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What is passive income? Passive income is money that we earn that is not directly tied to our time. At a job, you have to trade your time for money, but that is not trade off is not necessary for passive income. As an example, let’s say someone wrote a book and that book is now on a shelf in a bookstore. They have done their part by writing the book and now each and every time that someone makes a purchase, the author makes money. Passive income takes time and work upfront so you can reap the benefits later. In the book example, after the author has done the legwork of writing the book and any advertising, book tours, etc associated with the launch, so now they can sit back and wait for the money to roll in.
Building passive income takes time and work and it is important to set expectations beforehand. Most likely, you will not start out making 1000s every month and it will take time and work to even make $1 each month passively. But, for anyone willing to put in the upfront work, passive income can be an insanely powerful wealth builder or allow you to earn less active income, effectively buying back your time. In this article, we will discuss some of our favorite ideas that you can use to earn passive income so let’s dive into it.
Invest in Dividend Stocks
Investing in dividend paying stocks and ETFs is the easiest way to create a passive income stream. Without getting too much into personal finance theory, if you have most of your money in a savings account and are earning 0.06% APY, you are earning about $0.60 in passive income for every $1,000 in the account. Conversely, if you put that same $1,000 into a dividend paying stock or ETF yielding 3% annually, you will be earning $30 each year in passive income. That may not sound like much, but it compounds and is heavily affected by yields. At 5%, $1000 invested is $50/yr, $2000 is $100/yr, $3000 is $150/yr and continuing on and this is all completely passive income. You just have to invest once and wait for the payments to start rolling in. Start investing today on M1 Finance and get $50 free through this link.
Start a YouTube Channel
It is extremely easy to start a YouTube channel and you can upload content by just filming with your phone. Several content creators got their start this way, most notably Mr. Beast did this for years while growing his channel. In reality, it can be quite hard to make good videos as most will require planning, script writing, filming, and editing, but it is still very doable and making good videos is eventually how you grow on YouTube. Now how can we use Youtube as a source of passive income? You can monetize your YouTube channel through affiliate links, ad deals, and through Google Adsense (some criteria has to be met first for this one though). Obviously, it takes significant effort to regularly create videos and build an audience, but once they are done, they are on YouTube forever. This means that your backlog can keep earning you money forever.
Affiliate marketing means selling other people’s products and getting a percentage of the selling price from the product as commission. This is not a bad deal at all if you consider affiliate marketing as a source of your passive income. How do you get started with affiliate marketing? Several major companies offer affiliate programs, including Amazon, Ebay, and Clickbank. Once you receive your special links to the product you can post them on your website, Twitter, Instagram, in your YouTube video, etc.. Every time someone makes a purchase through your link, you will get a tiny percentage of the sale as commission. To make decent income from affiliate marketing, you need a website or social media account that gets significant visits or traffic so that you can make a lot of sales. Generally doing well in affiliate marketing requires a lot of up-front efforts in terms of building an audience or building such domain authority in whatever space you are in. Then, you can just sit back and enjoy the money as it flows in. If you want to learn more about affiliate marketing, check out this course.
Publish a Digital Product
Selling digital products, like an e-book, an app, a course, or a game, has grown in popularity in recent years. The idea here is similar to many others, you do the upfront work and then the product makes you money forever. Depending on the type of product, you can make money through ads, straight sales, and affiliate sales (other people will sell your product for you). Absolutely anyone can write and publish an e-book or course online, but that does not mean it will be successful. The amount of money that you will make is directly correlated to the quality of your product. Before releasing anything, make sure to heavily research your target market/niche, double check your quality, and determine a fair price.
Build a Members-Only Community
If you already have an existing audience, building an online paid membership community can be highly profitable. By creating and leveraging your unique value proposition members of your online community will be willing to pay for a community-like service. Great examples of this are Patreon, Twitch subscriptions, paid Discord servers, and Youtube has rolled out a similar feature. Each of these is built on the same concept and you can capitalize on this too. If you charge a monthly membership fee, you will see your monthly passive income increase immediately and drastically.
Sell Your Art
If you have design or art skills, you can use them to make money by selling clothing and other items with your designs on them. CafePress, Zazzle, and Redbubble to name a few, let you sell T-shirts, hats, mugs, and other items with your own designs. You can also use a service like Shopify or Etsy to create your own web storefront to sell your products. Several POD (print-on-demand) stores have been popping up on these platforms with the rise of services such as Printful. These services will handle the entire back end for you from processing orders and creating products to shipping and returns in exchange for a small fee per product sold.
Those are our favorite passive income ideas. Of course this list is far from exhaustive and there are hundreds to thousands of other ways to make passive income. Have other ideas to generate regular, passive income? Let us know below!