If you’re looking for the best passive income ideas, then you’ve come to the right place!
I have been researching and testing the best passive income ideas since 2012 and I am going to share with you what
What would you do if you had unlimited time and resources at your disposal? Would you travel around the world or start a new business? What would you create?
You don’t have to wait until your old and retired to live the life of your dreams. There are plenty of passive income ideas out there that allow you to earn money without having to put in much effort.
There are multiple ways to generate passive income to make more cash. Some of them include investing, blogging, freelancing, selling goods online, and even renting out space on your property. If you want to get started now, check out my favourite passive income ideas
What is Passive Income
Being able to create passive income streams to make more cash can drastically change someone's life. But it is important to understand what passive income is. When I was a teenager, I would always look up "How to make money online?" or "how to create passive income" thinking that once I found the right site, I could just click a button and the money would start rolling in... well that just isn't how it works.
Generally your normal job income is classed as active income as you have to trade your time for money... you have to actively be working for it. Passive income on the other hand allows you to sit back and relax as revenue keeps coming in... kind of...
In most cases passive income still requires a lot of work, usually upfront and will be able to provide you with income for years to come. It is important to remember that the passive income ideas listed here are not guaranteed to work and will still require a lot of work up front to get going.
I will try to explain the perks of each and remember that combining multiple passive income sources can be very beneficial in the long term.
1. Start a Blog
I thought it would be fitting to include a blog at the top of the list as well... your currently reading a blog. In the name of transparency it makes sense for me to explain what I am personally doing and my current experiences.
Blogs can be created on many different topics and many different ways. With Portfolio Hub I have manually programmed the website as I invasion many more features in the future however it is possible to be completely inexperienced in programming and still run a blog.
Websites such as medium.com allow anyone to create blog posts on their site so if you have ideas you can get started straight away creating posts and making them public. Currently I have been working on Portfolio Hub part-time outside of my 9-5. I have put over 150 hours into the site and roughly 20-30 hours to creating blog posts so far.
So once we have a blog how can we monetise the blog. Well there are two common ways this is currently done. The first one which will be applicable for Portfolio Hub is through running ads. This way visitors (You) don't have to spend a penny for my content but I can still cover costs of running the site.
The other method is through affiliate marketing which will be discussed further in this blog.
So how much have I made... well... £0. This is because at the moment of writing this blog, I have not been approved to run ads. So this shows even a passive income idea such as a blog still requires a lot of upfront work before revenue is generated (and once again, it is not guaranteed).
However, if you can pull of a successful blog then in some cases it can create hundreds or even thousands of pounds passively after 8 months to a year once traffic begins to flow in. Personally I watched a bunch of case studies on YouTube related to blogging to see what to realistically expect.
And I would also say don't just start a blog for the sake of wanting money, you will burn out and you will give up. You need to be creating content on something you are passionate about. I have been learning about personal finance, investing etc. for nearly 5 years and I love the process so creating these blogs is a way I can share my learnings, have fun and hopefully make a little side money to support the site and other investments.
Of course it does take a lot of effort to create blog posts so this could be considered active income (income where you have to actively work for it) however, if setup right, in theory you could stop posting and the site would keep making money
2. Investing in Dividend Stocks
Dividends Stocks as a passive income stream is a great choice for those of yous who already have a bit of cash and don't want to put in lots of work. One thing you will find with passive income is that you either need to put in time or a large upfront investment. With dividend investing, it's money.
A dividend stock for those of you who don't know is just like any normal stock you can purchase through the stock market which allows you to own a part of a business. E.g. if a company issued 1,000,000 shares and you bought 1, you would own 1/1,000,000th of the company.
Some companies decide to pay dividends to their share holders which are essentially little slices of a companies profit. For example, Coca-Cola ($KO) pays a dividend of 2.76% at the moment of writing this post. This means within 1 year of holding $KO stock you will receive 2.76% of the stocks value almost as a thank you for holding there stock.
There are many other companies that pay dividends with different values and even different intervals. Some pay dividends quarterly (e.g. 2.76%/4 each quarter) or some pay out the dividend monthly (e.g. 2.76/12 monthly).
Of course if you want to make a lot of money with this approach then you need a lot of money invested, this can be accomplished through consistency over time or utilising any other passive income method mentioned in this blog to increase your income so you can then buy more dividend stocks.
If you are interested in learning about investing in stock assets or compounding your interest then check out one of our other blogs below:
3. Create a Course
One of the easiest ways to create passive income online is by starting a course. Courses are a type of digital product and there are two types of courses - paid and free. Paid courses require an upfront fee but they usually provide better quality information than free courses.
Free courses often will utilise some other form of passive income stream to generate revenue such as advertising or affiliate programs.
You may be thinking "I don't know enough to create a course" but I think you can surprise yourself. If you know any little skill that someone else doesn't e.g. knitting, cooking, painting, programming etc. then you can create a course. No matter your skill level in any field, if you know more than someone else then you can also teach that to someone else.
Of course if you feel you are highly skilled within a skill then you may be able to charge more and have a better quality course but there are no rules about having to be a professional to make a course.
Here are some more ideas of what topics you could cover:
- Business
- Personal Finance
- Fitness
- Health
- Cooking
- Crafts
- Music
- Photography
- Writing
Just remember that creating a course is not easy and takes time but can pay you greatly over time if done right.
And do not worry about creating courses from scratch. There are sites you can use to help you create courses (some free and some paid). Checkout the following blog from Kiera Abbamonte who discusses the best sites to create courses
https://zapier.com/blog/online-course-platforms/
4. Affiliate Marketing
We have already mentioned affiliate marketing as a way to support some other passive income sources, but what actually is affiliate marketing. This passive income streams allows you to promote other peoples products (sometimes digital products, sometimes physical products) and when they successfully sell a product that you promoted, you can get a cut of the revenue.
This is why affiliate marketing as a great way to gain some extra money when you have a platform generating traffic such as a blog, YouTube channel etc. Affiliate marketing works by business' providing you with what is called a commission whenever people purchase their product after clicking on an affiliate link that you will have setup when entering an affiliate program.
There are many different types of affiliate programs including:
- Amazon Associates Program
- JVZoo
- Commission Junction
- ShareASale
To give an example of an affiliate marketing, below I have shared a link related to affiliate marketing. The book provides great information on how to get started with affiliate marketing and will not cost a penny extra to someone who pays for the book through the link. In fact, any revenue I make through this link will come directly from Amazon's profit. So the customer gets a relevant book, amazon gets a new sale, and I generate some revenue. A win-win for all:
Affiliate Marketing for Dummies
5. Start a Dropshipping Store
Dropshipping is a type of business where you act as a middleman between a manufacturer or wholesaler and a retailer. When someone buys something from you, or through your site then you direct that sale to the manufacturer to fulfil the order. You then take a cut of the profit as you have acted as a free marketer.
If you are looking to start a dropshipping store to make some extra cash, then you will have to figure out how to execute on this passive income source. Just like many other ideas mentioned in this blog, there isn't just one way to go about dropshipping.
The main process to get started with dropshipping is to buy a website domain name and hosting package. Then you need to find a supplier. Once you have found a supplier, you will need to set up an account with them so you can place orders.
This can be done a lot easier through services such as Shopify. Shopify provides store templates and many other additional addons to make setting up your own ecommerce store much easier.
However, because of how easy it is to get started with a dropshipping business, it can be hard to find a successful product. There is a lot of competition in dropshipping so expect when you have found a potentially winning product, you are likely not the only person who has done the same.
If you are too slow at setting up your own dropshipping store, then you may find out that someone else has jumped on the same product idea before you have had a chance.
Dropshipping isn't easy! But that doesn't mean it's impossible.
6. BONUS - YouTube
Everyone knows about YouTube, but did you know you can monetise YouTube as well. Many people make a living off YouTube through YouTube's ad network ran by Google AdSense. Money can also be made through affiliate marketing on YouTube; you ever seen a product review with a link in the description... yeah? that's probably affiliate marketing.
Similarly to the blog scenario, YouTube is one that requires a lot of upfront work. I decided to include this as a bonus because I currently make money from YouTube although in a very small amount.
I used to run a gaming channel called GamerBoyRobby (Yes I know, cringe) when I was roughly 12-15 years old. At the time I didn't make any money but I realised that a video I had on a video editing tutorial had some reasonable success.
So when I was 18 years old I converted the channel into RobertDoesTutorials where I focused on sharing my video editing skills with my viewers and in fact this worked to grow my revenue however I stopped uploading due to other priorities in life.
Looking at the chart below you can see my Lifetime earnings (which I have never shared before). Although it is not a lot in the grand scale of things, it really helped show me the power of passive income. And as you can see, I was making peak revenue when I had pretty much stopped uploading. This extra side-cash has helped me in the past regardless of it being a somewhat small amount for 4 years of revenue generation.
Checkout the channel here:
https://www.youtube.com/channel/UCudnL_c9lgamAhA49KNhpyQ
Summary
In summary, there are many different ways to generate passive income for some extra cash. However, if you want to build long term wealth, then you should avoid relying on just one source. Instead, diversify across multiple passive income strategies. This way even if one or two sources aren't performing as expected, you won't feel the full impact.
You might also want to check out this book on some additional Passive Income Ideas 2021
Please let us know if you found this blog post helpful and if there is anything you think we have missed out within our post.
Thanks for Reading 😊
FAQ
What is passive income?
Passive income refers to active income that requires minimal work to earn and maintain. Passive income sources include investing in mutual funds, selling products online, teaching online courses on sites like Udemy, or other tactics where the earner doesn’t have to participate. (shopify.co.uk)
Active Income vs. Passive Income – Which Is Best for Me?
In theory, all of your income sources carry similar weight. But when it comes to achieving financial freedom, passive income leaves active income in the dust. (oberlo.co.uk)
Can passive income make you rich?
Believe it or not, passive income is the primary source of income for most of the richest people in the world. Making money with minimum effort, reinvesting it wisely, and watching spending is vital for getting rich, so passive income streams are an essential part of any wealthy entrepreneur’s portfolio. (sixads.net)
Is passive income taxable?
Yes, passive income is taxable. In the UK the rules may differ depending on the type of income. A majority will be classed as self-employed income and investment income may come under capital gains tax and dividend tax. To find out more accurate information on taxes checkout the official government website
https://www.gov.uk/