Passive Income Ideas to Help You Make Money in 2022

What is passive income?

Although passive income isn’t some magic money-making scheme that will get you rich with no work, it is a way of maximizing returns so that you can work decreasingly hard over time. In other words, over time, effort goes down, and profits go up… Sounds great, right?!

One great example of a passive income stream is buying a property to rent it out. While there is some work and effort required to find the right property, deal with the legal side of things, and get it ready for tenants — plus financial investment in terms of the mortgage and deposit — once you get your tenants in, you can be earning money with minimal effort. Sure, there might be the odd property inspections and tenant changes to deal with, but the majority of your time as a landlord will be enjoying the passive income earned through the rent.

Basically, passive income is a long-term decision that involves short-term trade-offs. If you’re willing to commit your time, skills, and money towards your goal of generating passive income and potentially enjoying early retirement, then you could be making thousands in the long run.

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.

Frequently Asked Questions

How do I generate passive income?

Passive income is the idea that you deploy time and/or money and receive income with no further work. You have to do something to generate passive income up front, but then you can rely on that income into the future.

What are some examples of passive income?

Investing is a great example of passive income. You invest money in a company stock, and you receive a dividend payment and appreciation on the investment. Another popular example is real estate. You buy a property, and you enjoy the rent as passive income.

Does passive income really work?

Yes! Passive income is how the rich continue to build wealth. When you don’t have money, you can leverage your time and effort to create income streams that will grow into the future. As you accumulate money, you can deploy that money (and even combine it with your time) to generate more and more passive income.

Where can I invest to have passive income?

If you want to invest to generate passive income, dividend stocks and mutual funds are great ways to do it. You can also invest in debt instruments, like bonds.

If you want a safer approach, you can invest in a money market account or CD to get a risk-free return on your money.

What are the most popular passive income ideas?

There are lots of popular passive income ideas. The most popular include investing in the stock market, owning real estate, investing in a business, and even simply keeping your money in a high yield savings account. All of these approaches generate passive income, but they do require up front capital.

Does passive income really require “no work”?

This is a myth. Passive income always requires something up front: time or money. However, the idea that it becomes passive after you do the work is what’s alluring about it. For example, you spend 6 months writing a book, and you can enjoy the royalty income from your book for the rest of your life without any further work.

That’s not to say that doing more work won’t boost your income, but there is an element that requires nothing more to earn.

These passive income ideas range in complexity from simple to difficult with high returns and high-risk to low. Take into consideration your finances goals before choosing the options that best suit you. There are two basic methods for earning money passively. In some situations this can be done through the use of money. Most are priced as little as $1,000 in initial investment. Another option involves investing your own time into starting a side hustle. As you go over the table select three of them which will come into view to you instantly.

What is not passive income?

Passive earnings can also be confusing or misunderstood. Even if it can help increase your income streams, side hustles may be an effective alternative — unless it works so that the employee can step back to earn money. You don’t get any passive income. You work: The passive income streams aim to boost your earnings and give you time for retirement. Your work is passive income. A side business — Although a side business is likely to generate passive revenue, they are typically examples of active revenue as it requires attention and effort to sustain.

Minimize your taxes on passive income

A passive income can be a great strategy for generating side income, but you’ll also generate a tax liability for your effort. But you can reduce the tax bite and prepare for your future, too, by setting yourself up as a business and creating a retirement account. This strategy won’t work for all these passive strategies, however, and you’ll have to be a legitimate business to qualify.

Register with the IRS and receive a tax identification number for your business.

Then contact a broker who can open a self-employed retirement account such as Charles Schwab or Fidelity.

Determine which kind of retirement account might work best for your needs.

How to start building passive income?

Even though there are plenty of passive income ideas, we must remember that not all of them are great. Even though you have seen some people earn money, you cannot be guaranteed it will work for you, your skill set and your lifestyle. You’ll need to determine the amount you’ll have to commit to the job. It is necessary to make quick-term sacrifices for reaching your longer-term goals. I’m looking for some passive income ideas for beginners that will give you a ideas.

One great way to make passive income is to invest in dividend-paying stocks. Dividend-paying stocks are stocks that pay you a portion of their profits on a regular basis. This can be a great way to make money without having to do much work. All you have to do is purchase the stock and wait for the dividends to come in.

1. Invest in real estate

Real estate investing has been a well-established method for building wealth for almost as long as real estate has existed! Real estate investing was once a tricky venture to undertake — requiring a lot of time, effort, and expertise. However, real estate investment apps have now removed many complications and made it easy and assessable to become a real estate mogul from the comfort of your couch.

If buying properties seems a bit out of budget, you could also purchase a real estate investment trust — also known as a REIT. These investments generally pay generous dividends and follow the performance of the stock market. In this way, your investment value will go up/down just like physical property, but they are far easier to buy/sell, and you can diversify your portfolio by investing in different markets.

2. Get a high yield savings account.

Putting your money in a high-yield savings account might not be what you were dreaming about when we told you this list would be full of passive income ideas. Still, they are one of the safest and most reliable ways of getting your money to work for you, rather than the other way around.

Many high-yield accounts offer APYs of around 0.50% with no minimum balance to open, and some may even offer a cash bonus simply for opening the account.

You will need to place a relatively large amount of cash into the account to see any remarkable returns, but it’s still a worthwhile option.

3. Invest in dividend stocks

We mentioned earlier that we don’t consider investing for appreciation to be a passive income source. However, if you invest in stocks that offer high dividends to shareholders, you could potentially earn some impressive cash from your investments. Hopefully, the value of your shares will also increase while you own them, so you’ll be able to enjoy passive income from the dividends plus capital gains when you sell.

If you’re not an expert in the stock market, you may want to consider a broker or even try Robo-advisors for a genuinely passive investing system.

Remember, investments are high-risk, and you could lose more than you invest. Always get advice before starting an investment portfolio.

4. Buy or start a blog

A great way to earn money with minimum effort is with a blog. Of course, this will take time and effort to build, as you will need to write the blog regularly and build an audience. Still, you can earn an impressive amount of income with a blog via affiliate marketing or even selling ad space on your website.

If you’re unsure how to start a blog, you could also make money by buying an existing blog. This is a great “cheat,” as you can benefit from the traffic and cash flow already established.

5. Get involved in affiliate marketing.

Affiliate marketing involves partnering with a company to showcase and promote its products or services. Whenever someone follows one of your affiliate links to your partner’s site, you earn a commission.

There are a few ways to utilize your affiliate marketing partnerships to earn passive income. You could mention sponsors on your YouTube channel or podcast, write buying guides with links to the company’s products, compile product reviews, video unboxings, and much more.

To find the right company to become an affiliate for, you need to do some research and find a brand that matches your core values and your audience’s needs. There’s no point in becoming an affiliate for a butcher if your blog’s primary audience is vegans, for example.

6. Become a silent business partner

If you would love to own a business but don’t have the time or expertise, you might want to consider becoming a silent business partner. In other words, you contribute financially to the company but leave the day-to-day operations to your partner.

After your investment, you’ll be paid a percentage of the profits regularly, and your money will be backed by a percentage ownership of the company.

Don’t trust your dodgy mate’s business idea enough to invest? There are many websites for entrepreneurs looking for a silent business partner to invest in their business.

7. Write an eBook

While writing a blog and monetizing it is a good passive income idea, writing a book or eBook is an even better example of passive income, as you only need to write it once!

Instead of writing a blog, spend a while sharing your creativity or specialist knowledge by writing a book or eBook and sell it. Every time someone buys a copy, you’ll receive royalties, which can quickly add up if you hit the right mark.

Royalties for a printed book tend to be between 5–20% of the book’s price. eBooks are even more profitable, paying around 25%. Audiobooks usually pay royalties between 10–25%.

Obviously, you need to write a great book to earn a living income from your writing. However, just a few sales could help you earn that extra money you need for an upcoming holiday or to put you closer to your early retirement goals.

8. Create an online course

Like writing a book, creating an online course that people can buy repeatedly is an excellent way to earn passive income. Sure, it’ll take time, effort, and expertise to get the course built, but once it’s ready, you can stick it online and enjoy the revenue created every time someone purchases.

These days, there are virtually no limits to the topic you could cover with your online course. Personal trainers could create a series of fitness videos, chefs could start an online cookery course, accountants could help others learn bookkeeping. Basically, if you have a skill or specialist knowledge, you could build an online course and earn money from it.

That said, you may need to show relevant qualifications and/or experience to build an online course that will actually sell. However, you might be able to earn income via a YouTube channel even if you’re not formally qualified… Everyone loves a life hack!

9. License your music

If you’re a musician, you could write and license your music to receive money anytime someone wants to use your track in their project. There are a few ways licensing your music could make you money, and it’s a great way to supplement your income if live gigging isn’t paying out (or you don’t want to perform live).

10. Sell stock photos

If you always have your camera on you and are renowned for taking excellent photographs, you could monetize your passion by selling your images to stock photography companies. With these, any time someone purchases your image via a third-party site, you’ll receive a share in the profits.

The best companies to sell your photos to are the most well-known (as these have the most customers who might see, love, and buy your images). Try Adobe Stock, Shutterstock, Alamy, etc.

Even if you only have a smartphone, several stock image businesses will buy good-quality pictures snapped on a phone, so fancy equipment isn’t necessarily vital for this passive income idea.

11. Build an app

Instead of hiring out your developing and IT skills hourly, you could transform your technical skills into a passive income enterprise by building an app that people can download. The app doesn’t have to be revolutionary or even cost anything to download to make you money… Angry Birds is a free-to-download smartphone game built-in 2009 that made approximately €272.3 million in 2020!

Even if you’re not a technical whizz, you could still make money by building an app. You could learn some basic coding (which is surprisingly interesting and useful), or even find someone with the relevant skills to build a partnership and split the profits. Sure, there’s more money available if you do it alone, but if you come up with the next Fruit Ninja, you might not mind sharing!

12. Become a social media influencer

Did you know you can earn money simply by having a thriving social media presence? We’ve all heard of social media influencers by now… But for anyone who’s been living under a rock, social media influencers are people with high follower counts and high engagement rates who get paid a commission for sponsored posts, affiliate marketing or even hosting/attending events.

Of course, getting the traction required to become a social media influencer won’t happen overnight. You need to be committed to your social media strategy and prepare a portfolio illustrating the engagement levels of your audience that you can share with brands interested in collaborating with you.

13. Rent your car

If your car is just sitting on your drive, you could earn money by lending it to others while you’re not using it. Depending on your location and what make/model the car is, there can be some substantial cash up for grabs with this money-making idea.

If the idea of hiring your car is appealing, you’ll want to check out Turo. Think of it like Airbnb for cars.

Depending on your location, you could also make some impressive income by renting out your drive or garage. Big cities will be particularly profitable, as parking spaces are premium, and people will pay over the odds for a safe, guaranteed place to leave their car.

14. Airbnb

Naturally, a list of passive income ideas would be incomplete without mentioning the world-famous home-share platform Airbnb! While this won’t be suitable for everyone, if you have a spare room, holiday home, or any other ‘residence,’ you could be missing out on some impressive returns!

Airbnb isn’t the only option for renting accommodation, so you might want to shop around for the best platform for you.

15. Sell ad space on your vehicle.

If you regularly drive for work or even leisure, you might be able to monetize your daily commute by selling ad space on the side of your car, van, or truck. While it might not always be super stylish to drive a mobile billboard, you can make a few hundred dollars a month just to add some stickers to your vehicle and use your car as usual.

There are three major sites you can use to connect you with brands looking for ad space, these are:

Carvertise

Wrapify

Vugo

16. Sell ad space on your website.

If you don’t fancy driving around with a giant advertisement on the side of your vehicle, you could also make some decent passive income by selling ad space on your website. Most blogs utilize Google Ads to match their site with advertisers and receive a monthly revenue stream.

How profitable Google Ads will be on your website depends on the traffic you’re receiving. If your own website doesn’t have sufficient traffic to earn money this way, you could consider buying an existing website (see idea #4) and selling ad space there.

17. Participate in sleep studies

Earning money while you sleep doesn’t get more literal than this! If you’re in decent health, you could apply to participate in a sleep study and put your slumber to work.

Sleep studies can pay thousands of dollars for the right participants… All you need to do is undertake a physical and psychological exam to ensure you’re fit for the task… Then sleep!

Be warned… Many sleep studies require you to be cut off from social media and your friends/family so you can be watched and studied for the duration of the experiment. However, the generous rewards up for grabs are probably worthwhile.

18. Become a dropshipper

Dropshipping is an easy way to set yourself up with an online store and earn money with virtually no effort. Simply select the items you want to sell, and a supplier will create, store, package, and ship them to your customers. The only thing you need to deal with is the storefront and marketing.

19. Design t-shirts

A few websites work to transform your designs into fashionable t-shirts or a range of other products. With this business idea, all you need to do is develop the designs for the products, and the supplier will do the rest, giving you a portion of the profits whenever your designs sell!

You can even profit from your designing genius via Amazon… With Amazon Merch, all you need to do is upload your designs, and Amazon will make the product, sell it, package it, and ship it. So you can chillax and enjoy the profits.

20. Utilize cashback sites or reward cards

If you’re not already utilizing cashback cards, sites, and schemes, what are you doing?! Many credit card providers incorporate some form of cashback scheme where you receive a return on your everyday shopping just for using the card.

You could also sign up to cashback sites such as TopCashBack. Simply complete your normal shopping via the site to receive rewards.

Okay, this might not make you rich, but it’s an excellent way to minimize your spending and earn money on purchases you would have made anyway.

How many income streams should you have?

There is no “one size fits all” advice when it comes to generating income streams. How many sources of income you have should depend upon where you are financially, and what your financial goals for the future are. But having at least a few is a good start.

“You’ll catch more fish with multiple lines in the water,” says Greg McBride, CFA, chief financial analyst at Bankrate. “In addition to the earned income generated from your human capital, rental properties, income-producing securities and business ventures are a great way to diversify your income stream.”

Of course, you’ll want to make sure that putting in effort into a new passive income stream isn’t causing you to lose focus on your other streams. So you do want to balance your efforts and make sure you’re choosing the best opportunities for your time.

Passive income ideas for beginners

High-yield savings account. A high-yield savings account can be an easy way to get an extra boost on your savings beyond what you’d receive in a typical checking or savings account. It won’t be much, but it’s a simple way to get started with passive income.

Certificates of deposit. CDs are another way to generate some passive income, but your money will be tied up more than it would be in a high-yield savings account.

Real estate investment trusts. REITs are a way to invest in real estate without having to put in all the effort that comes with managing properties. REITs typically pay out the majority of their income in dividends, making them an attractive option for investors looking for passive income.

Minimize your taxes on passive income

A passive income can be a great strategy for generating side income, but you’ll also generate a tax liability for your effort. But you can reduce the tax bite and prepare for your future, too, by setting yourself up as a business and creating a retirement account. This strategy won’t work for all these passive strategies, however, and you’ll have to be a legitimate business to qualify.

Register with the IRS and receive a tax identification number for your business.

Then contact a broker who can open a self-employed retirement account such as Charles Schwab or Fidelity.

Determine which kind of retirement account might work best for your needs.

Two of the most popular options are the solo 401(k) and the SEP IRA. If you stash the cash in a traditional 401(k) or SEP IRA, you can take a tax break on this year’s taxes. The solo 401(k) is great because you can stash up to 100 percent of your earnings into the account, up to the annual maximum. Meanwhile, the SEP IRA allows you to contribute only at a 25 percent rate. In addition, the solo 401(k) permits you to make an additional contribution of up to 25 percent of your profits in the business.

If you’re thinking of going this route, compare the differences between the two account types or look at the best retirement plans for the self-employed.

Bonus: Save Up To 30% On Your Electric Bill

Let’s mark this one as passive saving versus passive income, but every little bit helps when you’re looking at your bottom line.

Truebill is an app that helps you save money by identifying recurring subscriptions and other bills and helping you cut costs by negotiating better rates and fees. One of their partnerships is with Acradia Power, which has the potential to save you up to 30% on your electric bill. It searches for better power rates in areas where competition is allowed, and it locks in the better prices for you.

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