Passive Income Ideas

Passive Income – Money For Nothing

Some people mistake passive income as money for nothing; some Internet Marketers even promote it as such, but that is not true. Passive income takes one of two things in order for you to accumulate wealth while you sleep.

  1. An upfront monetary investment, or
  2. An upfront time investment

In order to gain the benefits and enjoy the fruits of passive income, you have to contribute either money or time to hit your passive income goals. After some time and hard work the income streams you have developed will start to build and are able to maintain themselves, bringing you consistent revenue without much effort on your part.

I personally love passive income and believe adding passive income streams to your portfolio can help you increase your earnings and accelerate your financial goals in tremendous ways.

Building passive income streams can help you get out of debt, live the lifestyle you want, or achieve financial independence sooner. Whatever the reason, passive income is a great way to add extra dollars in your pocket.

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If you are sitting on a bunch of idle cash, you can put that cash directly into an investment. These types of passive income streams usually require minimal effort. Think of them as a way to “put your money to work” to generate returns for you in the background.
Examples:

  • Dividend stocks
  • Rental properties
  • Real estate investment trusts
  • High yield savings accounts
  • CD ladders
  • Robo-advisor investing
If you don’t have a lot of extra cash on hand, you will need to manually work towards building your passive income asset. There may still be some monetary costs involved, but the bulk of your investment will be time and effort. The long term rewards may be higher.
Examples:

  • Cashback credit cards
  • Cashback sites
  • Affiliate marketing
  • Start a YouTube channel
  • Create an online course
  • Sell stock photography

What’s The Difference Between Passive And Active Income?

Active income is what the majority of the population do to earn money. Active income is providing a service in exchange for money. This can be in the form of an hourly wage, a salary, or commissions. It essentially means you providing your time, in exchange for a specific amount of money.

While the vast majority of the population earn their income this way, which is normal, there is a limit to how much money you can make.

There are is equal amount of hours in the day for everyone. Some may be on a higher hourly rate, or salary package, but, no matter how hard you work, there is a limit to the amount you can earn.

That’s the beauty of passive income, the more you develop your passive streams streams, the more your income will increase, meaning, more money for you.

1. Dividend Stocks Passive Income

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What Makes Dividend Stocks Good For Passive Income:

Dividend Stocks are one of my personal favourite ways of investing for passive income. They provide a  proven way to earn passive income for the long term investor. Investing in dividend stocks will take time and research and a significant amount of money to receive large dividend checks, however, if you consistently invest money into dividend stocks you can amass a nice residual income, that will literally pay dividends later.

Dividend Stocks Passive Income Snapshot

Pros

  • Consistent long term income potential
  • Regular payments
  • Can be automated
  • Can have tax advantages

Cons

  • Can take a large investment to reap large dividends
  • Can take time to research investment
  • Can take time to build substantial amount

For any of these investment opportunities, make sure you open an account at the best online brokerage, and get rewards while doing it.

A great way to invest is with M1 Finance.  If you haven’t heard of M1 Finance, it’s a FREE investing platform that allows you to build a portfolio, and invest in it for free.

This is amazing for investing in dividend stocks because you can build your portfolio of, say, 30 stocks. Then, your investments will be auto-allocated to your entire portfolio every deposit – for FREE! You can even auto-rebalance. Then, your dividends can also be reinvested. It’s a fantastic platform, and it was made for this.

You can read out review of the Best Investing Apps For Beginners.

2. Investment Properties Passive Income

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What Makes Investment Properties Good For Passive Income:

Investment Properties are another personal favourite for generating passive income. There are literally millions of both small and large property investors who generate significant proportions of their passive income through real estate, as it has proven to be a sound long term investment strategy.

A positive cash flow rental property is a great way to bring in a monthly income and you can even outsource the management of the properties to a property management company, to make it truly passive.

Investment Properties Passive Income Snapshot

Pros

  • Consistent long term income potential
  • Regular payments
  • Can be automated
  • Can have tax advantages
  • Can enter property market with minimal money

Cons

  • Can have problems with derelict tenants
  • Country and State regulations can differ
  • Can have capital gains tax implications
  • Maintenance costs can create unexpected expenses
  • Low rental can negatively impact income

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For my first investment property, I went the solo route, doing my own research and negotiating, including negotiating the price and the finance. I only had to outlay $500 of my own money to buy a set of positively geared units that gave me a nice monthly return. As this was my first real estate investment (outside my own home), I also managed all of the tenant matters and maintenance, as it’s a good way to gain an understanding of the issues that can arise.

Now, you can choose to go the same route, or, if you’d prefer something a little less hands-on, that you can get started with earning money straight away, you can use a company like Roofstock.

Roofstock isn’t a real estate investment trust, which means you’ll be buying individual rental properties.

One of the scary aspects of investing in rental properties for many people, is the worry about finding tenants. Roofstock lets you buy properties with as little as 20% down that already have tenants living in them. That means you start getting paid from the first day of your investment and you don’t even have to physically visit the properties to invest in them.

If you are new to investing in single-family real estate, using a place like Roofstock guide you through the process is a great way to get into the market.

Finding a reliable property manager can be critical to your success, and Roofstock helps with this too; they’ll pair you up with one of their vetted property managers to deal with the day-to-day “landlord” tasks like collecting rent and scheduling maintenance.

3. REIT (Real Estate Investment Trust) Passive Income

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What Makes REIT Good For Passive Income:

If you are not quite ready to jump into property investment fully on your own, but would still like to generate some passive income from a real estate investment, an REIT could be the perfect vehicle for you.

If you want to invest in real estate, without spending hundreds of thousands of dollars on a single property, you can use Real Estate Investment Trusts.

REIT Passive Income Snapshot

Pros

  • Low cost entry to real estate investing
  • Low management fees
  • Good record of annualized returns

Cons

  • Untested in industry downturn
  • Leverage level may prove high in some cities

A real estate investment trust (REIT) is a pool of money from many investors that is managed by professional real estate investors. The money in the pool is used for investing in real estate. Investors put money into the REIT, the REIT buys properties and the returns are disbursed back to investors.

REIT’s provide a more truly passive investment than owning real estate directly, as you don’t have to worry about handling landlord duties and maintenance issues.

Most REIT’s require a substantial investment to get started, but with Fundrise, you have access to dozens of solid, value-producing assets that costs as little as $500 to get started. All-in-all, it’s an easy way to diversify your investments and get exposure to a market that may have been previously inaccessible.

4. High Yield Savings Account Passive Income

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What Makes High Yield Savings Accounts Good For Passive Income:

If you  really don’t want to think much about investing your money, but still want to get some income from it, a basic place to start is in a high yield savings account.

In the past, a high yield savings account would still provide significant passive income, but since the introduction of ultra low interest rates, the returns have diminished.

Recent times have seen interest rates rising, so putting more money into a savings account can generate a safe passive income stream.

High Yield Savings Account Income Snapshot

Pros

  • Completely hands off
  • Secure
  • Guaranteed regular payments

Cons

  • Low returns
  • Interest rates unlikely to rise significantly in short term

At the moment, you will struggle to get much more than 1% in a traditional bank high yield savings account. If you have a substantial amount of cash, you may be able to negotiate up to a short term 2%, but that is about it.

However, there are safe alternatives, if you want earn more with a high yield savings account, offered by online banks.

How Can Online Banks Offer Higher Rates Savings Accounts?

The answer to that is simple, low overheads. Online banks don’t have to staff physical branches, pay rent, teller staff, utilities, etc, meaning they can pass on these savings to customers, in the form of higher interest rates, which in turn helps the banks gain great business.

Currently, HSBC Bank offers one of the highest savings account interest rates, at 2.05%. The good thing about this offer, is, unlike certificate deposits, your money is available, whenever you need access to it.

5. CD Ladders Passive Income

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What Makes CD Ladders Good For Passive Income:

If you have spare cash sitting in the bank and want to earn a little more than the typical low interest on a savings account, you could use it to build a CD Ladder. A CD Ladder requires buying CDs (certificates of deposits) from banks in certain increments so that you can earn a higher return on your money. CDs are a low risk investment, which also means they provide low returns, but still higher than the interest on a savings account.

CD Ladders Passive Income Snapshot

Pros

  • Consistent long term income
  • Regular payments
  • Can be automated
  • Can have tax advantages

Cons

  • Can take a large investment to reap large dividends
  • Can take time to research investment
  • Can take time to build substantial amount

A CD ladder is a way to maximize the interest rates you earn on your savings without having your your money tied up for long periods of time.

The ladder component comes from staggering your CD’s into different maturity timeframes, rather than having it locked away for long periods of time.

Creating a CD Ladder is pretty simple.

  • Find a bank that provided high interest rates on CD’s.
  • Choose the CD’s you want to invest in, for example, say the bank offers the following CD’s.
    • 6-month CD at 1% interest
    • 12-month CD at 2% interest
    • 18-month CD at 2.5% interest
    • 36-month CD at 3% interest
    • 60-month CD at 3.5% interest

You decide to buy one of each. After six months, your first CD matures and you decide to renew it. You buy an 18-month CD with the money. When the 12-month CD matures six months later, you buy another 18-month CD. This creates a CD ladder where you get access to funds every six months. This means that every six months, you’ll decide whether to open a new CD or withdraw the money plus the interest you earned.

You can choose to use this type of CD strategy, or you may choose to go the longer, slightly higher interest rate route, that ties your money up for longer periods of time.

We recommend building a CD Ladder at CIT Bank because they have one of the best CD products available. High rates and even a penalty-free CD option.

6. Robo-Advisor Investing Passive Income

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What Makes Robo-Advisor Investing Good For Passive Income:

Robo-Advisors are a tool for investing, especially if you have little time and even if you don’t have a lot of spare cash. Instead of relying on a human broker, or advisor to manage your investments, robo-advisors take care of all the work for you, fully automated, 24 hours a day.

Robo-Advisors are a great way to begin your passive income journey.

Robo-Advisor Investing Passive Income Snapshot

Pros

  • Doesn’t require a lot of money to begin
  • Fully automated
  • Cheap to zero fees
  • Can have tax advantages

Cons

  • Not many

Betterment is one of the more popular robo-advisors and investment apps, that includes features not offered by many of the others, including tax loss harvesting, simple asset management, retirement calculators, low management fees and the option to use a human advisor.

You can read the DollarSkool Review of Best Investing Apps For Beginners here.

7. Cashback Cards Passive Income

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What Makes Cashback Cards Good For Passive Income:

Cashback credit cards are an easy way to get passive cash back from purchasing regular items. You can use them on a variety of goods, such as groceries, fuel, etc. You typically get anywhere from 1-5% back for the purchases made with your cashback credit card, which is a pretty easy way to get free money back from stuff you already buy.

Cashback Cards Passive Income Snapshot

Pros

  • Simple way to get cash back
  • Secure

Cons

  • Need to ensure monthly balance is paid to avoid fees

You are going to pend money, we all do, almost every day, whether for groceries, fuel, or utilities, among other things, so wouldn’t it be good, if you could get some cash back on these purchases.

Well the good news is, you can.

Cash back credit cards offer a percentage, usually around 1-5% on purchases you already make. Some cash back offers vary depending on the category. For example, a card may offer 2% cash back on gas and groceries and 1% on all other purchases.

Many cash back credit cards also offer sign-up bonuses. For these programs, you’ll usually need to spend a set amount within the first 60 to 90 days of opening your account in order to qualify for the bonus.

You are going to make these purchases anyway, so you might as well get some money back for them. This is a great way to get passive cash, just by spending money you normally would. Just be aware, that if you don’t pay off your credit card balance every month, interest fees can add up quickly and easily negate any potential rewards.

8. Cashback Sites Passive Income

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What Makes Cashback Sites Good For Passive Income:

Similar to cashback credit cards, cashback sites are a great way to get cash back from online purchases. These sites can even be combined with cashback credit cards to increase the amount cash you get back.

Rakuten (formerly Ebates) is the one we recommend, they give anywhere from 1% to 40% cash back on your online purchases.

Sign up for a free account to get started and download the browser extension. When you go to an Rakuten partner site, Amazon, Best Buy, Target and many more, the extension will notify you to enable you to get cash back. It’s that simple.

We recommend that you sign up, after all, the cashback is a benefit you can get, so if you don’t, you are really leaving money on the table.

Cashback Sites Passive Income Snapshot

Pros

  • Easy way to get cash back for online purchases

Cons

  • None

Rakuten (formerly Ebates) is the one we recommend, they give anywhere from 1% to 40% cash back on your online purchases.

Sign up for a free account to get started and download the browser extension. When you go to an Rakuten partner site, Amazon, Best Buy, Target and many more, the extension will notify you to enable you to get cash back. It’s that simple.

We recommend that you sign up, after all, the cashback is a benefit you can get, so if you don’t, you are really leaving money on the table.

9. Affiliate Marketing Passive Income

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What Makes Affiliate Marketing Good For Passive Income:

Affiliate Marketing is one of the best ways to make passive income online and it is often the area that many people start when they begin their online income generating journey. Affiliate marketing is a quick and inexpensive method of making money without the hassle of having to hold stock, actually selling a product, or filling an order.

Affiliate Marketing Passive Income Snapshot

Pros

  • Great way to earn passive income
  • Low entry barriers

Cons

  • Can take time to learn necessary skills and methods

Most people who are interested in making money online and generating passive income, have come across the term affiliate marketing. If you are new to making money online, you may not have a complete grasp of exactly what this term means.

In its simplest form, affiliate marketing is the process where an affiliate (YOU) earns a commission for marketing another person’s or company’s products. That’s it, pretty simple hey.

The affiliate marketing we are detailing here relates to online affiliate marketing.

You can read more about affiliate marketing at the post DollarSkool Can You Still Make Money With Affiliate Marketing In 2019?

10. Youtube Channel Passive Income

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What Makes Youtube Good For Passive Income:

Starting a Youtube channel is super easy and doesn’t require you to have the hassle of managing a website to earn money. You will need some equipment to get started. While a simple mobile phone is enough to get your first videos uploaded, I d recommend that you have a computer and video editing software, (their are free video editing software programs). Once you start making money, invest it into more professional equipment for better results.

Youtube Channel Passive Income Snapshot

Pros

  • Easy to get started
  • Easier to get videos found then rank a website
  • Regular payments
  • Content can continue earning for years

Cons

  • Requires some tech hardware to get started
  • Can take time to reach audience
  • Can take time to build substantial amount of videos

Even though the rules for monetization changed in January 2018, you can still make a nice amount of passive income from a Youtube channel. New channels are being created each day, so it is never too late.

There are hordes of people who make entire livings from their Youtube channels. People filming makeup tutorials, travel guides, unboxing videos, anything you can think of, really. Because YouTube is such a popular platform, there are more than enough eyeballs to attract an audience to even the most obscure niche.

The majority of people making passive income from Youtube, do so by monetizing their channels with ads. Don’t worry, there is nothing you have to do to place the ads, Youtube handles all of that for you, you just sit back and earn the money.

As I said, things are slightly different now, where once you could monetize your channel from almost the time you created it, to be accepted into the Youtube Partner Program and receive advertizing revenue, Youtube now requires a new channel to have 4000 total watch hours during a 12 month period, and a minimum of 1,000 subscribers. This obviously can put a dampener on things when getting started, but don’t let this stop you, all it takes is one of two successful videos and you will be on your way.

As a whole, you’ll get 55% of the total earnings when you run ads on your videos, with Google (who owns YouTube), taking the other 45%. As a general rule, this equates to about $2 for every thousand views. This means, for every 1,000 views a video receives, you earn, $2. Now this doesn’t sound like much, but the more videos you post and the more views you get, the more money you can make.

11. Online Course Passive Income

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What Makes Online Course Good For Passive Income:

If you have knowledge in a specific area, or, even multiple areas, creating an online course can be a great way to earn passive income. You can create a course for just about anything you can think of, from learning to play the guitar, to knitting, physics, programming, making youtube videos, or whatever you have knowledge or experience in, sufficient to create a course.

What makes this strategy passive, is that once you do the initial work of creating the course, you continue to get paid for each new student that enrolls.

Online Course Passive Income Snapshot

Pros

  • Good way to earn passive income
  • Can build upon courses to offer more

Cons

  • Can take time to master course structure

If you think creating a course is something you could do, I recommend you go to Udemy who are one of the leaders in the field of online courses.

Udemy has a built-in student base of 30 million, which provides ample range for you to attract some to your course.

Udemy has a Instructor Support Team available for you 24/7 to help you through your course creation needs. They also have a Teaching Center, a resource center to help you through the process and Studio U that provides peer-to-peer support from the Udemy instructor community. This community group is always on, always there, and always helpful. There is a lot of help, so, if you think you would enjoy creating a course, or more, get started now.

12. Stock Photography Passive Income

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What Makes Stock Photography Good For Passive Income:

If you enjoy taking photos, even if you are not that experienced, you can make money by uploading them to Shutterstock. Since 2003, Shutterstock has paid over $500 million to its contributors.

You don’t need to take professional quality photos to join and you can make an easy source of passive income from your photos.

Stock Photography Passive Income Snapshot

Pros

  • Simple to use
  • Good if you enjoy photography

Cons

  • Earning potential may be limited

With Shutterstock, it is easy to earn a side passive income from your photos. Just set up an account, upload your images, and earn money every time a customer downloads your photos.

The amount you earn per download depends on the type of customer who purchases the image. If a customer with a monthly subscription downloads your image, you’ll earn less than a customer who pays specifically for your photo.

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