Passive Income Ideas

[bjl584]

Some of these are easier and more realistic than others, but here are a few ways to make some extra money.

Your job isn’t the only way you can make money. The cash stream from sources of passive income requires some upfront work, but once established, takes little to no time to maintain. While it can take some time to see the fruits of your labor pay off with passive income, earning money without regular work is possible.

Some common ways to earn passive income include investing and starting a business that can mostly run itself.

Passive Income Ideas for 2024

Dividend stocks

If you purchase a dividend-yielding stock, you'll receive regular payments from the company. In most cases, companies will pay out dividends quarterly, and the more shares you own, the more dividends you'll receive. For those who don't want to pick individual stocks, you can consider dividend-yielding ETFs and mutual funds.

It’s worth noting that even high-yield stocks require a significant investment in order to produce enough income to live on. For example, the drug company AbbVie is considered a “dividend aristocrat” that has paid a steady dividend its whole life. It only pays around $5.00 per share per year in dividends. To make $40,000 per year with AbbVie stock, you will need to own 8,000 shares, which is worth $1,272,000 as of March 29, 2023.

It may be helpful to consult with a financial advisor to develop a well-rounded investment strategy that meets your financial goals and risk tolerance. WiserAdvisor is one example of a financial advisor service that can connect you with qualified financial advisors in your area to provide personalized investment advice and guidance.

Bond coupon payments

A bond is basically a debt security, like an IOU. Borrowers issue bonds to raise money from investors willing to lend them money for a certain amount of time and specific payment terms.

When you buy a bond, you are lending money to the issuer, which may be a government, municipality, or corporation or in some cases an individual. In return, the issuer promises to pay you a specified rate of interest during the life of the bond and to repay the principal, also known as face value or par value of the bond, when it "matures," or comes due after a set period of time. The payments are called 'coupon payments", any they are typically made on a fixed schedule until the bond matures.

The payments are "passive" in that you don't need actively trade your time or labor for them.

Investing in a high-yield savings account or certificate of deposit (CD)

A certificate of deposit (CD) is basically a timed savings account. You put your money in for as little as 6 months and as long as 5 years. When you deposit money, the bank will offer a certain interest rate which will be deposited regularly into your CD account (usually monthly). CDs have become popular in recent months as interest rates have gone from years of essentially zero to up to 5% today. For example, a 19 month (just over a year and a half) CD from US Bank can yield as much as 4.70%. After the CD has matured, you can roll it into another CD, if you wish, and get compound interest on your gains. Keep in mind that 4.70% gain on a 19 month CD worth $10,000 is $470.

Affiliate marketing

Affiliate marketing happens when you share and recommend products to others and earn a commission each time someone purchases the product. Popular ways people share their affiliate links include social media, their website and email newsletters.

You may not need to invest a lot of money for this passive income stream, but it could take a lot of time and effort to get it started. People with fewer than 1,000 followers have a harder time convincing affiliates to add them as partners, and you make the most money when you have 50,000 followers or more. The influencer marketing blog HypeAuditor surveyed self-described influencers and found that micro-influencers (1,000 to 10,000 followers) earned on average $1,420 per month, and mega influencers with over 1,000,000 earned an average of $15,356 per month.

Real estate investing

Earning regular rental income means you’ll need to purchase, prepare and manage a property. Whether you’re renting it out for short- or long-term purposes, once established, can provide you with a predictable income source.

If you're interested in real estate investing but don't want to manage a property yourself, a platform like Realty Mogul, Ark7 or Fundrise may be worth considering. All three of these companies are real estate investment platform that allows individuals to invest in commercial real estate properties with as little as $20. Through these platform, investors can access a range of real estate investments, including rental properties, commercial buildings, and development projects. By investing in a diversified portfolio of properties through a platform like Realty Mogul, you can potentially earn rental income without the hassle of managing a property yourself.

Peer-to-peer lending


This type of personal loan is where you (as a peer) lend money to borrowers. You’ll earn income in the form of interest paid back. To help reduce risk of borrower default, you can spread out the money you invest, or lend to others. Companies in this space include Prosper.com and Lendingclub.com.

Real estate investment trusts (REITs)


You can get a less stressful, if less lucrative return on real estate investments with a real estate investment trust (REIT), which is a fund that invests in real estate and pays you a handsome dividend.

REITs don't require you to purchase and manage your own property. Instead you buy shares in companies that own commercial real estate such as apartment complexes, hotels, and office spaces. In return, you'll receive regular dividends. But like the dividend stocks mentioned above, you may have to make a considerable down payment to get enough return to live off of.

Rent out parking space


If you have a parking spot or space to park a car on your property that you're not using, you can cash in by renting it out to others. Some may want to park their car when commuting to and from work, or for the longer term (like if they're traveling). If you have the means, you can even consider renting out a space for others to park large vehicles such as RVs or boats.

Rent out a room in your home


Instead of purchasing and renting out a whole home, you can start small in real estate investing by renting out a room in your home. It could be for a short-term rental (like AirBnb), several months, or even as a space for someone to store their items.

Sell designs or art online


Are you a photographer or love to draw? Consider setting up a website or on online marketplaces like Etsy where you can sell digital downloads of your artwork or photos. Platforms like Squarespace make it easy for anyone to create a professional-looking website without needing extensive technical skills. Once you set it up, you’ll need to market your work to help sell more. .

Create an online product


You’ll most likely need an active and dedicated audience who will buy your products. You can create online courses, ebooks, or even workshops where you teach others a skill they want to learn.

What is passive income?


Passive income is a type of regular income earned without working for an employer or job. It doesn’t require any active work where you’re receiving money in exchange for a service performed. Another way to think about passive income vs. active income is as rent vs. wages.

Once you put in the upfront investment — time, money, and energy — passive income takes little effort to maintain – you get paid for owning stuff. Your passive income can even earn its own money, such as through compound interest from your investments.

What passive income is not


Passive income is not a job or working that doesn't produce some type of asset that earns income. In other words, passive income isn't one where you have to be actively involved in order to earn money. It’s also not investments that won’t earn you any consistent returns.

How many income streams should you have?

You can have as many income streams as you want, but the right number for you will depend on your goals and current resources. If you don't have a lot of time to devote to establishing many passive income streams, it may make sense to only have a few until you can free up time. Or, if you have a limited budget, you may have to start small and grow your resources over time.

Yes, it takes a bit of work initially to be able to get regular passive income, but the effort can be worthwhile. When deciding on which passive income stream you want to pursue, think about how much time and money you can put into it right now. As you continue to grow your income, you may want to seek the help of a financial advisor to help you further manage your money.

Frequently asked questions (FAQs)

Can I make passive income with no money?

It is possible to make passive income with no money, but you may need to devote more time and effort for it to provide you with significant income.

How do I minimize my taxes on passive income?

You may be able to legally lower your taxable income by claiming any relevant expenses you put towards growing your passive income sources (such as qualifying business expenses), or putting some of the money earned towards tax sheltered accounts, like a traditional or SEP IRA.

[Fishindude77]

When I think of "passive income" streams, I generally think about things that don't require much work.
Many of the above items could involve significant to full time work in order to be successful.

[disneysteve]

When I think of "passive income" streams, I generally think about things that don't require much work.
Many of the above items could involve significant to full time work in order to be successful.

I agree. They clearly have a very different definition of "passive" than I do. Finding, buying prepping, and managing a rental property is quite far from passive, for example.

Yesterday, I sat down and reviewed our Vanguard accounts for April. We earned $3,550 in interest and dividends for the month. THAT is passive income. That works out to about $42,600/yr if each month is about the same. About 3/4 of our portfolio is with Vanguard so there's another 1/4 invested elsewhere that is also earning passive income bringing the total to over $50,000/yr. All I have to do is periodically reinvest some money when a bond or CD matures. Other than that, it's all on auto-pilot.

[james.hendrickson]

So...I want to add buying music royalties and annuities to this list. I have looked at both of these options, but have not purchased them myself.

[LivingAlmostLarge]

my neighbor is a book author and royalties off old books she's written. same with musician or jingle writers royalties

[AllyStreelman]

Hey Brian, thanks for sharing! The concepts of leaning into a dividend-yielding investment strategy and real estate investing through something like Realty Mogul are particularly appealing and have low barriers to entry.

[Bozzdivine]

The concepts of leaning into a dividend-yielding investment strategy and real estate investing through something like Realty Mogul are particularly appealing and have low barriers to entry. But I agree with some of the other posters that the term "passive" can be misleading as many of these strategies do require an initial investment of time, effort, or money. However, once established, they can become more hands-off. For instance, affiliate marketing can start off as quite time-consuming while you build a following and establish partnerships, but once everything is in place, it can generate consistent revenue with minimal upkeep. And I love the additions of music royalties and book author royalties to the list. It's a great reminder that passive income can also come from creative pursuits, not just financial or real estate investments.

[james.hendrickson]

For all the lurkers on the forums, and for folks who don't have thousands of dollar to buy an investment property:

Don't forget about fractional ownership of real estate as a way of building passive income.

Some legit companies in this space are:

1. Ark7 => New and doing some interesting things with their expansion strategy. Here.
2. Fintor => Also, new and have a great referral program. Low share minimums, good for investors who want real estate exposure and don't have $20,000 for a downpayment. Here.
3. Fundrise => A private REIT, but has low minimums and is generally well accepted by investors. Here.

I have accounts with all of these, and am satisfied with the results so far. I also recommend you check them out if you just have a couple of hundred and want to get some passive income from real estate.

How are these better than REITS? Good question, and I have not thought it through.

Edit: Fintor has ceased US Operations as of Spring 2024.

[kork13]

For all the lurkers on the forums, and for folks who don't have thousands of dollar to buy an investment property:

Don't forget about fractional ownership of real estate as a way of building passive income.

Some legit companies in this space are:

1. Ark7 => New and doing some interesting things with their expansion strategy. Here.
2. Fintor => Also, new and have a great referral program. Low share minimums, good for investors who want real estate exposure and don't have $20,000 for a downpayment. Here.
3. Fundrise => A private REIT, but has low minimums and is generally well accepted by investors. Here.

I have accounts with all of these, and am satisfied with the results so far. I also recommend you check them out if you just have a couple of hundred and want to get some passive income from real estate.

How are these better than REITS? Good question, and I have not thought it through.

I would argue that for a basic investor wanting exposure to real estate, a REIT mutual fund/ETF will be the simplest & most accessible option. For example, Vanguard's REIT fund (VGSLX) only has a $3000 minimum investment, and provides exposure across multiple types of REITs. The paired ETF (VNQ) is even more accessible, able to buy as little as a single share (currently ~$80/share).

Selecting & investing in single REITs has nearly as much risk involved as investing in a single stock. Doing that analysis properly requires knowledge & understanding that most people just don't have.

[james.hendrickson]

I would argue that for a basic investor wanting exposure to real estate, a REIT mutual fund/ETF will be the simplest & most accessible option. For example, Vanguard's REIT fund (VGSLX) only has a $3000 minimum investment, and provides appetite across multiple types of REITs. The paired ETF (VNQ) is even more accessible, able to buy as little as a single share (currently ~$80/share).

Selecting & investing in single REITs has nearly as much risk involved as investing in a single stock. Doing that analysis properly requires knowledge & understanding that most people just don't have.

Kork - no argument here, I just like fintechs.

[mattbram]

When I think of "passive income" streams, I generally think about things that don't require much work.
Many of the above items could involve significant to full time work in order to be successful.

I can't help but agree with this. Ultimately, I don't think there is such a thing as a 'passive' income.

Either you have to invest significant time into an asset to make it pay. Or you have to invest significant money (which you would have had to work for).

I guess income could be passive if you base it off someone else's work - such as using an inheritance to buy an asset that pays a fixed or varying amount over time.

Personally, I look for low risk/low maintenance income. Where I can invest some time and money then mostly be hands off whilst the money trickles in.

[ua_guy]

I have some good indoor and outdoor space that I could rent for vehicle storage. I looked into it. NO THANK YOU. Storing a vehicle for a close friend or family member is one thing to make some pizza/beer money on the side. There's a good amount of risk renting to people you don't know and you may run afoul of other regulations.

[mattbram]

I have some good indoor and outdoor space that I could rent for vehicle storage. I looked into it. NO THANK YOU. Storing a vehicle for a close friend or family member is one thing to make some pizza/beer money on the side. There's a good amount of risk renting to people you don't know and you may run afoul of other regulations.

This is something I have looked into as well. We have an outbuilding that I was thinking I could rent out, but waaaay too much risk involved.

I couldn't bring myself to rent something like that to friends or family (I'd just let them use it free). One thing I have had success with is renting out catering kit that I have stored. It all has to be checked and signed off anyway, so I occasionally rent that out to local pubs etc that want to put something on themselves.

[Annieadox]

This is something I have looked into as well. We have an outbuilding that I was thinking I could rent out, but waaaay too much risk involved.

I couldn't bring myself to rent something like that to friends or family (I'd just let them use it free). One thing I have had success with is renting out catering kit that I have stored. It all has to be checked and signed off anyway, so I occasionally rent that out to local pubs etc that want to put something on themselves.

I had a similar scenario with a spare room in my old apartment. Felt like there were too many strings attached to let a friend stay, but also couldn't be bothered with the rigmarole of finding a trustworthy tenant.

Anyway, there are cases when renting out is not stressing you out, but it boosts your financial flexibility and peace of mind.

I dipped my toes into real estate last May. Bought an apartment in Nea Smyrni – a pretty popular tourist zone. I list it on Airbnb, and it's been doing pretty well so far. The income's been helpful for sure, and the whole renting thing doesn't feel so risky when it's not your backyard.

[james.hendrickson]

Just piping up with another passive income idea. Over the past couple of years I've been on a kick of looking for passive income streams that are actually passive.

And there aren't a whole lot of them out there - evidently you can't just get something for nothing. There has to be a fair exchange of value.

One thing I've been doing thats actually been working is selling my browsing data. There are a couple of legitimate apps that do this.

Savvyconnect => This is basically a research panel similar to Nielsen. What the company does is give you $5 a month for read access to your browsing history. And they bundle the information and sell it to marketers. Or they survey their panel participants and sell the data to market researchers. I've been using them for about a year and the checks come regularly. They are here.

Nielsen Opinion Rewards => This is the original Nielsen television ratings panel, just the internet version. It works the same as SavvyConnect. You install their software on your electronic devices and it reads the data you generate. Then it pays you in points. The points are redeemable for cash. it averages out to around $5 a month. You can find them here.

Datacy. This is an interesting beast. They pay significantly more than Savvyconnect and Nielsen. And I presume they are using the same model. However, the platform doesn't exactly say how they making money - and in fact, I haven't pushed the issue that much. Its also hard to get into, I had to apply several times and it took months. Their website is here.

There are a couple of issues with selling your bandwidth. First, the major hazard is not that your data will be misused - these platforms are aggregating behavior statistics, not selling social security numbers or passwords. Instead, the major hazard is that selling your data will shift your mental focus to small things. In retrospect after having done for for a while, it might have been better to focus on larger dollar generating opportunities rather than installing apps for $5 a month. For example a skill upgrade, or forming new relationships that could lead to higher value gig work or a promotion might have made more sense.

But that, said, if you want some small consistent passive income wins, selling your bandwidth isn't a bad way to go.