Passive income is a great way for you to generate additional cash flow. Passive income can help you earn more during the good times and tide you over if you suddenly become unemployed or even if you voluntarily take time away from work.
Passive income can bring in money even while you work your primary job. If you are able to create a steady stream of passive income, it’s possible to relax a bit. A passive income can give you additional security.
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And if you’re worried about being able to save enough of your earnings to meet your retirement goals, building wealth through passive income is a strategy that might appeal to you, too.
Table of Contents
What is passive income?
Passive income can be money that you make without having to work hard to keep it coming. You can put in the most effort upfront, and then add some more effort as you go to make an income.
You can update the content of an online course to maintain money flow, for example.
Most people have heard the phrase “make money while sleeping” and it’s a big draw for those looking to make passive income.
You can make something, such as a blog, ebook, video, or online store, that makes money even if you aren’t working. You can also make passive income investments in stocks or property that will allow you to earn passively.
Comparison of passive income and active income Passive Income vs. Active Income – Which is Best for You?
All income sources should be equal in weight. But when it comes to achieving financial freedom, passive income leaves active income in the dust.
Active income, as you can see, is the amount of money that’s generated by all your efforts. To continue making an income, you must work hard. If you quit, you don’t get paid. Time is money.
Then you will have passive income. You don’t have to work hard for passive income. The money flows in for many years. If you’re looking to design a dream life where you are financially free, it might be better for you to focus on passive income.
While you may be able to build a passive income stream by making a small investment you are still investing your time. Passive income that is comparable to active income requires you to put in a lot of effort up front.
18 passive income ideas for 2023
There are many ways to create a passive income stream. These passive income ideas are some of the most popular and uncommon ways to make passive income.
Before you start with any income source from this list, make sure to fully understand the risks and how they relate to your overall portfolio.
1. Dividend stocks
Shareholders in companies with dividend-yielding stocks receive a payment at regular intervals from the company. Cash dividends are paid by companies on a quarterly basis from their profits. All you have to do is own the stock. Dividends are paid per stock share, so the more stock you have, the greater your payout.
Opportunities: Owning dividend-yielding stock can be a passive way to make money, as the income is not tied to any other activity than the initial financial investment. The money will be transferred to your brokerage account.
Choose the right stocks to minimize risk.
Companies that issue high dividends may not be financially able to keep it. Graves warns against novices jumping into the stock market without fully investigating the company that is issuing it. Graves advises that you must thoroughly investigate the website of each company and become familiar with its financial statements. You should spend at least two to three weeks researching each company.
There are many ways to invest in dividend-yielding stock without spending too much time evaluating companies. Graves advises going with exchange-traded funds or ETFs. ETFs can be described as investment funds that hold stocks, commodities, and bonds but trade just like stocks. ETFs can also diversify your holdings so that if one company reduces its payout, it doesn’t affect the ETF’s price or dividend too significantly. Here are some of the best ETFs to choose from.
“ETFs are an ideal choice for novices because they are easy to understand, highly liquid, inexpensive and have far better potential returns because of far lower costs than mutual funds.”Graves
Another key risk is that stocks or ETFs can move down significantly in short periods of time, especially during times of uncertainty, as in 2020 when the coronavirus crisis shocked financial markets. Some companies may cut their dividends completely, while diversified funds might feel less pinch.
2. Make an app
An app can be a great way to save time and reap the rewards over time. You might create an app that allows users to play a game, or helps them perform a difficult task. Your app will be available to the public and users can download it. This allows you to generate income.
Potential: If you are able to design an app that appeals to your target audience, there is a lot of upside to it. Your app will need to be sold. You might offer in-app advertising or require users to pay a small fee for the app.
You’ll need to update your app if it gains popularity or receives feedback.
Risk: Your time is most likely being wasted. You have very little risk if you don’t spend any money on the project or money you would have used anyway, such as for hardware. It’s a competitive market, so apps that are successful must provide a valuable experience or value to users. It’s important to ensure that your app doesn’t collect any personal data. Privacy laws vary from one country to another. App popularity can also be very short-lived. This could mean that your cash flow may dry up much faster than you think.
3. Information products for sale
A popular way to make passive income is to create an information product such as an ebook or an audio or video course. Then, you can relax and watch the money roll in from your product sales. Courses can be sold on sites like Udemy, Skillshare, and Coursera.
You might also consider a freemium model. This is where you build a following by providing free content, then charge for additional information. This model could be used by stock-picking experts and language teachers. This free content is a demonstration of your knowledge and can attract people who are looking for the next step.
Opportunity: Information products are a great income stream because you can make money quickly after your initial investment.
Risiko: Tresidder states that it takes a lot of work to create a product. It must be amazing in order to make money. There is no place for trash.”
Tresidder states that you need to build a platform, market your products, and plan for more products in order to succeed.
“One product is not enough to make a business,” “Creating more quality products is the best way to sell an already existing product.”Tresidder
He says that once you understand the business model, you will be able to generate an income stream.
4. Run a Blog
Blogging is the most popular passive income stream. Many entrepreneurs have made passive income streams from blogging, including affiliate links, courses and sponsored posts.
It’s true that it can take quite a bit of upfront work to build a successful blog. However, it’s one of the most sustainable ways to generate an audience through organic and social traffic or by building an email list.
The biggest perk of creating a blog is that you can turn that one asset into several different streams of income. If you are looking for a passive income option, then blogging may be for you.
5. Rent income
Renting out properties can be a great way to generate passive income. It is often more difficult than people think.
John H. Graves, Accredited Investment Fiduciary (AIF), in Los Angeles, is a writer of “The 77% Solution: You Can Afford Comfortable Retirement.”
Opportunity: To earn passive income from rental properties, Graves says you must determine three things:
- What return you desire on your investment.
- The total cost and expense of the property.
- The financial risk of owning the property.
If your goal is to make $10,000 per year in rental cash flow, and the property has $2,000 monthly mortgage and $300 monthly for taxes, then you would need to charge $3,133 monthly rent to achieve your goal.
You need to be aware of the risks. What happens if a tenant pays late or damages your property? What happens if your property isn’t available for rent? These factors can make a huge impact on your passive income.
Economic downturns can also present challenges. It is possible that tenants suddenly stop paying their rent while you still have a mortgage to pay. You may find it difficult to rent out your home as often as you used to due to income declines. Low mortgage rates have caused home prices to rise quickly in recent years, which could mean that your rents might not be enough to cover your expenses. To protect yourself, you will need to consider all possible risks and make sure that contingency plans are in place.
6. Make a course
Online courses are one of the most lucrative passive income options in 2023.
We’re still seeing huge sales growth for course authors. Whether you decide to sell a course on your own website or on a platform like Udemy, you’ll find customers who want to learn your insider tips and tricks.
You can control how much passive income your site generates if you have already followed tip two. It’s up to you to find your customers.
This will be easier if your course is sold on Udemy. However, you may have to make a significant discount during certain times. This will impact how much passive income your earn.
7. Affiliate Marketing
Affiliate marketing is one of the best passive income opportunities available today. It’s a great way to make money and sell popular products.
Only a portion of each sale is paid to you. Some programs like Shopify’s affiliate program allow you to earn up to $58 per referral, which is a decent income. Some online companies offer a mere $5-10 in referral bonuses.
Before you start researching the best affiliate marketing programs, it’s important to do your research. Blogs are the best way to earn recurring affiliate commissions at a low cost without spending money on advertising.
8. Flip retail products
Use online selling platforms like Amazon and eBay to sell products you find at a discount elsewhere. You can arbitrage the differences in your purchase and sales prices and might be able to build a following of people who follow your deals.
Opportunities: You can take advantage of the price differences between what your product is able to offer and what an average consumer might be able. If you have someone who can help you find discounted merchandise that not many people can access, this could be a great opportunity. You might be able find valuable merchandise that isn’t available to the general public.
There is risk: Although sales can occur at any moment online, making this strategy passive, it will require you to work hard to find reliable products. You will need to invest money in your products until they sell. This is why you will need a steady source of cash. To avoid buying products at an excessive price, you will need to be able to assess the market. You could end up with products no one wants, or whose prices you need to dramatically reduce in order to sell.
9. Dropshipping is a great way to start a business
Dropshipping is one of the best ways to start earning from wherever you are, even if you don’t have plenty of cash flow. Some dropshippers report making upward of $100,000 per year. Dropshipping isn’t a quick way to make money, but it does require some upfront investment.
This business model involves creating an ecommerce store where customers browse and buy products. Dropshipping is unique because you don’t need to physically see the products that you sell.
Dropshipping allows your supplier to handle everything, from manufacturing to packing to fulfillment. Dropshipping is a great option because you don’t have to send money to your supplier until customers pay. This reduces the risk of losing cash.
You can avoid the risk of investing in products that don’t exist. You can use a platform like the Oberlo marketplace to find trending products in different niches to sell in your store.
Depending on which product you choose, and the pricing you set, you can make a solid passive income or learn how to start an ecommerce company.
10. A bond ladder
A bond ladder is a series of bonds that mature at different times over a period of years. Staggered maturities can be used to reduce reinvestment risk. This is when you don’t want to reinvest your money in bonds that pay too low interest.
Opportunity: The bond ladder is a passive investment that appeals to both retirees as well as near-retirees over the past decades. You can relax and receive your interest payments. When the bond matures you can “extend” the ladder, rolling the principal into another set of bonds. You might choose to start with bonds that are one, three, five, seven, or seven years old.
You will have bonds left over after the first bond matures. These bonds can be repurchased in one year. The proceeds of the matured bond can be used to purchase another year or to roll out for a longer-term, such as an eight-year bond.
Risk: A bond ladder eliminates the most dangerous aspect of purchasing bonds. It removes the possibility that your bond will mature and you might have to purchase a new bond at lower interest rates.
There are other risks associated with bonds. Treasury bonds are backed federally, but corporate bonds are not. If a company defaults, you could lose your principal. To diversify your risk, you will want to have many bonds. This will eliminate the possibility of one bond affecting your entire portfolio. Your bonds could also be affected by an increase in interest rates.
These concerns have led many investors to look into bond ETFs. They offer a broad range of bonds and can be set up as a ladder. This eliminates the risk that one bond could hurt your returns.
11. Help businesses bring in clients
Are you a skilled marketer and salesperson? If so, there are tons of businesses that will pay you referral fees for bringing them more business.
Agents are always eager to help people find the perfect home. Freelancers, DJs, photographers, and other solopreneurs will often be willing to pay a referral bonus for finding a client that signs a contract.
If you are passionate about helping others make money, then you can build passive income by connecting with other people. You can earn passive income with just a few emails and messages.
12. Advertise on your car
You may be able to earn some extra money by simply driving your car around town. A specialized advertising agency will assess your driving habits and determine how many miles you have driven. The agency will wrap your car with ads if you are a match with their advertisers. Agencies are always looking for newer cars and drivers must have a clean driving record.
Opportunity: You don’t have to drive but it is possible to make hundreds of dollars per month if you are already driving. Drivers can earn by the mile.
Risk: This idea is worth exploring, but make sure you partner only with legitimate businesses. To bilk you of thousands, fraudsters have set up numerous scams in this area.
13. Sell Stock Photos
Ever wonder where your favorite blogs, magazines, and websites get their photos? These photos are usually obtained from stock photo sites.
Consider submitting photos to stock photo sites like DepositPhotos if you are a photographer. Young and the Invested use DepositPhotos for sourcing stock image content.
You’ll get a commission each time someone buys your photos if you license them to a website like this.
14. Make a YouTube Channel
Do you have knowledge about travel to Thailand? Are you a maven of Minecraft Swing dancing’s sultan? Turn your passion into a blog or YouTube channel. You can use sponsors or ads to make money. You can become an expert in a niche or popular topic. You will need to create a library of content and attract an audience. However, it can lead to a steady income stream as you become well-known for engaging content.
Opportunity: A platform is free or very cheap, and you can then leverage your amazing content to build a following. You will be more successful in becoming “the” person to follow if you have a unique voice or are passionate about a particular topic. Next, attract sponsors.
There is a risk: Content creation can be slow and tedious. Passionate about the product is key to your motivation to keep going, especially when you are trying to find new followers.
This is the real problem. You can spend a lot of time and resources but have little to show for your efforts if there isn’t much interest in your niche or subject. Although your niche may not be a lucrative one, you can still learn if it is.
15. You can rent useful household items
Let’s say you don’t have a car to rent. You can start small with household items that are needed but not yet in use. Lawnmowers? What power tools are available? Toolbox and mechanics tools? Large coolers or tents? You should look for high-value items that people only need for a limited time. Next, create a way that clients can find your inventory and a payment method for them to purchase it.
Opportunity: Start small and grow if you have an interest in an area. Are people looking for a tent to go camping on weekends? You can figure out the demand and buy the item instead of keeping it on hand. You might be able, in some cases, to recoup the item’s value after several uses.
Risk: You can always lose your property. However, you can reduce this risk by signing contracts that allow you to replace the item at the client’s expense. You don’t have to take on too much risk if you only rent a small amount of the item. You should be especially careful about liability concerns if you rent equipment that could prove to be dangerous (e.g. power tools).
16. Online selling of designs
You may be able to turn your design skills into a lucrative business by selling products with your printed designs. CafePress and Zazzle let you sell T-shirts, mugs, and other items with your designs.
Opportunity: Start with your own designs, see what the market wants and then expand. A shirt that captures the spirit or at least the wit of the time may allow you to profit from the rising interest in an event. You can also create your own website through Shopify to sell your goods.
Risk: You can ship items to printing partners without investing directly in them. This avoids one of the greatest risks of tie up your capital. You may get a better price if you own some inventory. There is also the risk that you might invest too much time and not see any return. However, this route may be worth exploring if you are already involved in design work, for example, for personal use.
17. Buy an Established Business
Cash is the king of business. Investing can provide financial stability and help you fulfill your obligations. It can also help grow your business.
Many businesses realize that the business provides significant cash flow and investment potential. This can be used to invest in the company, or for personal use.
Not all businesses need to be high-octane to generate solid investment returns. Many business schools teach students how to manage companies and help them achieve greater success.
These professors recommend the opposite. Instead of making a huge investment, invest in a small business to start. By the way, you can create your business name using our tool.
Passive income can be generated by established businesses that have loyal customers and are in good standing.
You can either generate cash flow from the business or make a handsome salary by working hard.
Some common examples include:
- Car washes
- Pest removal services
- Bistros and specialty cafes
- Window-washing business for commercial buildings
- Private ambulance services
- Clinics for medical testing
- Businesses that supply chemicals
- Businesses that supply electrical utility equipment
- Businesses that provide pool repair and supplies
- Boat storage facilities
18. Sell digital files on Etsy
Many people have discovered a way to use Etsy to sell digital files they find useful. Create an Etsy profile and start selling digital creations.
This could be art, budget worksheets or emergency contact sheets.
Partnering with another person can help you promote your content and build more products for sale. These side hustles can be a great way to increase your financial situation.
Etsy provides millions of digital files that can be downloaded instantly. As a passive income option, you can make useful products and sell them online via Etsy.
There are many ways to make money online. Etsy is one way to do this.
Passive income can help you increase your earnings and fill in any gaps your 9-to-5 job cannot fill. These passive income ideas can be used to replace your 9-5 income and allow you to quit your job.
It’s fine if your full-time job is also enjoyable. Paired with a 9-5, the work involved in earning passive income is easier to manage. You can do both.
You can make money in any of these areas, whether you want to open a dropshipping shop, create your own agency or create profitable content. You just need to get started.
Blog editor and content marketing specialist at Turbologo. Writing about Marketing and design. Victoria’s articles contain useful tips on how to build a brand and promote it online.