How To Generate Passive Income With Just $20
Written by
Cynthia Measom
Edited by
Joe Evans
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It’s true that a $20 bill won’t go far in today’s economy and cost of living. However, it can serve as the seed to launch a passive income strategy. The key is to pick the right idea.
Passive income strategies do not require you to actively work to earn money. Sure, you’ll likely have to do some legwork upfront, but after that, it’s kind of a “set it and forget it” proposition.
From fractional stock investing to print-on-demand T-shirts, here are six ways to generate passive income with only $20.
Fractional Stock Investing
Todd Stearn, founder and CEO of The Money Manual, said you’ll need to do your research to choose the right stocks, but you can invest small sums of money in stocks via fractional investing, which will generate passive income if they perform well.
“Find an online or app-based brokerage, and make sure they allow fractional investing, meaning you’ll be allowed to buy partial shares rather than being restricted to only buying full shares,” he explained. “Also, make sure they don’t charge any fees, including low balance fees, transaction fees or commission fees, as many brokerages have done away with these fees.”
Fractional Real Estate Investing
“You can invest in fractional shares of real estate with apps like Fundrise, which has a $10 minimum investment,” said Stearn. “These companies generally charge a small percentage of your investment, often somewhere between 0.15% and 1.85%, to manage the funds.”
Stearn explained that another way to get into fractional real estate is by investing in real estate loans through the Groundfloor platform with an investment as low as $10.
“Groundfloor charges no fees to investors, and most loans are repaid within six to nine months with an average payout of around 10%,” he said.
Selling Website Domains
Jason Lamprey, owner of Lamprey Construction, said that you should look for industry-specific website domains that have potential resale value.
“Platforms like GoDaddy or Namecheap offer domains at low prices, sometimes starting as low as $0.99 for the first year,” he said. “Spend your initial $20 to secure a few appealing domain names that are niche-specific, preferably industries you understand well. This way, you can identify gaps in the market more intuitively.”
“Use platforms like Flippa or Sedo to list your domains for sale; these facilitate exposure to potential buyers looking specifically for unique and valuable domain names. The key here is to keep an eye out for trending industry keywords, leveraging them to buy domains that could be attractive to potential business owners and entrepreneurs. This technique requires minimal upfront investment but can yield considerable returns if done correctly.”
Earning Interest and Bank Account Bonuses
“Places like Ally let you earn more on your savings without a big deposit,” suggested Finn Wheatley, a financial expert and risk analyst at The Small Business Blog. “You probably won’t get rich from the interest, but it’s a start.”
You can also look for banks that are offering $200-$400 bonuses just for opening an account and meeting easy requirements, such as receiving a direct deposit. For example, Truist Bank is offering a $400 bonus if you open a Truist One Checking account, receive at least one direct deposit of at least $500 and complete at least 15 debit card purchases within the first 90 days.
Starting a Membership Website
“Another idea is starting a website where people pay monthly fees to access info or join an online community,” Wheatley said. “With $20, you could get the site set up and test out some content to attract your first members. Even just a few people paying $5-$10 monthly could generate nice passive income over time.”
Selling Print-On-Demand T-Shirts
“Selling custom T-shirts online without inventory is also a good project to try for $20,” Wheatley suggested. “Sites like Printful let you design shirts and list them — then they make the products as orders come in. If some shirts sell while you’re sleeping, that’s passive income.”
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