30 Best Passive Income Ideas and Sources to Build Wealth (2022)

Rent ad space on your car

If you drive frequently, you can get paid for displaying a company’s advertisement on your car. It’s easy to get a wrap on your car and start earning money just from making your regular trips. The wrap won’t damage your car, and you can earn up to $450 in passive income every month. This option could be especially lucrative for rideshare drivers. Get started by using one of the following services:

Active income vs. passive Income: Which is best for me?

In theory, all of your income sources carry similar weight. But when it comes to achieving financial freedom, passive income leaves active income in the dust.

You see, active income is the money generated from all those efforts you’re currently making. And you need to keep working if you want to continue making a living. If you quit, you don’t get paid. Your time literally equals money.

And then you have passive income. An income that doesn’t require you to work actively. And the money continues to flow in for years and years. If you’re looking to design a dream life where you are financially free, it might be better for you to focus on passive income.

Just remember, while you might be able to build a passive income stream with a small investment, you’re not making any less of a commitment than someone investing their time. Making passive income comparable to income earned from active efforts requires a good amount of work upfront.

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Which passive income source is best?

The question of which passive income source is best depends on several factors, but some of the most important include the amount of money you have to invest, the total opportunity size, your interest and ability in the area, the amount of time you need to invest and the potential to succeed. Typically, the lower the barriers to entry, the more crowded the field of competitors and the lower likelihood of success.

So you’ll need to weigh the opportunity against these factors and see which passive income strategy works best for you. But it can be helpful to have natural ability and an interest in your target area, because these can help motivate you in the early days when things are likely to be tougher.

There are passive income opportunities for people who are starting out with some money and even those who have no money to start.

How can I make passive income with no money?

If you have little or no money to start, you’ll have to rely mostly on your own time investment to power you through, at least until you build up a little money. That means focusing on passive income sources that take advantage of the following traits:

  • An area where you’re an expert. Here you can build your expertise out into a useful product or service for consumers, e.g. design, software coding and others.
  • An upfront work-heavy opportunity. You’ll need an opportunity that requires a time or work investment, such as creating a course, building out an influencer profile or other options.

In effect, you’re substituting your time for your lack of capital, until you can get enough capital to expand your set of opportunities.

How can I make passive income with money?

Money can provide you with more passive investment opportunities. If you have money to invest in a passive opportunity, you have not only the opportunity set above but a new range, too. Money is a prerequisite for taking advantage of the following passive income areas:

  • Investing in dividend stocks or REITs. Investing in stocks means you need money upfront, but you’ll receive some of the most passive forms of income around.
  • Save with bonds or CDs. Other purely passive activities include buying bonds or CDs.

Here you can use your money to make money with little or no effort on your part, if that’s what you’d like to do. Of course, you could pair your money with a lot of time investment to move into an even more lucrative niche, too.

How to start building passive income

While it’s great to have plenty of passive income ideas and dreams, it’s important to remember that not every idea is a great one. Even if you’ve seen others earning money in a particular way, that’s no guarantee that it will work for you, your skills, or your lifestyle.

To find the best ways to make passive income, you need to start with some clear goals and plans. You’ll need to know how much you’re able to commit in terms of money and time. And you’ll need to be prepared to make short-term sacrifices to meet your long-term aims.

Before we go into the best passive income ideas to inspire you, consider the following steps to get started in your passive income adventures.

1. Build a nest egg

Before you commit thousands of dollars on a money-making scheme that you’re sure will work, it’s vital to build a nest egg… This may also be your first form of a passive income!

Open a high-interest savings account with as little as $100. Over time, the interest you earn on this cash will count as passive income, and you may even receive a cash bonus for opening the account.

2. Assess your skills

There’s not a lot of point in deciding you’re going to sell your photos to stock-image companies if you can’t take an in-focus picture to save your life! Along the same lines, some passive income ideas such as course-writing will require you to have specific qualifications and skills. If you have these, great! If not, then be realistic about whether you feel getting the relevant qualifications will be worth it.

But assessing your skills shouldn’t just be about what you’re not good at. You should also have a good think about the things you’re fantastic at. For example, if you’re a stock trader, perhaps you could write for financial publications? If you’re a personal trainer, maybe you could create a series of fitness videos people can purchase and follow along at home?

Be realistic about your skills and think about how you can use them to benefit others without needing to be physically there or working every day.

3. Be realistic about your time, money, effort, and other commitments

As we’ve mentioned, although the idea behind passive income is to make money while you sleep, no business can be built without effort. In fact, you might find that building a passive income stream actually involves a lot more time and effort than a standard side gig to get it up and running.

Before you start any venture, be realistic about your other commitments. If you have a demanding job, kids, and an active social life, you might not have the time to spend building another profitable business. In that case, you might want to consider investing or asking someone else to help you out with the heavy work.

4. Consider your dreams

Steve Jobs once said, “Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do.” It’s essential to consider his message when picking any job, side hustle, or passive income idea.

If at least one part of the idea doesn’t spark joy or fuel your passions, chances are it’s not going to work out. So, look for an idea that you can see yourself doing for years. Even if you can step back and let the business mostly run itself, you may still need to get involved occasionally, so make sure you pick something you’ll enjoy.

5. Find the overlap

Once you’ve analyzed your strengths and weaknesses, considered any constraints, and thought about what would make you happy, there should be a few ideas for passive income strategies in your mind already. You’re sure to achieve financial independence in no time!  

Get into affiliate marketing on your blog

Blogging can be a great side hustle for a lot of different types of people. Whether you’re posting recipes, how-to guides, parenting advice, or just cute pictures of furry animals, there are likely some products that will be of interest to your readers. When you include an affiliate link to a product on your blog, you’ll either get a share of the revenue if one of your readers makes a purchase or a flat fee per click. If you’re just getting started with affiliate marketing, check out Shopstyle Collective or the Amazon Associates Program, both of which make it easy to monetize links on your website or blog.

Why Build Passive Income?

Your income is your greatest wealth-building tool—a tool that typically requires you to clock in five days a week. Even if you love your job, we’re willing to bet you wouldn’t mind earning some extra income without the blood, sweat, tears and time commitment of another job. Here’s what building a passive income can do for you:

  • Increase your wealth
  • Allow you to retire early
  • Protect you from a complete loss of income if you lose your job
  • Provide an additional source of income in retirement

How to generate passive income

If you’re looking for specific passive income ideas, you might consider one of the following strategies:

Put your money in a high-yield savings account

This strategy might be one of the simplest passive income ideas. Just put your money into a high-yield savings account or money market fund. High-yield savings accounts are typically a bit safer since they’re located at banks and are FDIC-insured.

Interest rates are rising, which means that you’ll earn a stream of income based on the money you have in your savings account. The flip side, of course, is that the interest earned will be relatively minor and can keep your money tied up in a savings account instead of other investment strategies.

Invest in dividend stocks

What are dividend stocks? Some companies distribute a portion of their profits directly to their shareholders in the form of dividends. When you invest in dividend stocks, you’ll receive a dividend based on the number of shares you hold in the company, usually around 1%.

Keep in mind that dividends are only associated with particular stocks, and even then, not all dividend stocks pay dividends on a consistent basis. Plus, you’ll have to invest money in the stock market, and there’s never a guarantee that you’ll see a positive return.

Despite these risks, dividend stocks allow you to invest passively in the stock market and receive an income stream without having to do much after your initial investment.

Those already familiar with the stock market might also consider dividend exchange-traded funds (ETFs), which pair the advantages of an ETF with the passive income provided by dividend stocks.

Automatically invest in the stock market

If stock selecting isn’t your thing, you can always have someone else do it for you. There are many online brokerage services that you can rely on to invest in mutual funds, dividend stocks, and other income-producing securities.

These “robo advisors” simply require you to open a brokerage account and allow you to start investing right from your phone or computer. Keep in mind that each service provider has its own rules regarding your minimum investment, and there’s never a guarantee of positive returns.

The right fund can still allow you to build passive income that accumulates over the long term, which can be a good way to plan for retirement or save money for another investment.

Purchase a rental property

Another way to generate passive income is through rental properties. Naturally this will require an upfront investment, including the money you spend on the real estate property and the time you spend locating reliable tenants.

But once you find occupants, your only real responsibilities will be collecting rent money and maintaining the property. This simplicity is why rental properties are among the most common passive income ideas for investors.

Invest in real estate investment trusts (REITs)

If you’d prefer to avoid the upfront time investment or hefty down payment of owning real estate property, you might consider a real estate investment trust (REIT).

Real estate investment trusts allow you to invest money in a company that owns and manages real estate, usually commercial real estate such as offices or other commercial spaces.

REITs vary in complexity, so investors should do their homework before committing themselves. But many REITs are publicly traded on stock exchanges, making them simpler than other forms of real estate investing.

Lend money through peer-to-peer lending

Peer-to-peer lending platforms allow you to lend money to others, who will then make monthly payments to repay the loan, along with interest.

To get started, most peer-to-peer lending services require you to meet some basic income requirements and possibly even some state-level requirements depending on the service.

Once you’re approved, you can gain passive income through interest payments made by your creditors. Just be cautious with this strategy. It’s often wiser to offer multiple, small loans instead of few larger ones in this passive income strategy.

Sell your photos online

Do you have a creative side? If so, you can make passive income by selling your digital photos and artwork online.

Stock photo sites allow you to create an account and upload your content, which will then be placed in their digital inventory and organized by tag. Customers who are looking for photos of a dog, for example, can search the website and ideally land on one of your quality creations.

This approach means that every time someone downloads your photograph, you’ll receive a payment, though the website will usually take a percentage. Obviously, there’s a small upfront time investment to capturing the right images and managing your account, but once each image is uploaded, it will generate future income as long as the site is active.

Write a book

This approach might be one of the most-overlooked passive income ideas simply because many people assume that the process of writing a book is insurmountably difficult. That would be true if you were trying to publish the next bestseller, but the digital landscape has made it easier than ever to self-publish an e-book or even offer customers a print-on-demand option.

What are you passionate about? What skills and experience can you share with the world? Organizing and writing these ideas out can be a major upfront time investment, but once you’re done, you’ll have something to be proud of, not to mention a passive income stream.

You can promote your e-book through your website or even sell it through Amazon’s Kindle Direct service. If you do, you’ll receive residual income every time a customer purchases your book, guaranteeing cash flow as long as your book remains active.

Pursue affiliate marketing

Affiliate marketing refers to the practice of partnering with a larger company and then marketing its products or services to its target audience.

This strategy is ideal for those who already have a blog, website, or other online platform. But affiliate marketing isn’t entirely passive since there will be an upfront time investment for every blog you write or online post you make.

One advantage is that affiliate marketing is a growing field and allows bloggers to make passive income right from their own homes. The disadvantage is that it can be a bit more demanding than other passive income streams and can take time to develop enough content and connect with enough clients to achieve true financial freedom.

Sell advertising space on your car

Another way to create passive income is to sell advertising space on your car or truck. You’ll connect with companies that provide you with a vinyl decal, which can be easily removed later without damaging your paint.

In exchange for displaying these decals on your car for a predetermined length of time, you’ll earn passive income. The amount depends on the company itself and the length of time you agree to advertise.

The advantage to this approach is that there is no monetary investment required, nor is there any upfront time investment. Of course, if you use your vehicle as part of your small business, you won’t be able to slap another company’s logo on your car.

How to Get Started

While it can be tempting to want to pick five passive income ideas to get started with I’d really encourage you to pick one in the beginning. You need time and the ability to focus to really a grow a passive income stream. Master one thing before moving on to the other.

It’s going to take a substantial amount of time or money in the beginning but I promise earning passive income is everything it’s cracked up to be! Pick an idea, make a plan, and dedicate yourself until that income stream comes to fruition.

Examples: What is and is not passive income

Active Side Hustle IncomePassive Income
Consulting by the hourA course on your area of expertise that you sell online
Freelance computer programmingBuilding a program you can sell over and over
Freelance writingWriting a book
Working constructionInvesting in real estate
Driving for UberRenting out your car
Photography sessionsBuilding your photog Instagram account

Tools To Help Outsource Your Business

If you currently own a business, outsourcing will free up your time so you can focus on other tasks that will result in more income. If you don’t want to hire employees, consider hiring freelancers who work as contract laborers. Look for freelancers with a strong work ethic who provide quality results.

As long as the main product or service isn’t something only you can do, you can transform your business into a passive moneymaker.

Here are the companies I recommend starting with:

  • CloudPeeps: CloudPeeps does an excellent job matching business in need with skilled, vetted freelancers who can manage everything from PR and marketing to web development and administrative tasks.
  • Fiverr: Fiverr has it all. Much like CloudPeeps, it supplies hand-picked freelancers for all of your business needs.
  • Guru: Guru offers similar services to Fiverr and CloudPeeps but emphasizes their flexible payment options, like hourly pay, recurring payments, payment by milestones, and payment by the project.
  • PeoplePerHour: With an advanced AI system that matches your project needs to the perfect freelancer and features on Forbes, CNBC, and BBC, PeoplePerHour offers a legitimate pool of talented artists to outsource to.
  • Upwork: Like the other freelancing networks, Upwork pairs you with freelancers in several sectors and boasts hires by companies like Microsoft, with short-term, full time, and recurring options.

What is not passive income?

As we mentioned, passive income is often misunderstood and confused with side hustles. While a side hustle or second job is a great way to boost your income streams, unless it’s operating in a way that allows you to step further and further back (while earning more and more cash), then it’s not truly passive.

Your passive income is not…

Your job – The idea of a passive income stream is to boost your regular earnings or allow you to retire early. Your main job is not a passive income stream.

A side hustle – While a side hustle can potentially generate passive income, they’re more often an example of active income as they require your attention and effort to maintain. However, if your side gig allows you to step back over time without losing traction, this could become passive income over time.

Consulting – Consulting is an excellent side gig or online business if you have a specialist subject that you can share with the world, but it’s not a source of passive income. If you want to make passive income by coaching or consulting, you need to build your practice with others who could take on the hands-on element while you step back and enjoy the benefits.

E-stores are going to make the big bucks this year.

You can do it too.

You can do it too.

Show me how

Investing for speculation – You’ll often hear people tout investing in the stock market as a source of passive income. However, we disagree that investing for speculation is one of the best passive income ideas for one simple reason… Stock appreciation is not income. That said, investing in high dividend-yielding stocks is an example of passive income as this provides you a regular income injection without you needing to do anything.

A good trick for figuring out whether an investment is passive income or appreciation/speculation is whether you’ll see a cash on cash return like dividends (passive income) or if you only get a monetary benefit once you sell the investment (appreciation).

Passive income FAQ

How can I generate passive income?

You can generate passive income ideas in myriad ways. For instance, you could write down all the things that interest you and research how other people build businesses around them. Another idea is to brainstorm how to solve a common problem you have and build it into a passive income idea. 

What passive income ideas can I start with little money?

There are many passive income ideas you can start with little money. These include dropshipping, affiliate marketing, print on demand, and selling your unused things.

How much passive income can I earn? 

You can make as much or as little passive income you want. However, it’s not a get-rich-quick scheme. You’ll need to put in some hours, effort, and capital initially to create a passive income source. The good news is that nailing these things early allows you to sit back and enjoy the financial rewards for years to come. 

You may invest as little as $100 in the beginning, then reinvest your profits until your passive income grows to a sustainable figure. With a high-recurring income, you can make enough money to live a happy, healthy life.

What are the best passive income ideas for 2022?

  1. Start a dropshipping store
  2. Sell courses online
  3. Monetize a blog
  4. Create a job board
  5. Invest in the stock market
  6. Create a print-on-demand store
  7. Sell stock photos online
  8. Become an affiliate marketer
  9. Flip websites for a profit
  10. Own a rental property

Build Wealth That Lasts

Did any of these ideas for creating passive income spark your interest? Want a clearer picture of how to build wealth? Connect with an investment professional who will help you create a game plan for your specific goals. Having a financial pro in your corner is the best way to make a plan that meets your specific needs. 

Find a SmartVestor Pro today!

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