Table of Contents
- What is passive income?
- Things to consider beforehand
- Generating passive income
- 1. Design an app
- 2. Start a blog
- 3. Sell your Photos
- 4. Become an influencer
- 5. Make YouTube videos
- 6. Write an e-book
- 7. Sell your own products on the internet
- 8. Set up a website selling a product
- 9. Become a referral source
- 10. Create an online course
- 11. Make an online guide
- 12. Buy real estate
- 13. Invest in stocks
- 14. Set up an Airbnb
- 15. Create a storage rental
- 16. Sell your art
If you’re looking to invest your time and resources into something that will continually generate money, you should start looking for opportunities to generate passive income.
36% of workers are involved in the gig economy. Around the world, people are picking up side hustles that involve everything from freelance writing to dog walking.
The only problem with “gigs” is that they typically don’t provide much long term financial security. You do the work requested, get paid for the work, and that’s it. No interest, no regular payments. You spend the money and you’re right back where you started.
What is passive income?
In general, if an activity involves a significant amount of upfront investment (like cash, material resources, research, and personal effort) and has the promise to continue providing results with little-to-no effort after the initial setup, it qualifies as passive income.
Passive income requires a very hands-on approach initially and doesn’t typically provide income immediately. It can take a variety of different forms including:
- Using existing money to generate more money
- Renting or selling an existing asset
- Creating an asset that you can continue to sell
- Reducing current expenses to free up existing money
- Starting on the right foot
Things to consider beforehand
If you want to invest in a source of passive income, you must go in with a plan. The initial investment can feel daunting, and if you don’t go in with a clear purpose, you can end up throwing money away.
Here are a few important considerations before you take the passive income plunge:
- Start by conducting research into your desired passive income
- Set objectives, such as a certain amount of money you want to make once the money starts flowing in
- Calculate the estimated costs involved and how much cash flow you’ll need to generate to start to see a profit
- Consider other assets you’ll need to get started, such as creating a logo, setting up a website, researching an industry, or developing a product
If you’re feeling confident about your ability to tap into passive income, the only thing left is to choose what kind of income you want to pursue!
Generating passive income
Below are 16 effective ways to generate passive income in 2020. Some require more effort or technical skills than others, but all will certainly generate recurring income for years to come.
Keep in mind that these are not put in any order and are not the only methods of generating passive income.
1. Design an app
Apps are an incredibly popular way to use 21st-century technology. In fact, 194 billion apps were downloaded in 2019. Needless to say, if you can create an app that answers a genuine need for consumers, you can tap into a very fertile market.
While designing an app isn’t as simple as many other things on this list, it has become exponentially easier over time. If you set goals, make a plan, and then design and develop an app, you can hand it over to a contracted development team to do the coding. Before you know it, you’ll have a bonafide product that you can sell with little to no future effort.
2. Start a blog
Blogging has remained one of the most popular sources of information on the internet for years. Fortunately, starting a blog has only gotten easier with time. You can use a tool like Squarespace or Wix to build a site or you can hand the task over to a web developer as a contract project. We built ours on WordPress.
Once you have a site, you can create quality content for readers. Over time, as your following grows, you can monetize the site through things like on-site ads, donations, and affiliate marketing. A few tips to help your website get traffic quickly include:
- Cultivating an email list of loyal followers
- Setting up a social media community for your site
- Utilizing search engine optimization (SEO) across your website
- Using pay per click (PPC) ads to initially drive traffic to your site
If you choose to go this route, be ready for a significant upfront investment as you churn out content and wait for your site to begin appearing in Google searches. Once you get some momentum going, a lot of the work will be complete, and you can sit back and enjoy the fruits of your labour as your already existing content continues to draw traffic.
3. Sell your Photos
If you’re a skilled photographer, you don’t have to resign yourself to posting your gorgeous content on free photo sites or social media. You can sell them as stock photos.
You can submit photos to an established site like Shutterstock to reach a larger crowd, although you’ll have to work within their system. If you want to have control over your photos (and you want to keep all of the profit) you can also build your own website to showcase your photos.
4. Become an influencer
Another way to create passive income is by tapping into affiliate marketing as an influencer. If you already like to use social media, you can direct some of your energy into cultivating a following on Youtube, Instagram, Facebook, Pinterest, or a podcast.
Yes, this option does mean you’ll need to continue to create content over time. But once you have a solid foundation of quality material, you can set up a schedule of new content creation and let old posts and recordings — all of which will be infused with affiliate links and promotions — continue to draw traffic.
5. Make YouTube videos
This is a venture that is growing rapidly. You can create videos in just about any area that you like — music, tutorials, opinions, comedy, movie reviews — anything you want, then put them on YouTube. You can then attach Google AdSense to the videos, which will overlay your videos with automatic ads.
When viewers click on those ads, you will earn money from AdSense. The keys will be to create compelling videos, to promote those videos on social media websites, and to create enough of them that your income will be coming from multiple sources. There’s a good bit of work that goes into creating videos, but once a video is done it can become a completely passive cash flow source for a very long time.
6. Write an e-book
This can be a lot of work upfront, but once the ebook is created and marketed it can provide you with a passive revenue stream for years. You can either sell the ebook on your own website or offer it as an affiliate arrangement with other websites that provide content related to your ebook.
7. Sell your own products on the internet
The possibilities here are endless — you can sell just about any product or service that you like. It could be a product you have created and can manufacture on your own or it could be digital in nature (such as software, DVDs, or even instructional videos).
You can set up a dedicated website for this product or service unless of course, you have a website or blog already in place. Alternatively, you can also sell it on an affiliate basis, either by offering it directly to websites and blogs related to your product or service or through a platform such as ClickBank.
8. Set up a website selling a product
If there is a product that you are particularly knowledgeable about, you may be able to sell it on a dedicated website. The technique is similar to what you would use for your own product, except that you will not be concerning yourself with product creation, but only with the sale of someone else’s product.
You may even find after a while that you are able to add other products that are related. Should that happen, the site could generate substantial revenues.
If you are able to have the product drop shipped to customers directly from the manufacturer, you won’t even have to get your hands dirty. That may not be 100% passive, but it’s darn close.
9. Become a referral source
Every small business needs referral sources in order to maintain sales. Make a list of small business providers that you use on a regular basis and feel you can recommend to others without reservation. Then contact the owners and see if they have any kind of cash referral offers available.
You can do this with accountants, landscapers, electricians, plumbers, carpet cleaning services — the list is endless. Keep a list of these businesses, and be ready to refer them to your friends, family and coworkers. You can earn a fee on each referral just from talking to people.
Don’t overlook referral programs at work either. If your company offers a referral bonus for either new employees or new customers, then take advantage of that plan. It’s easy money with virtually no work.
10. Create an online course
Everyone is an expert at something. Why not create an online course about your passion?
There are several ways you can produce and host your own online course. One very simple way is to use a website like Udemy.com. Udemy as over eight million students and is a great way to get your content in front of others for their consideration.
Once you create an online course, it can work for you while you sleep!
What do you put in your online course? Good question. You can add video lessons, checklists for completing steps you recommend in your video lessons, small ebooks to supplement the lessons, audio files for people listening while travelling, informative interviews with like-minded experts, and a whole bunch more!
In fact, you can create several packages at different price points. Some people will want everything, so you can include ‘the works’ for the highest price point and then have two lower price points so that you can receive the largest possible volume of orders.
11. Make an online guide
If writing articles or creating videos isn’t your thing, and you want to make money online, try creating an online guide.
By providing specific information in a guide-like format, you can make money through some of the means already addressed: advertisements through Google AdSense, affiliate links, and even memberships you can sell from your online guide.
12. Buy real estate
Real estate is a historically stable investment. However, it certainly qualifies as a “use money to make money” source of passive income. Usually, you need exorbitant amounts of liquid assets to purchase and maintain a piece of property.
However, if you invest in your property upfront and then use it as a rental, you can continue to reap the financial rewards for years to come. If you’re not hurting for cash, you can even hire a property manager to run your rental. They’ll take a portion of the proceeds, but you’ll continue to have a small amount of income and will maintain the value of the property itself. No need to worry about day-to-day operations.
13. Invest in stocks
Investing in the stock market is a classic choice for generating income. However, there are a couple of different ways that you can go about the process. If you want to be hands-on, you can conduct intensive research, purchase and sell high-risk, high-reward stocks regularly.
If you’re looking for passive income, though, you may want to consider putting your money in more stable exchange-traded funds (ETFs). Or, if you really want to be hands-off, using a Robo-advisor to invest for you. This will yield smaller results, but you’ll still be creating a passive income without the need to lift a finger.
14. Set up an Airbnb
If you have extra living space, you may have a fairly easy source of passive income. Airbnb has made it incredibly easy to rent out your extra spaces to generate a profit from otherwise wasted resources. Now, this one is borderline “passive” income, since it does require some continual attention.
However, while it takes a little bit of elbow grease to get your space set up, once your rental is staged and listed, it requires minimal oversight. You can monitor your space as people come and go, paying you for each stay and turning an empty possession into a valuable asset.
15. Create a storage rental
If you’re not interested in having Airbnb foot traffic regularly or you don’t have people-friendly spaces available, you can still produce a nifty profit by renting your extra space as storage.
You can even rent a parking space if you have extra room on your property. Storage rentals mean you don’t have to worry about changing sheets, setting out amenities, or interacting with guests daily.
16. Sell your art
You might be a skilled designer, a graphics expert or someone who just picks up the paint-brush as a hobby. But what if those raw pieces of your art can ensure you a continuous flow of money. There are several websites like Etsy, Zazzle, etc. that will pay you a nice amount of money for sharing your artworks with them.
These websites use your artworks to create patterns for their branded t-shirts, mobile covers, posters, mugs etc. Whenever these products are sold, you will be given a fair share of commission from the product price.
Making passive income in 2020
As you go about setting up a source — or multiple sources — of passive income, it’s important to remember that slow and steady wins the race. This isn’t a mad dash to scrape up some extra income via a quick side gig. You’re looking for ways to set up channels of stable, hands-off income that can last for a while.
Make sure to do your research and put in a genuine upfront effort, and before you know it, you’ll be happily joining the ranks of those who passively generate income even in their sleep.