A couple of days ago I published a post explaining what passive income is and why it’s important to me. Please check out my previous article if you want an intro to passive income. Otherwise, if you’re ready to read about 10 great ideas for creating your own passive income streams, let’s dive right in!
I’ve been reading a lot about passive income recently and it’s becoming clearer and clearer that generating multiple passive incomes streams is the only path to financial freedom. As a result, I’ve been scouring the internet for the best, easiest and most effective passive income ideas. These are my top 10. I haven’t tested all of these yet, but they are ideas I have researched a lot and consider to have real potential. Consider this my to do list! 🙂 I hope to experiment with several of these over the next year or so and will update as I go!
10 passive income ideas to try
1. Invest in stocks
Invest your money in the stock market. This is nothing groundbreaking, but it’s one of the most well-known and classic forms of passive investment, so I had to include it! Once you’ve chosen where to invest your money, your stocks should pay dividends every quarter or so with no further action from you. You may not see huge instant results, but keep reinvesting the dividends away and you will see your returns get bigger and bigger. This investment income, together with extreme frugal living, was how Mr Money Moustache was able to retire aged 30! Investing in index funds is usually agreed to be one of the most passive and reliable forms of investing. For a good introduction, see this post by Mr Money Moustache, or the Monevator guides to passive investing for UK recommendations.
2. Invest in peer-to-peer lending
Peer-to-peer (P2P) lending is a great way to earn a higher interest rate on your savings. The risk is greater than with a typical savings account, which is why the returns are greater. Two popular companies in the UK right now are Ratesetter (interest rates up to 4.5%) and Zopa (rates of up to 6.3% for the highest risk account!)
3. Affiliate marketing
Affiliate marketing is when you promote a product or service, and earn a commission every time someone buys it based on your recommendation. Most affiliate marketers do this via a blog or website. You can work affiliate links into your existing blog, or set up a new website specifically to promote a certain product. It can take a lot of time to build up a website good enough to bring in affiliate income passively, but once you do, it’s potentially very lucrative! Some great blogs which publish info on how much they make with affiliate marketing are Making Sense of Cents, Emma Drew and Dumb Passive Income.
4. FBA shop
FBA stands for Fulfilled By Amazon. This is a great service for Amazon sellers. You send the products you want to sell to the Amazon fulfilment centre, and then let Amazon deal with the rest. They will pick, package and post the products to the buyer for you. You can even find a supplier who will ship the products directly to Amazon for you, meaning you don’t have to deal with any inventory yourself. Like most passive income streams, this can take a lot of research and energy to set up. But once you’ve hit on a good product to sell at a profit, you can sit back and let Amazon do all the work! Read this case study of how one Amazon FBA business made over $4,000 in the first month.
5. Sell stock photos
If you are into photography, consider uploading some of your best shots for sale on a stock photo website. You will earn a small commission each time somebody uses one of your pictures. If you are a keen, say, travel or food photographer, you may find that you have enough suitable images to sell already, without even doing any extra work. This site has a great list of sites to try, and also covers some of the legal issues.
6. Rental property
We live in the south east of England where property prices are insane, so this is not something I’ll be able to invest in anytime soon. But if house prices are more affordable where you are, this might be something you look into. If you hire a management company to deal with maintenance and tenants, this can be almost completely passive income.
7. Rent out your driveway
I heard about this recently and I think it’s genius. Basically, if you have a house (or flat) with a driveway or other parking space you can charge people to park in it – kind of like Airbnb for cars. Obviously not everybody will be able to do this one, but if you lived near a station, town centre or sports ground, you could be looking at quite a lot of money for almost no work once you’re registered. Two UK companies that offer this are Your Parking Space and Just Park. There are plenty more companies that can be found by Googling.
8. Create a product to sell
The trick is to make create a product that you only have to work on once, but can keep selling indefinitely. Ebooks, online courses, apps and printables are all good options. Once the work is done, any money that you make from future sales will be true passive income.
9. Cashback credit cards
I’m not sure if this counts as real passive income or not since the cashback is directly linked to your activates – you have to be spending money to make money, and the money won’t just roll in by itself. However, this is something I’m definitely meaning to look into. If you find a good credit card, put all your regular spending on there and set up an auto-payment to pay it off in full every month to avoid charges, you can get cashback or other rewards just for spending would have anyway. See Money Saving Expert for the best deals in the UK.
10. Sell a design
Websites such as Cafepress let you upload your own design and apply it to products such as T-shirts, phone cases and stationery. Products featuring your unique design are then available for sale through the website. Cafepress takes care of all the printing, sales and shipping. You sit back and wait for the commissions to roll in!
Get started on your passive income journey
So there you have it. There are dozens more ways to generate passive income streams out there, but these are 10 of the easiest and potentially most lucrative. The ideal scenario would be to have several different streams of passive income so that you are not too dependent on any one source.
My passive income journey is only just getting started. I am planning to experiment with several of the above ideas over the next year or so, and of course I will review what works and what doesn’t here on this blog!
How about you? Do you have any passive income streams? Are there any that you want to try? Let me know below.
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