It sounds utopian and is the unattainable dream of many, but you can earn money while you visit Morpheus. Here are some ideas
It’s easy to see why so many experts praise making your money work for you instead of you working for your money. After all, who doesn’t like the idea of earning money while you sleep?
If you are like me, one of those dreamers who yearn and search tirelessly for financial freedom, then in this post I will explain how the Internet makes it possible to generate passive income.
What is passive income?
The term passive income, or residual income, refers to the ability to generate income without expending much effort.
The best investors will tell you it’s about diversifying, creating multiple income streams and letting your money work for you. Instead of reaching for a paycheck and depositing your earnings into a standard savings account, you can explore other investment opportunities that will bring you higher returns over time. It doesn’t make sense to stay in assets when they could generate more income for you.
The problem is that you can’t start from scratch. You will have to invest one thing or another to get the passive income ball rolling. This will require an investment of one or more of the following: money, time, effort, or additional assets.
What are you willing to invest in?
The first step in creating a passive income stream will be to decide what you are willing and able to invest: money, time, effort and/or additional assets.
We will classify these options into two categories. The first is investing money, which is self-explanatory. The second is investing money along with time, effort and further support.
The first option, investing money, is probably the easiest income idea as long as you have some capital to invest. These are the opportunities where you take money from the bank and put it into a financial investment. Over the course of several months or a few years, these investments can grow steadily with almost no effort. Some examples would be high-yield savings accounts, CDs or index funds.
On the other hand, there are passive income ideas that require more than a monetary outlay; they also need time, effort and perhaps other resources. For these, you will typically invest time and energy to set everything up and provide general maintenance along the way. Examples in this category include affiliate marketing, creating an online course, or creating YouTube videos that generate money over time.
Invest your money
These passive income investments only require cash up front. Once you make that initial investment, you can sit back and wait to cash out months or years in the future.
- High Yield Savings Account
Savings accounts are not an attractive investment to highlight. But the truth is, you can find high-yield savings accounts online that have much higher interest rates than the traditional banks you’re used to. Since online banks don’t have the same overhead costs as standard bank accounts, they can give you interest rates in the 2-3% range, more than 20 times higher than the national average interest rate of 0.1% on savings accounts.
- High Dividend Stocks
Stocks that pay quarterly dividends are another way to maintain predictable income. When you buy stocks, you obviously want to take advantage of a company’s large earnings. But with high-dividend stocks, you get paid just for owning shares. Large, leading companies like GM and IBM are two dividend-paying options you can explore in the stock market. Ally Invest is a good place to start if you’re interested in high-dividend stocks.
- Peer-to-peer lender
Instead of going to a bank to borrow money, many consumers turn to peer-to-peer lending groups to get a loan. By joining a P2P lending platform, you can earn interest on the money you make available for others to borrow. In a sense, you are becoming the bank and can generate returns between 5-10%.
Traditionally, people would find a financial advisor in their area, meet with them and discuss their financial strategy for building a better future. These meetings with real advisors often carry high monthly service fees that intimidate first-time investors. Instead, you can go online and sign up to use a robo-advisor.
A robo-advisor is online investment software that makes financial decisions based on algorithms and calculations with little intervention from a human advisor. You can receive personal finance recommendations automatically and let the software do its job. Monthly fees are much lower and more affordable than your standard financial advisor.
- Real Estate
Real estate investing sounds like a complete headache. The idea of buying a house, fixing it up and then flipping it sounds almost overwhelming and not at all passive. But you can invest in a property without having to show up at the property. With real estate investment trusts, or REITs, you can join a group of other investors who also want to invest in real estate. A professional real estate broker like Fundrise will handle all the logistics and make investments on behalf of the group. No need to worry about arranging things or being an on-call landlord for a rental property.
- CD Ladders
CD ladders are short-term strategic investments that allow you to collect money consecutively as each investment matures. This means that you plan a series of CDs that mature at different times. Once your first investment matures, the rest of your investments will continue to come in, putting some cash back in your pocket. CD ladders keep your money relatively liquid and not tied up for long periods of time and are an excellent passive income idea.
Invest your time and effort
These types of passive income ideas will require you to put in a lot more time and extra work up front, but the earnings that accrue over time can be well worth it.
- Affiliate Marketing
Affiliate marketing offers many ways to make money without having to own a product. One way is to create your own website or blog that generates steady traffic. You can then set up affiliate partnerships and send your readers to partner sites to purchase items. You will receive a commission for each referral. You can also use affiliate links on social media channels like YouTube.
- YouTube Videos
If you can get a large audience on a YouTube channel, you can turn it into cold hard cash. The trick is to create content that is useful, entertaining and engaging. This is not the easiest idea to execute, but if you can pull it off, there are many ways to monetize your YouTube channel.
- Create an eBook
Self-publishing an e-book is becoming an outdated notion, but if you can create engaging content that resonates with people, it could be worth it. Of course, it’s not the most passive method of generating income at first, but it can be an effortless source of income once you’ve written the book.
- Online Course
Creating online courses is another passive income idea that requires hard work and a great deal of effort up front. To create a course, you must be an expert in a particular area. Your topic must also be something that people find useful or enjoy learning about. After you create your course, you can charge fees for years to come without much intervention.
- Rent out your home or vehicle
If you have assets like a house or vehicle, why not make some extra money when they are not in use? If you have a spare room in your house or a whole extra house, then you can post your property on Airbnb and collect rental fees. Do you have a vehicle that is barely used? List it on an app like Getaround, which allows people to rent your vehicle for daily or hourly rates.
- Sell photos
Fancy a shutterbug? Making some extra money from your photos can be a fun passive income idea. With sites like Shutterstock and GettyImages, you can list your images and collect royalties every time someone uses your photo. Sure, buying a single image won’t make you rich. But if you have thousands of high-quality images that generate you a few dollars here and there, that can add up over time.
Passive income ideas with huge potential
If you’re ready to up your investing game and start earning money additionally, you can take one or more of these passive income ideas and put your money to good use.
By establishing one or more passive income streams, you can set yourself up for a better future. A future where you can earn money without much effort in the long run.