One of the most important ways to attain financial freedom is to have greater control over your income. While cutting back on expenses is a good way to reach your financial goals, on the flip side, increasing your base income can accelerate the path to financial freedom. This is also known as passive income.
In its most basic sense, passive income is money that you don't actively need to work for. This doesn’t mean it is a 'get rich quick’ scheme, you still need to put in the time and effort to earn this income, but a little effort goes a long way.
Invest in Real Estate
An investment in real estate is a great way to make money and can be considered a semi-passive income stream. This is because real estate involves your active involvement in the initial stages. However, once you have set up your house and rented it out, this can earn you a steady source of income to supplement your cash flow.
In order to ensure that your property generates a passive income, it is essential that you study the real estate market and remain prudent in your decisions. You need to assess the investment potential based on the location, amenities, and other factors.
Invest in the Stock Market
One of the most lucrative ways to make a passive income is to invest in the stock market. This type of investment is great for building long-term wealth and can also help you stay up-to-date on the current market trends.
If you are a first-time investor, it is advisable to invest in dividend stocks. These stocks are held in companies that pay out a regular dividend based on their profits. Hence, the more stock you earn, the higher the payout. However, stock investments always come with an element of risk as you need to know what stocks to invest in. Some research on the company and a study of its historical market trends can help you make the best decision.
Make Money With YouTube Videos
Making YouTube videos may not be the best choice for everybody but if you have a passion or a skill that you want to share with the world, creating videos can earn you a lucrative passive income.
The YouTube algorithm allows you to make money every time a person views your video or from the ads that can appear before or during the video. However, it takes a lot of time and effort to make money this way. You need to build a steady follower base and create a unique niche before you begin to monetize your channel.
Put Your Photography Skills To Use
If you have a love for photography, you can use this skill to earn a passive income. There are many websites like Shutterstock that will pay you for your images. The payment is either a flat fee or a commission on every picture that is sold.
If your pictures are popular, it can earn you a steady stream of cash as more people buy your photos. All you need to do is create a portfolio of your images and submit them to the website. If your pictures are approved, you can showcase them on the platform. The host website handles image sales.
Purchase Index Funds
Investing in high dividend yield stocks can provide a steady source of income but you need to understand the market trends to know what stocks to invest in. Many investors avoid this risk by investing in index funds. This means you invest your money in a range of stocks in a fund like the S&P 500 and not just specific stocks.
Index funds take on the responsibility of choosing what stocks to invest in. This can be beneficial if you have no prior knowledge in investing. Moreover, index funds take a more balanced approach to investing as you put your money in multiple company stocks, resulting in a diversified portfolio.
Write a Book
If you have a passion for writing, you can turn this talent into a passive income stream. If there is a topic or idea out there that interests you, consider writing an e-book about it. You can then sell this book online or to a publisher. Not only do you earn an income but it is also an empowering feeling to share your thoughts and ideas with the world.
While you can generate a passive income stream from writing an e-book, the initial investment is quite high. It takes a lot of time and effort to write a book and you need to do multiple iterations with your editors before you publish your work. However, if you truly believe in your writing skills, selling an e-book is a great way to make some extra money.
Rent Your Space on Airbnb
Airbnb is a platform that allows people to find accommodation when they travel to different cities. The vendors on the website are individuals who rent out their living space for a period of time. If you own an apartment or an extra room in your home, Airbnb is the perfect way to generate some passive income.
You need to register your space on the website and pay a 3% commission fee every time your property is rented out. However, anything beyond that becomes your income. Renters are paid the money 24 hours after the guests check into the home. The amount you earn depends on the size and location of the space.
Sell Your Stuff on Amazon
Research shows that 40% of the sellers on Amazon are third-party vendors. These are individuals who list their products online to earn an income from sales. You can choose from a wide range of categories on the website and list your items along with images and details. The Best Sellers category can show you what types of products are popular on the platform.
An alternative to listing your products on the website is to find a wholesaler and re-sell their products. However, this doesn't always guarantee a passive income until you successfully sell the products and it can tie up a lot of your money in the products. You would also need to find a wholesaler that you can trust so you can negotiate the terms.
Create an Online Course
Writing a book can take a lot of time of effort and there a lot of costs you will incur before the book generates income. However, an easier way to earn money is to write an online course. If you have knowledge and expertise on a certain topic, you can create an online course to educate others.
This generates a steady source of income as you earn money every time someone signs up for the course. You can either post the course on your personal website for a fee or on platforms like Udemy to reach a wider audience base.
Design T-shirts, Cups or Mugs
If you have a knack for drawing or painting, you can capitalize on this skill to earn a passive income. Replicate your designs on t-shirts, mugs or stickers and sell them online. You can either sell them on your personal website or through a third-party seller like e-bay.
This isn't just a great way to earn passive income but it also helps you develop a wide skillset like networking and marketing. Alternatively, you can also sell your services to companies for website or logo designs. You get to do something you love while making some extra money.
Start a Blog
If you enjoy writing and learning about a niche topic like personal finance or traveling, you can use your skills to start a blog. Blogs are fairly simple to set up and have proven to be a lucrative source of income for many people. It gives you the opportunity to do something you love while educating your followers on a certain topic.
As an alternative to starting a blog, you can also buy an existing one. Many blogs are abandoned because of low-income levels but these websites may still have a reasonable amount of traffic. You can buy these blogs to capitalize on the traffic and earn a passive income. This is a good option if you don't want to build a blog from scratch.
Become a Ride-Share Driver
If you own a car and are looking for a way to supplement your income, you can join a ride-sharing app to make the most use of your time. There are many ride-sharing apps like Uber and Lyft where you can register your car and offer rides.
The best part about this service is that it allows for flexibility as you get to choose your hours. Moreover, if you are out and about in the city or headed to a certain place, you can offer rides and earn some money on your way there. If you don't want to drive, you can always rent out your car through apps HyreCar or Turo.
Invest in a Business
Starting a business requires a lot of time and effort on your part and is not a passive way to generate income. However, a great way to make some money on the side is to invest in an existing business and become a silent partner.
Silent partners only have a stake in the business but have no say in the day-to-day operations. While this can be a stress-free way to earn an income, it can also be quite challenging to voice your concerns as you don't have a direct impact on how the company is run.
Try Affiliate Marketing
Affiliate marketing is when companies will pay social media influencers or bloggers to promote their products on their platforms. Websites like Amazon and eBay are well known for affiliate marketing but with the rise of Instagram and other social media avenues, many individuals have also become successful affiliate marketers.
When you post a link to the vendor's website, you earn a commission on any purchase that is made through the link on your website. However, in order to do affiliate marketing, you need to have a wide follower base so you can attract readers and viewers to buy the products.
Build an App
Your mobile phone is your gateway to pretty much everything these days like connecting with your loved ones or staying on top of the latest trends. Hence, if you are a techie, consider building an app that people will enjoy. This can either be a social app, a gaming app or just a convenience app (calendar, to-do list, budgeting.)
You need to put in the initial time and effort to develop and design the app but once this is done, you earn a steady stream of income on every app download. If you are more skilled on the design front, you can always hire a developer to help you. There is a lot of competition in the app-development space but fresh ideas always win.
Get Cash-Back on Purchases
There are numerous credit-card companies out there that offer rewards on purchases. These rewards can vary depending on the type of card you have and how long you've had the card for. Many credit cards offer reward points and cash-back on various purchases. This is an easy way to earn passive income as you are 'earning’ money on purchases you would have made anyway.
Even if your credit card company doesn’t have a cash-back policy, you can still earn reward points on your purchases. After you reach a certain level of points, they can be redeemed for gift vouchers or travel credits.
Set-up an Advertising Agency
Every company needs to market their products in order to create a brand name and generate more sales. This makes advertising an incredibly lucrative way to earn a passive income. With AdSense and Google Ads, online advertising is now easier than ever.
If you have prior knowledge in online marketing, you can put your skills to good use and offer your ad services to companies. You can run ads on Google, YouTube or LinkedIn based on the advertising metrics. Once this is done, you just need to monitor the ads and make modifications based on the results. You earn an income based on the traffic generated.
This a loan scheme between a borrower and lender and is usually facilitated by a third-party website. As a lender in this transaction, you earn interest on the loan but since it's not backed up by a financial insinuation, you face the risk of default.
In order to avoid such a situation, you need to diversify your portfolio and lend out smaller amounts of money. The borrower's history of loan repayment is also a good indicator of the risk of default. A peer-to-peer scheme is a great way to multiply your income.
A bond ladder is a collection of bonds that have different maturity dates. The different dates make it a safer investment alternative to tying up all your money in low-interest bonds. This is a passive way of earning your income because you get to collect an interest payment every time a bond matures. Given that maturity is at different dates, it provides a steady stream of income.
Since it is a bond ladder, once the bond matures, you can use the principal amount to extend the period of the bond. To further reduce risks, you can invest in an ETF bond which is a collection of bonds that allows for a more diversified portfolio.
Start a Podcast
While writing an e-book or guide allows you to showcase your skills through words, a podcast lets you share your ideas and thoughts on any subject verbally. In recent years, podcasts have become incredibly popular as they cover a variety of genres from comedy, to crime and even personal finance.
A podcast doesn't generate passive income immediately but as you start to grow a steady follower base, you can earn a passive income through sponsorships, or affiliate marketing. Podcasts are a great way to earn an income while doing something you love!