Passive Income Ideas: 9 Ways To Make Money While You Sleep

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Passive income offers a way to generate extra income each month. The idea of passive income, earning money without actively doing work, is enticing for many. Even if you love your day job, having some passive income streams in your back pocket can help you set up a brighter financial future.

This guide explores some of the best passive income ideas.

What Is Passive Income?

Passive income represents money earned with little to no current effort. Depending on the source of income, it might take a bit of time or money upfront to reap the rewards of a relatively passive income stream later.

When you build passive income streams, you create more financial stability. You can use the incoming funds to cover lifestyle costs or make progress toward financial goals.

Additionally, these extra income streams can give you more financial bandwidth during unexpected situations. For example, if you lose your job or have a medical issue, you can lean on your passive income streams to get you through.

Generally, passive income streams involve an upfront investment of time, money, or both. Over time, these income streams can grow. For example, many bloggers start off earning a few pennies at a time. But as a blog gains traction, the income associated with it can also take off.

Best Passive Income Ideas To Start With

As you dive into the world of passive income, you’ll quickly realize there’s no shortage of opportunities. But some income streams are easier to build than others.

Below are some ideas to help you start growing passive income streams if you are short on time or money.

1. Sell Digital Products Online

Digital products include items you can make once and then sell forever. Some popular digital products include:

• PDFs
• Templates
• Courses
• Printables

Depending on your situation, you might sell these items through sites like Etsy or Gumroad. But for some, selling these products through your own website is a viable option.

2. Rent Out Extra Space

If you have spare space around your house, renting it out could generate a quick source of passive income. Some potential spaces to rent out include:

• Get a roommate: You might rent out the guest bedroom to a roommate.
• Storage space: Rent out your extra garage space as a storage option.
• Parking spots: If you have an unused parking spot in a hot location, consider renting it out to someone who needs it.

Ultimately, renting out used space gives you a way to generate income instead of collecting dust.

3. Start a Blog or YouTube Channel

If you have specialized knowledge, you can turn that seed into a successful blog or YouTube channel. Both offer a way to earn passive income through advertising revenue. In addition to ad income, you can potentially earn money through affiliate links and brand deals.

Although it’s possible to put in time without earning any money, successful blogs and YouTube channels make significant income.

4. License Your Art or Photography

If you have artistic skills, you could license your art or photography for a profit. Some places to sell your photography online include Shutterstock, Alamy and Getty Images.

It will likely take several photo opportunities to generate a worthwhile income. However, this could offer a way to build a passive income stream around an activity you already enjoy doing.

5. Invest in Dividend Stocks or ETFs

If you don’t want to commit too much time to building a passive income stream, purchasing dividend stocks and ETFs could open the door to passive income. These types of investments can generate an income after you buy the underlying asset.

6. Open a High-Yield Savings Account

A high-yield savings account offers a low-risk way to build your income streams. When you tuck your savings into this account, it can generate interest income each month.

For example, let’s say you stash your $25,000 emergency fund into a high-yield savings account with a 4.25% APY. It would earn $1,602.50 in one year, which is certainly better than earning nothing.

Passive Income Ideas That Require More Investment

If you are comfortable putting more time or money behind your passive income goals, consider the following ideas.

7. Buy and Manage Rental Property

When you think of passive income, rental properties might be the first thing that comes to mind. Essentially, this income stream involves purchasing and renting out a property to tenants. You could potentially earn hundreds or thousands of dollars per month by renting out an apartment or home.

While this income stream is usually passive, you might occasionally receive unexpected phone calls from your tenants to make repairs around the property.

8. Own an Income-Producing Machine

Buying the right income-producing machine can lead to a significant source of passive income. Some possible options include:

• ATMs
• Laundromats
• Vending machines

Of course, these machines come with some maintenance. If you can stomach the upfront costs, you’ll often see a worthwhile income stream.

9. Write a Book

Writing a book involves a lot of upfront time and effort. For those who self-publish their book, it can cost some money to bring the book to market. Though with all of this input, a popular book can generate a passive income stream.

Pros and Cons of Building Passive Income

Every financial endeavor comes with pros and cons. Explore both sides of building passive income below:

Pros:

• Earn money around the clock, even while you sleep.
• Diversify your income streams.
• Make progress toward long-term financial goals.

Cons:

• Often requires upfront investment of time, money or both.
• Often not entirely “hands off”
• No guarantee of success

Final Take: Start Small and Stay Consistent

Building passive income streams takes time and effort. As you get started, choose one idea and stick with building it over time. You’ll need to be consistent upfront to grow your passive income stream.

At first, it’s easy to get discouraged with little to no earnings. But even small sales numbers can lead to a worthwhile income over time.

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