What is Passive Income?
“Make money while you sleep.” You’ve probably heard of this slogan. Sounds really seductive, right? It seems that you could “get something for nothing”. But the truth is, building a passive income usually isn’t passive at first. It still involves work. You just give the work upfront.
Although some up-front time/money/skills are required, once established, passive income could eventually build a considerable wealth that doesn’t eat up your time to enjoy life.
What’s the Difference Between Active Income & Passive Income?
Most of us are familiar with active income. This is income that is earned in exchange for performing a service, for example, hourly wages, salaries, commissions, and tips. In earning active income, your time literally equals money. If you stop working, then you stop earning. So traditional side business and odd jobs are also included in active income.
On the contrary, passive income is money earned with minimal activity through any venture that requires little daily effort or upkeep on the individual’s part.
For example, you might spend some time putting together a website with affiliate advertising. At first, it seems you’ve devoted much upfront time and effort just like (or even more than) earning an active income. But eventually, the money will low in with very little continued effort and oversight on your part.
8 Passive Income Ideas in 2021
By finding the right passive income strategy for you, you can develop passive income streams that allow you more flexibility and freedom. In this digital age when more and more passive income ideas and streams are springing up, it is even easier for beginners to make extra money.
So why wait? Get started by checking the latest passive income ideas in 2021!
(1) Start a Dropshipping Store
When it comes to selling goods, one of the biggest hurdles for a seller is acquiring and stocking products. But with dropshipping, you are able to sell products online without managing any physical inventory.
By connecting your online store to a supplier’s warehouse, they can fulfill your orders and ship them out to customers directly. Your job will only include: select and promote your products online and generate sales.
To start generating passive income from Dropshipping, you could sign up for Shopify. Once you create an online store, you could partner with a manufacturer, a wholesaler, or a drop ship distributor. They will be the ones to ship products directly to your customers. For beginners, drop ship distributor is recommended since it will save you a lot more time and effort.
the dropshipping model (source: BSS Commerce)
(2) Run a Blog
Take your passion for a subject and turn it into a blog. You could choose a platform like WordPress and creating interesting, funny, useful, or otherwise compelling content so that your blog can generate cash through revenue streams like ad sales or subscriptions.
At first, you’ll have to build out a suite of content and draw an audience, but it can create a steady income stream over time, as you become known for your engaging content.
As you post to your blog, more and more, your site will start bringing in traffic whether you put in any additional time or not.
(3) Affiliate Marketing
If you already have a blog or website that has abundant traffic, besides earning money from ad sales or subscriptions, you could also try affiliate marketing.
With affiliate marketing, you promote a third party’s product by including a link to the product on your social media account. If your audience clicks and buys the product, you will receive a few percent of every sale as a commission. This is one of the best passive income ideas for those social media accounts consistently about a topic for which they can recommend related products.
Amazon might be the best-known affiliate partner, but eBay, Awin, and ShareASale are among the larger names, too. And Instagram and TikTok have become huge platforms for those looking to grow a following and promote products.
The affiliate marketing model (Source: Stashlr)
(4) Create a Youtube Channel
Around the globe, five billion YouTube videos are watched every day. YouTube is as popular as ever with users spending an average of 40 minutes per YouTube session.
Making money on YouTube is no longer exclusive to a select few platinum musicians or huge influencers. There are plenty of opportunities for ordinary people to make money from YouTube.
And to monetize your YouTube channel, you don’t need to have millions of subscribers. Your earning potential isn’t determined solely by the number of subscribers and views you have, but also by the level of engagement you generate, the niche you cater to, and the revenue channels you explore.
You could also increase your revenue by partnering with different brands that are looking to target specific audiences.
A podcast is an episodic series of spoken word digital audio files that a user can download to a personal device for easy listening. Podcasting doesn’t make any money until people choose to watch you.
If you find your passion for creating audio, you could try podcasting. All you need to do is to pick a trending topic you are interested in and output valuable content for your audience. From there, you can quickly start building your portfolio of tunes. You never know — it might transform into something bigger.
It takes time for listeners to decide you have value. But once you’ve built up your audience base, you will be able to monetize your content.
(6) Airbnb Business
Airbnb allows people to travel all around the world and to stay in accommodations that are a lot less expensive than traditional hotels.
So if you have a spare bedroom, you can find a roommate or list the space on AirBnB for travelers. Airbnb charges you 3% on every booking for their services, but you can set the nightly rate at whatever you want. People around the world are making impressive passive incomes through Airbnb.
This is one of the passive income ideas where the risks are quite minimal. All you have to do is put up an advertisement online that such a room is available for rent. You will just have to wait for people to check your spare room and rent it.
(7) Sign Up for Cash Back Sites
When you shop through sites like Rakuten and Swagbucks, you can buy the things you would ordinarily purchase at the stores where you normally shop. The difference here is that you earn points, gift cards, and even cash — all of which can be applied to future purchases or just stashed in the bank.
(8) Peer to Peer Lending
Peer-to-peer lending, or P2P Lending, is an alternative to traditional bank loans. It matches investors who are willing to lend money with borrowers who are vetted by the platforms for creditworthiness. It’s riskier than putting cash in a high-yield savings account or money market fund, but also potentially can earn more interest — as much as 5% or more.
There are some P2P lending sites, like Lending Club(facilitates personal loans) or Worthy(facilitates business loans), to loan money to others. The lending site collects the payments and provides more leverage when someone is late.
Simply lend money to a variety of people instead of putting all of your money, literally, in one basket. It is a wise strategy if you’re pursuing higher yields that beat stock market returns.
The p2p lending model (Source: Blend.ph)
Passive income is more than a pipe dream. Forbes contributor Brianna Wiest calls it an infinite potential income stream for a reason. The point, she says, is that “there’s always a possibility.”