Having a passive income is an excellent way to generate extra cash even as you do your primary job. There are many ways to use passive income ideas. But, you’ll need to research your business ideas and have robust strategies to execute your ideas to ensure significant returns.
In this article, we’ll offer six ideas you can consider when starting to earn passive income.
What is passive income?
First off, let’s explore the actual meaning of passive income. Passive income refers to money earned without actively working for it on a daily basis. Starting a passive income stream often requires some money, time, or effort. But once you’ve set it up, you can earn an income passively with minimal effort. Remember, passive income is not money earned from a second job or non-income-generating assets like land or property. It involves starting a venture capable of making money by itself.
Why do you need passive income
Setting up passive income streams is a sure way to increase your earnings. With the current high economic uncertainty across the globe, it’s important to boost your income. Passive income gives you extra money to kickstart your journey of being financially secure. The more income sources you create, the more quickly you’re likely to achieve your financial goals.
It is everyone’s dream to retire early. Ultimately, you can accelerate your retirement age by having passive income. In addition, the flow of additional income gives you the flexibility to decide who you work for, how you work, and how long you work. Simply put, you’re not a slave of employers.
Furthermore, having passive sources of income can free up your time, allowing you to engage in other enjoyable activities such as travel, hobbies, or spending time with family and loved ones.
1. Invest in Dividend stocks
If you’re looking for passive income, dividend stocks can be a great option for you. Dividend stocks are shares of publicly traded companies that regularly distribute a portion of their earnings to shareholders.
To buy dividend-paying stocks, open a brokerage account, find the best dividend stocks, fund your account, and then buy the preferred stock. Once you own dividend stocks, you’ll receive regular payments, often paid quarterly or annually, to your account. The received payments can be used to buy additional stocks, thus expanding your profits. Remember, the more shares you win, the greater the dividend you will receive.
But you need to exercise before investing in high-dividend stocks. In unexpected cases, a higher-than-average dividend yield may mean a company in distress. As a dividend investor, pay attention to the company’s financial health by analyzing factors such as cash flow, profitability, and debt levels.
2. High yield savings account
High-yield savings accounts offer a good option to generate passive income if you have money that you don’t need immediately. Putting your money in a high-yield savings account allows you to get passive income from interesting earnings, which are higher than interest earned from a traditional savings account.
Investing in high-yield savings accounts is actually one of the most passive ways of earning money since the income isn’t related to any activity. All you need is to open a high-yield savings account with your preferred bank.
The average interest rate for high-yield savings accounts ranges between 4% and 7% annual percent yield (APY). While the earnings can be low when inflation is factored in, it is better to put your money in a savings account than hold it in a non-interest-bearing current account where you receive nothing.
3. Publish a book
Writing your own e-book is a great way to earn passive income with minimal upfront cost or ongoing effort. E-books have grown in population, and their demand is still growing. According to Statista, the global e-books market is projected to reach US$13.92 billion in 2025. Also, the e-books market volume globally is expected to reach US$15.69 billion by 2029 as the number of readers increases.
While creating an e-book can be daunting due to the shared volume content involved, creating one process can be immensely rewarding. All you need is your knowledge and a viable e-book idea that meets your passion. To make the process less daunting, try to break down your project into smaller, manageable pieces. Don’t be so hard on yourself; seek support from mentors and other writers.
The amount of money you can earn from eBooks varies depending on the platform you use, the price of the book, and your marketing efforts. On average, an e-book can fetch between $3 and $10 per sale. Thus, you can earn an extra hundred bucks by selling a few e-books every month. But you’ll need to choose the best self-publishing platform to make your e-book visible to millions of potential buyers. Amazon’s Kindle Direct Publishing (KDP), Apple Books, Smashwords, Gumroads, and Draft2Digital are some of the best platforms for self-publishing eBooks.
4. Start a Youtube channel
Starting a YouTube channel gives you the opportunity to share your content and get paid for it. To start uploading videos, you’ll need to first create a personal YouTube channel. Then, pick a niche with a strong and active audience – and one that aligns with your expertise and interests. Content relating to current events or trending topics can easily attract views.
But, setting up a channel does not automatically qualify you to receive earnings from YouTube. You’ll need to meet certain YouTube Channel Monetization guidelines for your channel to be monetized.
Only channels that follow our YouTube channel monetization policies may be able to monetize. To get your channel monetized, you’ll need to join the YouTube Partner Program (YPP). You can unlock your eligibility to the YouTube Partner Program by gaining 1,000 subscribers and either 4,000 public watch hours in the last 12 months or 10 million public Shorts views in the last 90 years.
As a YouTuber, you can pay between $3 and $10 per 1000 views depending on some factors like content engagement and type of video. The key is to create videos that actively engage viewers and attract more clicks.
5. Create an online course
Are you an expert in a particular subject or passionate about a topic? Creating an online course allows you to package expertise into a product and sell it repeatedly. Becoming an online course creator has never been easier, thanks to an array of platforms and tools for creating your courses and growing your audience.
While it may take days or weeks to complete your online course, the potential earnings would be ultimately worth the upfront investment. Once your course is ready, you can kick back as money rolls in from the frequent sales of your product.
Courses can be marketed and sold through various sites such as SkillShare, Coursera, and Udemy. Alternatively, you can create a personal website for your online course. Of course, owning an online course website gives you control over what you can offer. However, building an online course platform is a huge undertaking that requires expertise and extensive marketing.
6. Affiliate marketing
Affiliate marketing is one of the profitable ways to generate a passive income online. You don’t need your own product or any preexisting experience to get started. All you need to do is add links to another company’s or person’s products on your site or social media account.
Becoming an affiliate marketer is easy and free. To start, you choose an affiliate program and fill out the required application form. Once your application is accepted, you’ll receive a unique link to use on your website or social media platforms. Amazon Associates, Bluehost, ShareASale, Amazon Influencer, and Hostinger are examples of the best affiliate programs for creators and marketers. Make sure you select an affiliate program that matches your niche and interest.
When visitors click on the link and purchase from the third-party affiliate, you earn a commission. But you’ve to create high-quality content to attract visitors. T
Final Thoughts
Passive is a great to achieve financial freedom. There are multiple passive income ideas in addition to those listed in this article. It is prudent to note that some passive income ideas require a high upfront investment in terms of time and resources. However, once established, passive income ideas have the potential to generate extra cash indefinitely.
Related: How To Start a Side Hustle
