Who wouldn’t want passive income that flows in with little or no effort on your part?
Of course, we would all like to make money while we’re sleeping, traveling, or just relaxing.
Passive income may seem like an unrealistic dream, but there are actually a number of practical ways to make passive income. The key is finding the right opportunity for you. This article presents a list of the best passive income ideas that you can start using.
At first, you may only be making a small amount of money passively, and you may even want to reinvest that money so it compounds and grows faster. But with some time, it’s possible to create enough passive income that you could quit your job or even retire early.
→ Related reading: 9 Steps to Financial Independence (How to Retire Early)
What is Passive Income?
Passive income can be a bit of a divisive topic. In general, passive income is any money that you make with little-to-no effort. The money will flow in without too much being required of you.
Exactly what qualifies as passive income is up for debate. There are a few different types of passive income, and the options covered in this post will be broken down into the following categories:
- Passive income from investments. Of course, you’ll need some money to invest in order to put these ideas into practice.
- Passive income with effort up-front. You’ll need to put in the work up-front, and it may be a lot of work, but eventually, it can lead to a source of passive income.
- Passive income with no money and little effort. Believe it or not, there are actually some ways to make money without investing time or money.
Passive Income Ideas from Investments
Probably the best way to make passive income is to let your money do the work. Of course, you’ll need some money to invest in order to take advantage of these opportunities, although some of them can be started with very little money.
1. Invest in Dividend Stocks
Some companies consistently pay dividends to their shareholders. As a shareholder, you can reinvest the dividends to buy more shares of the stock, or take the dividends in cash. Reinvesting will allow you to own more shares, which leads to more dividends in the future (ideally).
The companies that consistently pay dividends tend to be large companies with a long track record of success. Because of this, these investments tend to be considered less risky than the stock market in general.
Dividend stocks can be a great investment regardless of whether you want to reinvest all of the dividends and hold on to the stock for a long time, or use the income produced through the dividends.
You can either do the work to research specific stocks and take the DIY approach, or you can use Emperor Investments, a robo advisor that builds a customer portfolio of dividend stocks for you. See our review of Emperor Investments here.
2. Peer-to-Peer Lending
Peer-to-peer lending (or P2P) has become extremely popular in recent years. Borrowers and lenders can be matched up through a website or marketplace. Instead of going to a bank, the borrower gets a loan from an investor.
In some cases, the borrower might not be able to qualify for a loan through a traditional bank. And in many cases, the borrower gets a better interest rate than they could get from a bank. As an investor, you can earn a good return as well.
Each P2P website operates a little bit differently, but you will be able to see the credit grade or risk of a loan prior to investing. The higher the risk, the more interest you will earn, assuming the borrower makes all of the payments.
P2P lending can be a bit risky, but there is potential for a pretty good return on your investment. If you’re interested you should take the time to educate yourself and make sure that you understand all of the details. Peer-to-Peer Lending 101 from Good Financial Cents is an excellent starting point.
The most popular P2P websites include:
3. Real Estate Crowdfunding
Real estate crowdfunding websites allow you to invest in real estate without all of the headaches that usually go along with owning real estate. You don’t have any of the work, you simply invest and take on some of the risk.
There are countless real estate crowdfunding websites and there are several different types. Some allow you to invest in commercial properties. Others may specialize in large rental properties and communities. Others may focus on smaller properties that are being flipped. Some allow you to invest in individual properties, while others will allow you to invest in a portfolio of properties.
Many of these require you to be an accredited investor, but there are some good real estate crowdfunding sites for non-accredited investors.
This is a very popular investment because so many people want to invest in real estate but simply don’t have the time or desire to be a landlord. Also, in many cases, you can get started with a relatively small investment.
Some of the best real estate crowdfunding websites are:
4. Invest in REITs
REITs (Real Estate Investment Trust) offer another way to invest in real estate without the hassle of being a landlord. The REIT owns income-producing real estate like office buildings, apartment complexes, shopping malls, or hotels. REITs make it possible to invest in real estate on a small scale, and to earn a share of the income produced.
There are several different types of REITs. Some are publicly traded on a stock exchange, and some are not. REITs may also be in the form of mutual funds or ETFs.
If you’re looking for an easy way to get started with real estate investing, REITs can be an excellent choice.
→ Related reading: 11 Ways to Invest in Real Estate (With or Without Owning Property)
5. Buy a Rental Property
Of course, another option for investing in real estate is the good old fashioned rental property. You could buy a condo, single-family home, or multi-unit property.
Owning rental properties can be a great source of income, but whether or not it is truly passive will depend on a few factors. The more properties you own and the more tenants you manage, the more time you will need to put into it. If you want it to be a passive investment the best option is to hire a property manager.
→ Related reading: How to Generate Income from Rental Property
6. Robo Advisors
If you want to put your money to work but you’re not comfortable picking and managing the investments yourself, a robo advisor could be a good fit for you. There are a growing number of companies offering these services. You’ll enter some information related to your age, goals, and risk tolerance, and they will handle the rest. Robo advisors are ideal for hands-off investors.
Blooom is a robo advisor that specializes in 401(k) accounts. You can get a free analysis of your 401(k) to see Blooom’s recommendations. If you choose to use their service it will cost you $10 per month, a fixed amount rather than a percentage of your investments.
Betterment is one of the most popular robo advisors. Betterment will lead you through personalized planning based on your personal situation, and then it will create a diversified portfolio and automatically rebalance it. The cost is 0.25% off your balance, annually.
Emperor Investments will create a pure stock portfolio for you. Their fee is 0.6% percent, but since your investments will be in stock, there are no hidden fees like mutual fund or ETF management fees.
In terms of being passive, it doesn’t get much more passive than allowing technology to do the work for you.
7. High-Yield Savings Account
Your first financial priority should be to build up an emergency fund that will cover all of your living expenses for a few months. But don’t put this money in a checking or savings account at a local bank that pays you a terrible interest rate.
You can open a high yield savings account or money market account with an online bank that will earn a much better return for you. This interest isn’t going to make you rich, but it will outperform (by far) what you are likely getting from a local bank.
My wife and I keep our emergency fund in a savings account with CIT Bank. CIT offers the best rates on savings accounts and money market accounts that you’ll find anywhere (20x the national average!). Opening an account with CIT is quick and easy, and can be done online.
CDs (certificates of deposit) are another very low-risk investment option. Typically, you can earn a higher interest rate with a CD as compared to a savings account, but your money may be tied up for a while.
You can avoid having all of your money tied up in CDs by creating a CD ladder, which is simply using multiple CDs of different lengths or different maturity dates so you can get access to some of the money sooner. For example, if you were starting today and you had $15,000 to invest in a CD, you could invest:
- $5,000 in a one-year CD
- $5,000 in a two-year CD
- $5,000 in a three-year CD
Longer terms will earn higher interest rates, so as each of these CDs reaches its maturity date, you could reinvest in the money into a new three-year CD, and they would still be staggered if you are doing that each year.
I also recommend CIT Bank for CD, as they have some of the best rates available. Check the current CD rates here.
Annuities are investments that provide a passive source of income for a set period of time, or for life. They are used mostly as a source of income in retirement and can help to offset the fear of outliving your money.
There are a lot of mixed opinions on annuities and they’re not right for everyone. Be sure to do your own research and get the advice of a trusted advisor who will consider your own unique situation to determine if an annuity is right for you.
10. Business Bonds
You can invest in business bonds that will produce passive income for you, and provide opportunities for small business owners to grow. This type of alternative investment can be a great way to diversify your portfolio and earn more interest than you would from a savings account.
Worthy Bonds offers a fixed 5% interest rate. The bonds are fully secured by liquid assets (like inventory) in order to reduce risk. You can get started with as little as $10 and you can choose automatic reinvestment if you want your money to grow faster. The bonds are for a 36-month term, but you can withdraw money at any time.
StreetShares makes it easy to invest in small businesses, with a focus on veteran-owned businesses. Like Worthy Bonds, StreetShares also offers a 5% interest rate for investors. You can start with as little as $25, so StreetShares is also an excellent option for small investments. One thing to note is that there is a 1% fee if you withdraw the money in less than 1 year.
11.Invest in Royalties
Royalty Exchange is a marketplace where you can invest in royalties. Artists and musicians can raise money by selling royalties to their work. As an investor, you can make money passively from the investment.
Passive Income Ideas with No Money and Little Effort
Everyone would love to make passive income without the need to invest a lot of money or put in a lot of effort up front. This is the type of passive income that many people are looking for.
While the options are a little bit more limited, there are some great ways to make this income that is truly passive.
Some of the methods in this section will generate smaller amounts of money, but the good news is, they are extremely easy! There’s nothing better than free money! If you use a few of these easy methods together, it can add up to a significant amount of money.
12. Rent Credit Card Tradelines
Here is a potentially lucrative passive income source that may be completely new to you. You can add authorized users to your credit cards (without actually giving them a card or access to your account) and be paid to do it. People who are looking to improve their credit score can get a boost by piggybacking off of your payment history, and they will pay you for it. How much you make will depend on the age of the credit card account and the credit limit on the account.
If you’ve never heard of selling/renting tradelines before it probably sounds ridiculous and dangerous. The first concern usually involves putting yourself at risk for adding an authorized user that you don’t know and trust. But the process only involves adding the user to your account, the card will be sent to your address and you can destroy it. The other user actually never has access to your account.
However, there is still some risk involved. The risk involves the possibility of your credit card account being closed by the issuer, because in most cases this will be violating the terms. It’s not illegal, but it does violate the terms of the credit card companies, so they may close your account if they know you are doing it.
It’s definitely not for everyone, but some people are making good money with very little effort. If you want to learn more I recommend reading this thread at Mr. Money Mustache for lots of details from a guy who is making a few thousand dollars per month with this… and it’s very passive.
13. Credit Card Sign Up Bonuses
One of my favorite, easy ways to make money is through credit card bonuses. Many credit cards will give you a bonus just for signing up and for making a minimum amount of purchases on the card during an introductory period.
Now, this isn’t something that you can do all the time, but you can sign up for a new credit card or two a year, depending on your situation. I’ve made hundreds of dollars each of the past 2 or 3 years with this approach.
A few important things to point out:
- It’s critical that you avoid high-interest credit card debt. Pay your bill in full each month.
- If you don’t think you have the discipline to have a credit card, or another credit card, skip this.
- Don’t go overboard. Opening too many new credit accounts in a short period of time can hurt your ability to get credit when you need it.
That being said, if you’re looking for an easy way to make $100-500, or more, this is a great option.
14. Credit Card Rewards
Going along with the previous point, credit card rewards are a great way to make some money passively. You can earn cash back, points that can be used for travel, or cash in your points for gift cards. My go-to credit card is a cash rewards card that allows me to earn 2% cash back for every purchase. Over the course of a year that adds up to a significant amount for someone who puts every possible expense on a credit card.
I also have other credit cards that earn higher percentages of cash back for certain purposes. The Chase Freedom card will earn 5% cash back on purchases in specific categories that rotate each month. I love being able to rack up 5% cash back for things I need to buy anyway, like groceries and gas.
→ Visit this page to see an updated list of the best cash back and cash rewards credit cards.
Another option is to use a travel rewards card, which is ideal if you want to use the passive income for travel. Visit this page to see an updated list of the best travel rewards credit cards.
→ Related reading: How to Stack Rewards and Cash Back
15. Bank Account Promotions
Credit card companies aren’t the only ones who are willing to pay you to open an account. Some banks will give you a bonus simply for opening a checking or savings account. Again, this isn’t something that you’re going to do all the time, but it is an easy way to make a little extra money with no work involved.
→ Capital One is currently offering a $25 bonus for opening a checking account or savings account (for new customers).
16. Automatic Investing
One way to invest and make money passively is to automate the process. Acorns is an app that will invest your spare change automatically. When you make a purchase it will round up to the next dollar and invest the difference. You can also set up automatic recurring investments if you’d like to grow your account faster.
Qapital is another app that makes saving and investing easy. You can set up rules that will automate saving and investing based on things like your spending habits.
17. Turn Your Car Into an Advertisement
If you’re looking for a passive side hustle, how about allowing your car to be used as an advertisement?
There are a few different companies out there that match up advertisers with car owners who want to make some extra money. It could be a rear window advertisement, panel, or full wrap. The ad will be removable, will not damage your car, and they’ll actually install it for you. You can make anywhere from $50 – $400+ per month. Some of the biggest companies in this industry are:
Although the companies mentioned above are legit, there are some scams going around that claim to pay you for advertising on your car. Be sure that you are working with a reputable company.
18. Rent Out Your Stuff
One way to make some money without much effort is to rent out your stuff to other people. There are a lot of possibilities here, and it really depends on what you have, and what you don’t mind other people using. Fortunately, there are also several websites that allow you to list your items for rent, and make it easy for renters to find you.
Fat Lama – At Fat Lama you can rent just about anything from electronics, to sporting goods, to baby items.
Style Lend – At Style Lend you can rent women’s fashion items, like clothes and accessories. If you have a closet full of nice clothes this can be a nice, easy side hustle for you.
BabyQuip – At BabyQuip you can rent all kinds of baby items from cribs to toys to safety gates. This can be an ideal side business, especially if you’re located in a area that attracts a lot of tourists and vacationers who might not be able to bring everything from home.
Getaround and Turo – These two sites allow you to list your car for rent. People can rent from you rather than going to one of the major chains, and you can make a few thousand dollars per year doing it.
Fluid Market – At Fluid Market you can list your truck for rent.
RVshare – RVshare allows you to list an RV for rent, which can be a potentially lucrative side hustle.
→ For more details and more options on renting things, see my article 20 Things You Can Rent Out for Extra Money
19. Rent Your Spare Bedroom
If you have a spare bedroom in your home you could make some money without too much effort by allowing someone to rent the room. It could be a local college student, a single person looking for a cheap place to live, or you could rent it out nightly. A popular side hustle is to use sites like:
→ Related reading: How to Make Money by Renting a Room with Airbnb
20. Sell Your Data
MobileXpression certainly is not going to make you rich, but it can easily get you an extra $50 per year with basically no effort. You’ll download their app to your smartphone and they’ll get access to your browsing data, which they use for research purposes. Each week you’ll earn 5 credits. When you get 50 credits you can cash it in for a $10 gift card to a number of different stores, including Amazon. You’ll also get a bonus when you first sign up. I’ve been using it for more than a year and I’ve earned several gift cards.
Another similar option is Neilsen Computer and Mobile Panel. It works about the same as MobileXpression and you can earn about $50 per year.
UpVoice will pay you $70+ per year for visiting sites like Facebook, Instagram, YouTube, and Amazon.
21. Get Refunds That are Owed to You
Paribus is a free app that will automatically search for refunds that are owed to you. When you make a purchase from a store/website that has a price match guarantee Paribus will search for a lower price, and if it finds one it will help you to get a refund for the difference.
Paribus will also track your shipments from Amazon and Walmart orders to make sure that they arrive on time. If the shipments are late, Paribus will help you to get compensation for it.
It’s a free app and doesn’t require any of your time other than just a minute to set it up.
22. Make Money While You’re Driving
No, I’m not talking about rideshare driving or making deliveries. Both are legit side hustle ideas, but neither is passive.
There are a few apps that allow you to make money while you’re driving. Now, like several of the other options in this section, you’re not going to get rich with these apps. But they can provide some easy, passive income, especially if you have a long daily commute.
HyperDrive – With HyperDrive, you can earn rewards for being a safe driver. Rewards include gas, coffee, movie tickets, video games, and more.
23. Cash Back Apps
Earning cash back from the everyday purchases that you need to make can be a great way to earn some passive income. Earlier, I mentioned cash back credit cards as an option. One of the great things about cashback apps is that they can be stacked on top of rewards from your credit card.
There are a lot of cash back apps (you can see 15 of the best cashback apps here), but here is a quick look at a few of the best options:
Rakuten (formerly known as Ebates) is an extremely popular site/app that makes it easy to earn cash back on purchases at thousands of different websites, and some in-store purchases as well.
TopCashback is very similar to Rakuten. Although it’s not as popular, the amount that you can earn from TopCashback will often beat what you can get from Rakuten.
Ibotta is an app that is great for saving money at grocery stores, and other places like Walmart, Lowe’s, and many other stores. You can browse offers available at each store and claim the ones you want. It’s pretty easy to rack up a decent amount of savings thanks to Ibotta.
Swagbucks allows you to make money in several different ways, including cash back from purchases at thousands of different websites. Although it’s best known as a survey website, the cash back functionality is possibly the best way to make money with Swagbucks.
MyPoints is very similar to Swagbucks, and is actually owned by the same parent company.
The Honeygain app is about as simple as it gets. You install the app on your phone, connect to the internet, and earn money. Data scientists use Honeygain’s network to access the internet, essentially renting it from you.
Honeygain claims that you can earn up to $50 per month. I’ve been using it for a few weeks, and while my earnings are not that high, I am earning money and it’s completely passive.
Passive Income Ideas with Effort Required Up-Front
The options listed in this section have the potential to become sources of passive income in the future. There is no guarantee that you’ll be able to make money passively, but the ceiling is high with many of these options.
25. Start or Buy a Low-Maintenance Business
Just about any business can be a passive source of income if you’re not putting much time into it. Usually, that means hiring people to do the work for you. But some types of businesses require a lot less work than others, and you may not need to put in more than a few hours per week. Businesses like vending machines, automatic car washes, storage rental facilities, and laundromats can be good options.
26. Start a Blog
Blogging is often mentioned as a great way to make passive income. The truth is, it takes a lot of work up front to create a successful blog that will generate passive income. But if you’re willing to put in some work now, passive income down the road is definitely possible through blogging.
Some blogs are more passive than others. If passive income is your goal, monetizing the blog with display ads and/or affiliate programs are among the best options. Once you have a reliable stream of traffic (search traffic is generally the most reliable), you can make money that is not directly tied to the amount of work you are putting in.
27. Start a YouTube Channel
Another option for making money passively through content is to start a YouTube channel. With a popular YouTube channel, you can make money from ads, direct sponsors, and affiliate programs.
Like blogging, creating a successful YouTube channel will require a lot of work up front. But once you have a large following and you’re receiving a lot of views from getting your videos ranked in the search results, the money can come in without much work on your part.
→ Check out Stand Out and Make Money on YouTube to learn how to do it.
28. Create a Niche Website
Niche websites are similar to blogs, but they are tightly focused on a specific topic. For example, you may start a website on camping where every article is related to some aspect of camping, or products that are used for camping.
Niche websites typically make money by promoting products as an affiliate or through display advertising. And most niche websites get the majority of their traffic from Google search, by targeting low-competition search phrases.
Creating a successful niche website will require some work and some patience, but once it is rolling, it’s one of the most passive types of websites you can own.
→ For details, please see my article How to Create a Niche Website
29. Write and Sell E-Books
If you like to write, selling ebooks can be an excellent way to make recurring passive income. The most common approach is to use Amazon to reach a large audience of Kindle users, but you could also sell an e-book through your own website with a simple checkout like SendOwl.
You can write any type of book that you like, and on any topic that you want to write about. Of course, they type and topic of your book will impact the size of the audience that may want to buy it, but there is a lot of flexibility.
You’ll put in the work up front to write the e-book, and then you’ll be able to earn money from it for months, or maybe even years to come.
→ To learn more, please see Become an Amazon Kindle eBook Publisher.
30. Create an Online Course
Creating a course is a popular way to make money online. Some courses sell for hundreds or even thousands of dollars, so you don’t need to make loads of sales in order to make very good money with a course.
Obviously, creating a course takes time and effort. But if your course is focused on an evergreen topic (something that will still be relevant a few years from now), it can be an excellent source of passive income once the course is live.
You’ll need to market the course and provide some level of customer service. However, if you have a steady flow of traffic, or if you’re able to create profitable ad campaigns, the sales can flow without too much effort on your part. You can also outsource customer service to a VA if you want to make it more passive.
31. Sell Digital Products
E-books and courses are two of the most popular types of digital products, but there are plenty of other options as well. You can create and sell printables in a wide variety of niches. You could also sell other types of products like website templates, graphics, photos, software, apps, music, and much more.
Selling digital products has the potential to be passive because you can have a checkout, like SendOwl, that will handle all of the orders and product devivery. You don’t have to deal with inventory and the amount of work involved in maintaining the product and the store can be minimal, depending on what you are selling.
Some types of products require more customer service than others. For example, selling WordPress themes and plugins will come with a lot of support requests as your customers are likely to need assistance. If passive income is your goal, choose a type of product that is not likely to require a lot of support.
→ See my article How to Sell Your Own Digital Products the Easy Way
32. Merch by Amazon
With Merch by Amazon, you can create designs and make money passively as other people buy t-shirts and other products with your design.
If you have some design skills, it’s an excellent opportunity to make money. And if you don’t have design skills, you can outsource the work or partner with a designer.
Right now, Merch by Amazon is invite only, but you can fill out a form to request an invitation.
33. Phone Farming
Phone farming involves using several smartphones to run different apps that make money passively. To make this work, you’ll need to have several old smartphones that are no longer in use, or be able to get free phones from other people who are no longer using them.
With a bunch of phones, you can run video watching apps and data collection apps on the phones to earn money. You might be able to make $20 – $40 per month if you have a bunch of phones.
It takes a bit of effort to set up, but it’s passive once you have the apps running.
To see more, please read How to Start a Phone Farm.
Get Started with Passive Income Today
After reading through this list, pick a few that look like a good fit for you. The sooner you get started with passive income the sooner you’ll be making money, and you’ll have more to re-invest. There is definitely some low-hanging fruit on this list that is easy to get, even if you don’t have money to invest.