Ways to generate passive income

13+ Passive Income Ideas to Make Money [2020]

Passive income is like the holy grail of making money.

However, passive income doesn't mean there isn't work involved.

Typically, a large amount of work or upfront monetary investment is involved. But, once that work is complete, the magic begins.

Generating passive income is not going to make you a ton of money fast. At least, not at the start.

However, over time, it can surpass what you'd make in a typical 9-to-5 job.

Just be aware that, as with most things in life, what you put into creating an income stream is directly related to what you will get out of it.

None of these are get-rich-quick schemes.

And they all require some work or upfront investment!

Disclosure: This post may contain affiliate links. If you make a purchase through the links, I may receive a commission at no cost to you. Please read my disclaimer for further details.

Ok – on to the passive income ideas.

Do you have any retirement savings or other investments?

If you answered “yes” then you deserve congratulations! You already have a passive income source.

If it is for retirement, I would consider it deferred passive income. You won't be spending it until later in life. And some of these strategies can be effective for that as well.

But other investments can be used to generate additional income now.

Investment Options

Any account or investment vehicle where you earn interest is a way to create a passive income source. These options can include:

  • Savings account
  • Certificate of Deposits (CD)
  • Money Market accounts
  • Bonds

However, here are some better, higher-return investment options.

  1. Dividend Stocks/Index Funds
    • Several stocks pay dividends, a share of the company's profits, to their investors.
    • There are several stocks that pay decent dividends. However, the return can vary over time.
    • A better alternative to investing in individual dividend stocks is an index fund that invests in stocks of several companies that pay dividends.
  2. Rental Properties
    • Owning rental properties can require a large initial investment or extra debt.
    • Additionally, you either need to be a landlord or pay a management company to maintain the property.
    • However, if the property is paid off or the mortgage payment is much less than what your tenants are paying, it can be a great source of passive income.
  3. Peer-to-Peer (P2P) Lending
    • P2P lenders like Upstart and Lending Club connect borrowers and lenders outside of the traditional banking system.
    • You loan people money through the P2P platform and earn interest as you are paid back.
    • The most significant risk here is the borrower not paying their loan payments.
  4. Real Estate Crowdfunding
    • To alleviate the traditional problem of the high cost of entry in real estate investing, companies like Fundrise allow you to invest in multiple real estate projects with others.
    • There are different plans available based on your goals. And returns can be in the range of 8-12%.

Related: Fundrise Review: Smart Investment or Risky Move?

Online Money Making Ideas

Below is just a small sampling of ideas for making money online. If you search for how to make money online, you could read for days and days.

However, I think the ideas below are some of the best, especially for beginners.

  1. Dropshipping
    • A strategy in which you sell items online that you don't ever see or handle.
      • After receiving an order, you arrange for the item to be shipped directly from the supplier to the buyer.
    • You never touch the product.
    • While this involves a good amount of work, with the right systems in place, it can be mostly passive in making money.
    • Wholesale Ted is an excellent resource for learning more about dropshipping.
      • Sarah Chrisp of Wholesale Ted has a ton of excellent YouTube videos on dropshipping and many other topics.
  2. Online Retail (Amazon FBA)
    • As opposed to dropshipping, you need to have a physical product for this.
      • That doesn't mean you have to touch it though.
    • The most prominent platform here is Amazon FBA. But there are others as well. You could sell on eBay or your website.
    • Doing something like Amazon FBA does require a lot of work at the beginning, but once a product is established, it only requires a few hours a week to maintain.
      • And Amazon does most of the heavy lifting for you, including storing your product, selling it, and shipping it.
    • Check out some other ways to make money with Amazon.
  3. Print-on-Demand
    • Services like Merch by Amazon and Teespring are pretty close to as passive as it can get online…if people like your designs.
    • You create designs for things like t-shirts, sweatshirts, hoodies, and pop sockets. Once uploaded, the service takes care of the rest.
    • Print-on-demand products are great because you don't have to maintain any inventory and the service takes care of everything.
    • You just sit back and collect royalties on the sales.
  4. Blogging
    • While blogging by itself doesn't generate money, it is an asset that you can leverage as a platform for other methods that can make you money.
    • Additionally, having a blog with a number of these other ideas helps to build your brand and gain exposure to what you offer.
    • Starting a blog is quick. Growing a blog takes time and is a long-term tool in all of this. But, the dividends it pays can be huge.
    • In addition to blogging, starting a podcast can expand your audience and provide more opportunities for growth.

Of all the passive income ideas on this list, blogging has one of the lowest costs to start and the most potential for scaling (some bloggers make tens of thousands of dollars EVERY month).
Yes, it takes time to grow, but that growth can be exponential once it gets going.
And you can get started for as low as $3.95 per month with Bluehost.
Go and get your hosting by clicking the link above, and then visit my how to start a blog post to start your blog!

  1. Affiliate Marketing
    • Websites advertise products and services that other companies sell.
      • A buyer clicks on an affiliate link and makes a purchase.
      • Thru the link, the seller knows where you came from and gives the referrer a small commission.
      • It doesn't cost the buyer anything additional. In fact, in some cases, the buyer may receive a discount through an affiliate link.
    • Blogs, including this one, use affiliate marketing to generate income.
      • Most of the time, it isn't very much.
      • However, there are some bloggers, like Michelle Schroeder-Gardner at Making Sense of Cents, who makes over $50,000 every month just through affiliate marketing!
    • There are a lot of websites that are just built as affiliate marketing sites.
  2. Online Courses
    • You can learn about pretty much anything online these days.
    • Everyone knows something very well.
      • They could probably make an online course and make some money off of that knowledge.
    • Sites like Thinkific and Teachable allow you to create a well-designed online course.
    • Additionally, if you don't have a website but want to deliver online courses, host your courses on a site like Udemy.
    • The great thing about online courses – once you create it, it is a passive income maker.
  3. Digital Products
    • Digital products are a pretty broad category.
      • It includes things like ebooks, downloadable templates, checklists, and software.
    • Similar to online courses, creating digital products is an excellent passive income source with little work after it is created.
  4. Photography
    • If photography is a hobby of yours, why not make some money doing it?
    • Several sites, including Adobe Stock and Shutterstock, exist for you to sell your photos online.
    • Additionally, you can sell them on your website.
      • Most importantly, you are in control and don't share profits with anyone.
    • Again, selling your photos (or any other creative work) is another excellent method of generating passive income since creating it is quick and easy.

Offline Passive Income Methods

Finally, besides investments, there are some other ways to generate passive income offline.

The focus of this site is making money online. However, I saw this during the summer and need to include it here.

  1. Storage Lockers
    • On vacation this summer, I took my kids to a water park. I noticed banks of storage lockers spread out all over the park.
    • I'm sure there are other examples like this, but this is a perfect example of how to create passive income with an initial investment and occasional maintenance.
    • Install lockers. Pay them off. Collect the cash.
    • Brilliant!

Also see:
Best Investment Apps for Growing Wealth
Best Passive Income Apps to Make Money
How to Make $200 Fast

Summary

In conclusion, you can see that there are many different ways of creating assets to generate passive income. But always remember that an investment of time or money is necessary to make these ideas work.

And creating multiple streams of income can help you reach your financial goals and help provide financial stability.

Have you tried any of them? Please share your successes and failures below in the comments.

And we'd love to hear about other ideas you have!

Ways to generate passive income to help you escape your daily grind.

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