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Best Passive Income Ideas – Forbes Advisor

Top Passive Income Ideas
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Making money while you sleep is the ultimate dream of non-intrusive investors. Finding the best passive income sources may allow you to do just that.

What is passive income?

Passive income is money that you can earn without putting in a lot of constant effort. Having identified and established a stream of passive income, you won’t need to take care of it every day – but that doesn’t mean you won’t have to do some work now and then.

Most passive income ideas require an initial investment of time, money, or other resources. It also requires some degree of regular monitoring or maintenance to keep things on track, but it won’t require you to dedicate dozens of hours a week or have a short conversation at the water cooler.

How to get passive income

Typically, people generate passive income in one of three main ways:

  • investment. When you invest, you are using the money you already have to make more money.
  • Asset building. This means having an asset that passively earns money over time.
  • asset sharing. Participation in this sense means selling or renting assets that you already own.

Let’s take a look at the different passive investing ideas that boost investing, build assets, and share assets.

Passive Income Ideas: Investing

Investing offers the greatest opportunities for generating passive income, but it can require large amounts of money to generate meaningful returns.

dividend stock

Dividend shares reward investors with regular payments of company dividends. Since you have to own the shares to receive the dividend, you will likely have to tie up thousands, if not tens or hundreds of thousands, of dollars to earn a significant income from dividend stocks. (The S&P 500 provides an average dividend yield of just over 1%, for example.)

Investing profits is not without risks. Companies may go through hard times and be unable to pay dividends or have to cut dividends. Look for preferred stocks or aristocrats to get higher returns.

Real estate

Owning real estate is one of the oldest ways to generate passive income. But it is not as easy as buying a house or land. When you own a rental property, the requirements for repair and maintenance can become a huge drain on time and money, unless you hire a property manager, which will only reduce your income. In addition, the purchase of real estate may require an upfront investment of hundreds of thousands of dollars.

If you’d rather avoid the cost and headaches, consider alternative sources of real estate investment, such as real estate investment trusts (REITs) or real estate crowdfunding platforms like Fundrise or RealtyMogul. You will just need to make sure that crowdfunding does not require you to be an approved investor to invest with them.

Peer-to-peer lending

Peer-to-peer lending works just as it sounds: You act as a third-party lender, often through an off-the-shelf platform like Prosper. You will then earn interest as the initial amount you loaned is paid off.

Peer-to-peer lending comes with a significant risk that the person or people you are lending to may default on their loan. You can choose to spread your money across many different loans to reduce this risk. You meet the income or net worth requirements for the peer-to-peer platform of your choice. Some require you to be an approved investor, and even Prosper has lower state financial requirements.

Domain name investment

Domain investing – also known as acquisitions – is a bit like stock trading. You buy inexpensive domain names and hope you can resell them at a profit. You’ll usually want to target specific common terms or proper names, and remember that .com domains work at a premium to nearly all other US domains.

Although getting started is cheap – you can get some domains for $10 or less – there is a risk that you will not be able to sell the domains you buy, and therefore lose your initial investment. You will also be in a bind for annual fees each year through your enrollment service.

vending machines

Owning and operating vending machines can provide a (mostly) passive income stream. You will need to find a site and invest at least a few thousand dollars to get started. From there, maintenance just requires you to spend a little time each week restocking and maintaining your hardware, although you can outsource these tasks if you’re willing to sacrifice some profits.

Anytime you buy physical property as an investment, just remember that you’ll need to set aside storage space as well as take on the risks that come with moving perishable products.

Passive Income Ideas: Build Asset

As the name suggests, asset building requires upfront time and effort to build an income generating asset. While it may not carry the high financial costs of investing, it does have the risk that you will not sell the assets you invested your time in creating.

digital products

Digital products can be anything, from e-books and lesson plans to mobile apps – even NFTs. The key here is that you spend time building it once and then you can sell the same asset over and over again online. You can take a completely passive approach to the digital products you create, or you can devote time and money to marketing them.

Music and photo licensing

If you have a creative streak, you can turn your photos or music into a stream of passive income by licensing them to stock photo and music sites. Then other content creators pay for the rights to use your creations. Musicians can sell their songs on sites like AudioJungle.net and Pond5, while photographers can sell their photos on sites like Alamy and Adobe Stock.

Tailored Products

By uploading original designs to print-on-demand websites like Teespring, Redbubble, CafePress, and Zazzle, you can earn passive income every time someone orders a T-shirt, coffee mug, or other physical product emblazoned with your design. Even better, you don’t have to deal with printing, warehousing or shipping, which greatly reduces the frustration of selling physical merchandise.

Affiliate sales

Affiliate sales are passive income generated when someone makes a purchase after clicking on a link or using a referral code that you post on a website, video, or podcast. You will generally earn a flat rate commission or a percentage of their purchases.

You can find affiliate links for almost any type of product or service, which means you can make passive income from anything from mattress reviews to software reviews. However, keep in mind that this is a very competitive space, and that the most successful affiliate marketing requires continuous high-quality content production.

Passive Income Ideas: Asset Sharing

If you are not able to devote the time or money to generating passive income, take a look around. You may be able to make money from assets you already own by renting or renting them to others. Think of it as Airbnb for [insert asset here].

land rental

If you have extra space in your backyard, garage, or garage, you may be able to turn a profit by renting out space you don’t even use. Sites like HomeCamper let you rent land for travelers looking to pitch a tent (or park a RV) in your area, and JustPark helps you rent parking spaces on your property.

house rental

Exploiting your home for passive income can include anything from renting out a spare bedroom to listing your home on Airbnb or Vrbo when you’re out of town to renting it out for a movie production. Kathy Kristof, CEO of SideHusl.com, notes that she rented her hourly home to film and ad producers with Giggster, raising $1,400 in one day.

Transportation rental

You don’t have to drive an Uber to make a profit from your car. You can rent it to others who need a set of wheels using sites like Turo or Getaround — or if your bike is gathering dust, you can rent it out on platforms like Spinlister. Many transportation rental companies offer their own insurance policies to protect you and your renters, but you will need to make sure you are aware of any insurance obligations you may incur. Also, consider the wear and tear your bike or car may be exposed to when making the decision to rent it to others.

Advertise on your car

Earn passive income by turning your car into a renewable billboard. Sites like Free Car Media, Wrapify, Carvertise, and StickerRide connect car owners with advertisers. In exchange for putting a vinyl sticker on your car for an agreed period of time, you’ll earn structured passive income, all without disrupting your usual driving routine. Just make sure that the platform and campaigns you choose align with your driving habits. Some require a certain amount of miles per day or that you be a delivery driver.

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