and listing on their website.
Once your gear gets rented to Parachut’s members, you receive a regular payout through the Parachut platform. For a piece of a gear like a Cannon EOS 5D Mark IV, you can earn an average of $150 a month, or $1800 per year…just to rent your unused gear!
10 Rent Out Your Car on Turo
Do you have a spare car that you’re not using? You can turn your under-utilized car into passive income by renting it on Turo. Especially if you live in a big city, renting your car on Turo can be a great way to make extra money while you take the bus.
Once you sign up for a profile with Turo, you’ll fill out your listing’s information with details, including photos. Turo will send you people who are interested in renting your car for a short-term period.
Worried about insurance? Turo covers your car with $1 million in liability insurance and 24/7 roadside assistance throughout the trip.
10 Get Paid to Shop
Would you like to get cash back in your account just for shopping? Well, the ibotta app lets you do just that! This one way to make passive income just by doing what you already do (aka: shopping).
With ibotta, you can earn cash back in-store and online when you shop for groceries, clothing, home, and travel. After you download the app to your phone, just scan your recent shopping receipt. Ibotta will credit you money back for qualified items. You don’t earn points, you get actual money back that you can cash in on later.
When I first signed up for ibotta, I qualified for their new member sign-on offer and ended up making $20 in my first month, just for scanning receipts. You can Sign Up for ibotta by Clicking Here.
11 Create an Ecommerce Website
Have you ever wanted to run your own online store? With platforms like Shopify, it’s now easier than ever to setup an online shop and make money.
You might be thinking that an ecommerce website sounds like a lot of work, which wouldn’t qualify as passive income. This is true in the beginning. Starting an ecommerce website takes some effort to get running and profitable. However, once you get the business rolling, you can hire a virtual assistant to take care of the daily tasks and allow the business to basically run itself (while you earn an income).
How will you come up with a product to sell? One way to sell products with an ecommerce website is with drop shipping. This business model entails securing a relationship with a vendor who sells a certain product. You then list and market the product on your website. Once you receive a customer order, you fulfill it with your vendor at a lower price and then keep the profit.
12 Start a Blog
Do you think blogs can still make money today? Of course they can! Blogging is great way to eventually earn passive income. It takes a good amount of work to get your blog up and running, but if you stick with it, you can make a steady income. If you love to write and are willing to learn some new skills (like how to market your blog), starting a blog can be a good side hustle.
Most blogs make money through ads on the website, marketing other companies’ products, sponsored posts, and selling your own digital products. Blogging is also a great way to meet new people and write about things you enjoy. My best advice is to pick a topic you know will be popular and a topic you enjoy writing about. Some of the most popular blogging niches include health & fitness, personal finance, investing travel, food, and parenting.
13 Create a Course
Chances are you are somewhat of an expert at something. It might be a skill you’ve learned at your job, a hobby you’ve been working at all your life, or something you’re just naturally good at. If you have a skill, there are probably some people out there who would be willing to pay you to learn that bit of knowledge.
If you’re looking to make passive income, you could turn this knowledge into an online course. For example, say you’re an expert at Microsoft Excel. Creating spreadsheets just really lights your switch. There are plenty of people who are interested in learning to use Excel and might buy your course.
Or, say you’re someone who knows a lot about nutrition. You could turn that knowledge into a course that teaches others how to eat better to be healthier or lose weight. Health & fitness is one of the most popular niches online with billions of dollars spent every year on supplements and workout programs. Creating an online course in this field is just one way to take a piece of that pie.
Platforms like Teachable allow you to create online courses and generate an income by teaching others.
14 Write an E-Book
Similar to taking your knowledge and turning it into an online course, you could package that specialized information up into an e-book. Creating an e-book can actually be quite a bit simpler than creating an online course as you only need to create the words (rather than videos). You might even take advantage of Amazon’s Kindle platform to attract an audience and sell your e-books.
Most e-books sell anywhere from $5 up to $50 and can vary in length from 30 pages up to 300 pages. The most important aspect to consider when creating an e-book is that people are simply looking for answer to their problem. If they want to lose weight and you can show them how to do it in 30 pages, your audience is likely willing to pay a good amount for you to help them solve that problem.
15 Create a YouTube Channel
Are you someone who loves to talk behind camera? If so, creating a YouTube channel might be a great idea to generate passive income. YouTube creators, like those who do make-up tutorials or other how-to videos, have a great opportunity to make money through the platform. In addition to making money through advertisements, YouTubers can make money by directing subscribers to their own website and selling things like e-books and courses.
YouTube channels make money by how many people watch their videos based on the ads YouTube runs. One major benefit with YouTube is that you can begin creating an audience of subscribers. When you load a new video, your list of subscribers will be notified of the new addition to your channel. Hence, the more videos you create, the more income you can make by subscribers returning to your channel with eyeballs on your videos (and YouTube’s ads).
Are you ready to create passive income?
Passive income is closer within your reach than you think! It really is possible to make an extra $100 or $200 per day on a passive basis. Of course, it takes work and effort upfront to generate that type of passive income. However, it’s more than worth it to create the income you need to enjoy your life and stop living from paycheck to paycheck.
Whether you decide to leverage real estate, online courses, blogging, or investing to generate passive income, start today! What are your best passive income ideas? Share in the comments below!