19 top Passive Income ideas in 2021. You decide!
Steady passive income requires a good variety of wealth-building opportunities that don’t necessarily take a lot of your time, energy, or effort to run. We’ve put together a list of some of the best passive income ideas 2020 has to offer.
For entrepreneurs, passive income is the elusive holy grail we all strive to attain. It’s literally earning money while you sleep.
Everyone knows that having multiple streams of passive income is the best way to build wealth. Most people just don’t know where to start; we simply weren’t taught in school how to get jobs as “productive members of society”.
But never fear, there are many great options for earning passive interest that are increasingly accessible to Americans today. We’re going to tell you about a couple of them.
The two main types of passive income
According to the folks over at the IRS, passive income activities fall into two broad categories:
- Trade or business activities in which you don’t materially participate, including actions you might make in anticipation of starting one.
- Rental activities are activities that involve some form of property. Whether it’s under a lease, a service contract, or some other arrangement.
Traditionally, you’ll need a significant amount of money (or real estate) to build wealth via passive income. Today, however, many apps and services can show you how to make passive income with $1000, $500, or even less.
19 passive income opportunities to check out today
There are a lot of ways to make passive income that you can start today. You can choose almost anything based on your skills, expertise, and interests.
1. Peer-to-peer (P2P) lending
With P2P lending, you can lend out money to individuals, businesses, and startups online. Rates are usually steady and paid out on a monthly, quarterly, or yearly basis.
2. Stock dividends
When you invest in the stock market, you can get dividends, or regular, periodic payments as owners of certain companies’ stocks. These are usually a small percentage of the stock price but they add up! You can even buy ETFs full of dividend stocks for extra income.
A certificate of deposit (or CD) is a federally insured savings account with a higher fixed interest rate than a bank account and a fixed date for withdrawal. Investing in a high-yield CD from an online bank can get you decent interest rates (but still below inflation).
Bonds are small loans that you give to the government or a corporation in return for interest. Investing in the right bonds can give you passive income for life. However, be wary of rate change allowances in your contract.
5. Small-business Bonds
You can buy high-risk bonds in small businesses as passive income investments rather than the government.
While traditionally the territory of an accredited investor, services like Worthy, for example, make small-business bond investing much more accessible.
Annuities are contracts that you can buy from an insurance company with a lump sum. At a predetermined future date, you’ll start receiving monthly payments for the rest of your life. There are several different kinds of annuities, so take the time to research and consult with a trusted financial advisor.
7. High-yield savings accounts
You can also earn passive income (although at a lower level than stocks and bonds) by investing in a high-yield online savings account. These are like normal savings accounts except with higher interest rates.
8. Buying existing businesses
If you have money to spare, you can look into buying an already-established business outright. Again, the idea here is not to get too involved in running the business but instead letting the existing leadership run it for you.
You’re not limited to just brick-and-mortar operations. You can also buy things like an established blog or an e-commerce site. Services offered by Flippa, for example, allow you to purchase a domain, an app, or an e-commerce business for as low as $1,000.
9. Real estate renting/leasing
If you have real estate, you can rent or lease out your property.
Short-term rentals have become popular in recent years. Whether you’ve got a spare bedroom upstairs or an entire house, you can rent out your property for days at a time and potentially make more than you would on year-round renters.
10. Real estate investing
You can join a REIT or real estate investment trust and get in on real estate without taking out a big loan. You can get into real estate crowdsourcing online too. There are now apps and services such as Fundrise, Crowdstreet, or RealCrowd that offer you a way to invest in real estate with as little as $500 or $1,000 without actually getting your hands dirty.
If you have neither cash nor real estate, you’re not out of the game. If you have a bit of time on your hands, you can get to work now and set up an online money-making machine that brings in passive income for you.
An awesome bunch of ideas for passive income you can start today fall under online activities.
A word of warning: these are now highly competitive spaces, which means you’re going to put in quite a bit of sweat equity before you can expect a regular profit from a passive income website.
11. Affiliate marketing
Through your online content like blog posts, videos, and podcasts you can refer customers to various e-commerce companies that pay you commissions for sales. There are affiliate marketing programs for just about any industry, which means you can position your passive income website to cater to a very specific niche (ideally, one which you can leverage on your experience and expertise).
If you like talking about finance online, come check out MyConstant’s affiliate program!
12. Start a podcast or a YouTube channel
Writing/coding not your thing? Instead of a blog or a website, try growing a YouTube channel or a podcast series. These two content areas are on track to grow exponentially over the next few years.
If you have a cool creative hobby there’s always going to be high demand for your work. Some of the more achievable passive income ideas for 2020 involve creative endeavors. Here are a few creative activities that can make you a good amount of passive income:
13. Digital media
Whether it’s an ebook or audiobook, comprehensive guides, or even patterns or prints you made, you can put these up for sale online as ways of making passive income.
Different sites specialize in a type of digital media. Etsy, for example, is a great place for selling your prints and patterns, while Amazon’s Kindle store is more suited for ebooks.
14. WordPress themes and plugins
If you’re handy with WordPress, you can create themes and plugins for other users to purchase. The effort to reward ratio can be quite high here.
15. Stock photos and videos
Sell the rights for companies and content creators to use photos and videos you’ve taken. There’s always demand for cheap, quality content. Better than leaving them on a hard drive somewhere!
16. Art and Design
You can create artwork that customers can purchase for you and print for their use. This also includes designs for t-shirts, bags, and other personalized items. You can earn a cut of the profits for the merchandise.
Lastly, here are a few other passive income investments for you to make money on the side with minimal effort:
17. Ad space
(e.g., outdoor, vehicle, etc.). Put advertisements on your car. Or allow companies to put up ads (via billboards) on real estate that you own.
18. Vending machines
You can earn money from a fleet of vending machines. Just make sure you check the laws and regulations in your state governing these.
19. Rent out your gear
If you have in-demand tools or items that cost quite a bit that people would prefer to rent (rather than buy), apps like Fat Llama allow you to rent these out for folks to use.
Choosing the best passive income stream for you
We hope you can see from this list of passive income ideas that there are many ways that you can start building passive wealth today.
All it takes is the drive to take action now. Pick a passive income stream idea or two that you think works best for you and work to master those.
Then choose another. Lather, rinse, repeat.
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