Want to learn how to make passive income? In this blog post, I am sharing some best examples of passive income ideas for beginners that can help you earn passive income in 2022 and beyond.
Do you know why some people have achieved huge financial success in their life? Well, they have one thing in common: they have many sources of income.
But does that mean they have several jobs?
Oh well, NO! The truth is they know how to take advantage of what’s called “Passive Income.” Or you can say they know how to earn money even while sleeping! One smart trick that makes riches richer.
Making money while sleeping sounds so easy. Right?
There are many myths and confusions about passive income. In reality, passive income does not mean making money ‘without’ doing anything. And this is the reason most people fail to generate a sustainable passive income for themselves. They don’t realize that passive income is a process that needs an initial investment of time, effort, or money.
Passive income is like setting up an activity that will make money in the future even when you are not making an active effort.
I am sure you also want to build your dream lifestyle with passive income. But don’t know where to start and how to make passive income? What strategies you will need to follow to make passive income a reality? And if there will be any pitfalls? There are dozens, if not hundreds of passive income ideas. And all these things together add up to increase your confusion.
The purpose of this post is to ease your confusion and give you a kickstart by helping you find the best passive income ideas that will work for you in 2021, 2022, and beyond.
But first, how does passive income work?
Disclaimer: This article contains affiliate links where I may receive a small commission at no cost to you if you choose to make a purchase from a link on this page. You can read my full affiliate disclosure and how we make money in my disclaimer.
What is Passive Income?
In the world of personal finance, there is a lot of talk about passive income.
According to Investopedia, “Passive income means income that requires little or no effort to earn and maintain”. Think about the sale of books or rights to films/songs or real estate rental, etc. All these systems make it possible to earn money “with no effort” over the years “after” you have created them.
To make it more clear, let’s first understand the difference between active income and passive income.
Active income is what we make by working every day. No work, no money! If we stop working, we will not be paid and won’t be able to pay bills.
Passive income is money that we make without requiring us to work for it every day. But let’s just clear one thing: Creating passive income requires an initial investment or hard work. Passive income is more like the fruit of your efforts and hard work.
There are two main ways to make passive income. Some passive income sources need some upfront effort (like writing a book), while others need upfront monetary investment (like dividends from your stocks).
Why Passive Income is Important?
The benefits of creating passive income are numerous. For example, if you lose your job, you may be able to limit the damage by having another source of income than just your salary.
It is also an ideal solution to speed up your path to financial freedom. Although, in any case, an initial effort will often be necessary on your part. It can be larger or smaller based on the activity chosen. But like many things, the benefit is long-term.
Passive money is a great solution to find some time for more fulfilling projects in the future. It lets you enjoy life and the things you love. It is a concrete form of freedom and financial independence.
1. Creating passive income gives you financial security
Consider this as freedom from stress and anxiety related to bills and debts. Recently many people lost their jobs due to covid and many stores were shut down. This unprecedented certainly gave us the reason to realize the importance of having multiple streams of income for extra money.
2. Building passive income streams gives you freedom to pursue your dreams
Having another stream of income gives us the freedom to pursue things we are passionate about doing in life instead of running a 9 to 5 rat race.
3. Making passive money gives you financial stability
Passive income can help you gain financial independence and retire earlier from full-time work. Passive income is an important aspect of the FIRE (Financial Independence, Retire Early) movement, a lifestyle movement with the goal of achieving financial independence and retiring early.
The main ideas behind the FIRE movement originate from the 1992 best-selling book Your Money or Your Life.
4. Earning passive income gives work location flexibility
Have you ever wished to live a digital nomad lifestyle? Or make money while on vacation? Passive income gives you the freedom to choose your work location, either work from home or travel worldwide.
There is a famous quote about Passive Income by Warren Buffett without which this article would be incomplete:
If you don’t find a way to make money while you sleep, you will work until you die.Warren Buffett
How to make passive income?
Now that you know what passive income is, let’s break it down so you can see different ways to make passive money.
To build a real passive income, you’re either investing your time or money. The easiest way to build passive income is by using your money to make more money but that does not mean that you can not make money without investment. There are many legit passive income ideas that require no money investment and you can start today.
Each idea can contain a little element of both time and money. For example, building a blog requires time investment along with little funding. Although, little, this is part of the monetary investment.
What are the Best Ways to Get Passive Income in 2022?
Passive income has been around for a very long time but recent developments in the digital world have expanded the opportunities in this area. Choosing the right sources of passive income allows you to use your time the way you want. You don’t have to devote dozens of hours a week to keep your business running.
The goal should be to get the best return on your business for the least amount of time spent.
Without further delay, let’s dive into popular ways to make passive income you can use to earn money while sleeping.
Best Passive income ideas with Little money or No Money
1. Sell Stock Photos
If you enjoy taking and editing pictures, this easy passive income stream is a perfect example of passive income for you. You can pursue it as your hobby and at the same time build it as a source of making passive money.
The best part of selling photographs is you don’t have to be a professional but it is important to have basic knowledge of photography and image processing. This requirement is only to meet quality requirements of stock photo sites. You know many professional photographers sell their stock photos as a part of their passive income strategy.
For getting good photographs, investing in a good camera and suitable image processing software is always an advantage. These days many smartphones also meet the necessary requirements. If you have a good phone, it might be worth the try.
You can offer your photos for sale on several photo platforms. These platforms offer either percentage or a flat fee for each photo that gets sold. These are few examples of platforms to sell your photos:
- Adobe Stock (Formerly Fotolia)
- Getty Images
Not only on these photo-sites, but you can also sell on Etsy or your own website. Selling on Etsy and on your own website gives you full control and allows you to price your own photos. Apart from price control, Etsy has a good audience and can help you brand yourself but you need to pay some bare minimum platform fees.
On the other hand, setting up your website gives you full freedom and no one takes your cut. You can start your website with Hostinger for 90% off. But setting up a blog, marketing and it’s branding requires more effort than selling on photo selling platforms. Etsy is a good option if you don’t want to build a website from scratch.
Tips for better photo sales:
- Use good resolution photographs
- Use relevant keywords so customers can find your photos
- Avoid posting replicas of the same photographs
Pros of selling photographs to make Passive Income:
- Large client base as most online businesses need photographs
- Helps you build your online portfolio
- Helps you get recognition internationally
- You earn money with what you like to do
- Reviewing images may take time
- A high rate of rejection sometimes while selling on platforms but avoidable if you take care of terms and conditions
2. Earn Passive money with YouTube videos
You’ve probably heard of YouTube stars getting rich with their videos. Starting a Youtube channel is a great way to generate passive income over time. YouTube is the second-largest social media platform after Facebook and second most visited website after Google.
According to experts, there are currently more than 2 billion users on Youtube worldwide, and every day people watch 1 billion hours of videos per day (around 8.4 minutes per person). Numbers say it all. Youtube market is getting competitive day by day, if you like creating videos, you should definitely give a try,
Ways to generate passive money from your Youtube Channel:
1. Advertising through the YouTube affiliate/partner program: Have you seen ads displaying on Youtube before or while watching videos? These are Youtube advertisements. You can apply for these on your channel through the YouTube partner program.
There is a minimum requirement of 1,000 or more subscribers and at least 4000 hours of view time in the last 12 months before you can apply for Youtube ads on your channel. These requirements apply for 2021. You first need a Google AdSense account, which you link to the YouTube channel. Then activate the “monetization” function in your YouTube account.
2. Selling Products: There are various ways to sell on Youtube. Most common include Paid promotions, affiliate links, or your own E-commerce products using affiliate links in the description. Paid promotions are like selling someone else products on your channel in return for money. For selling any products, you test products in your videos or make review videos or integrate them in any way to make viewers know about the products.
The most common I can easily remind (as a mom) are of kids playing a new toy or unboxing LOL surprise dolls. If you already have a good reach on your YouTube channel, you can earn several hundred or thousands of dollars.
Pros of earning money with Youtube:
- Helps you unleash your creativity.
- Gives you a voice and identity – You can really become a Youtube influencer.
- Multiple revenue-making opportunities like affiliate marketing, ads, or selling your products
- Networking opportunities.
- Earning a substantial income may require a lot of work like creating and editing a lot of videos, marketing skills, and a good number of subscribers but you never know when your video gets viral and you become a superstar.
- You have to take care of YouTube regulations, YouTube is really strict about copyrights. Make sure your videos are unique and are of good quality.
3. Affiliate Marketing
Affiliate marketing is a process of earning a commission when a customer buys a product from your recommendation or link. It is one of the most popular ways of generating passive income, especially via blogs. All major companies, sales platforms, and service providers offer these partner programs. The most common include Amazon, Walmart, and Share-a-sale.
Selecting a good affiliate product is very important for affiliate future success. Think of it as a number game and find a product that resonates with your niche, target audience, provides solutions to your audience, and yet pays wells.
Remember that ‘selling 10 fitness bicycles’ is always better than ‘selling 10 yoga mats’.
There are various ways to promote your affiliate products:
Affiliate marketing via Blogs/Niche Website
Affiliate marketing via a blog is the #1 way to make passive income and seriously top bloggers are crushing with affiliate marketing. Though it didn’t happen overnight and it took them years to reach this level. If you have not started yet, getting a blog is the best thing to start (provided you stay consistent).
This doesn’t require much investment and you can get started with as low as $0.90. And the good thing is, you can monetize a blog not only with affiliate products but also with ads, selling digital or physical products, or via sponsored posts.
While the internet is still young, there are lots of possibilities and opportunities. The success of a blog, however, depends on getting good traffic which is a combined effort of good content, optimum keyword research via good tools like Ahrefs and Semrush, on-page SEO, and off-page SEO techniques.
There is INDEED a lot of time and effort required upfront while setting up a blog, but you can really get the ball rolling after about six months if you put your efforts in the right direction. Although your initial income (affiliate commission) may look something like this.
If you are new to concept of blogging, I would recommend you to read my comprehensive guide on how to start a successful money making blog.
Affiliate marketing without blogs
You can also promote your affiliate products via Email marketing, Youtube, Pinterest (pins or ads), Facebook (organic reach or ads), or Google ads. Every medium has its own requirement like you might need to use funnels instead of adding direct links on Pinterest or Facebook. But affiliate marketing without blogs is more like a side hustle as you need to manage your ads from time to time.
Pros of Affiliate marketing Passive stream:
- Free to Low-cost to a business idea to start.
- You don’t have to be an expert in the beginning.
- You can really grow with this passive income idea.
- Making revenues not guaranteed always, affiliate marketing requires patience. Remember that Rome was not built in a day so does your high earning blog will take time to set up and scale.
4. E-commerce/ Dropshipping
e-Commerce is simply selling physical stuff online. Dropshipping and outsourcing its tasks is one of the best ways to make passive income online with e-commerce.
With dropshipping, you can establish yourself as an online retailer without coming into direct contact with the items and when someone purchases a product from your website, the information is automatically sent to the supplier. The duty of the supplier is to send the order directly to the customer. That means you don’t need to hold any inventory or storage space.
With the explosion of e-commerce during COVID, dropshipping has become a very popular way to make money online. Of course, it cannot be done without effort. A drop shipping online shop must also be well planned and maintained to make it successful in the long term. But, most of the work occurs at setting up your store, which allows you to enjoy passive income later.
Many online platforms that support drop shipping these days. You might have heard of e-commerce giants like Amazon, popular Shopify, or upcoming GrooveKart.
Pros of dropshipping a Passive income business idea
- No need investing thousands ahead as you pay for products once the order is placed
- Scalable operation
- Starting up is faster
- Shipping can be complicated as there is a third party involved and most of the items ship from overseas. This can be avoided by selecting a drop-shipper based in your target shipping country.
- Since we are discussing dropshipping it’s important to mention that almost 90% of drop-shippers fail during their first month mainly due to the selection of the wrong product or supplier or ineffective marketing techniques.
If you are interested in dipping toes into dropshipping and starting a small business, here are some good free sources for you:
Recommended resources: How to Build a Million Dollar Brand on Amazon (Free book) or Join 7-days one product challenge to change your life.
5. Selling Digital Products
If you want to learn how to create passive income with no money, you’ll have to invest upfront effort and time instead. Selling digital products is one of the passive income ideas that become passive over time.
Producing unique, high-quality, and valuable content could be very complex at first but once created, you can sell it as often as you like without much effort as it requires a digital download only. But the best part is: you can build up a real passive income that will become a sure-fire success and generate revenue without doing any work in the future.
The most common digital products for Passive income include:
E-books are one of the best ways to earn passive income and grow your influence.
Though they require an initial time and effort, monetary investments are close to a penny. Once you create an e-book, you can earn money passively over the years with book sales and increase your cash flow.
For beginners, self-publishing e-books on Amazon Kindle Store is a popular way to make passive money selling books.
Recommended Reading: Best passive Income books you must start reading today!
There is no secret that e-learning due to social distancing has skyrocketed the sales of online courses. You have a skill or expertise, pack it into a course and sell it.
It may sound like an easy peasy task that requires little to no investment time but putting up a valuable program needs effort and demandable skills. However, like ebooks, you can sell your skills for years to come and generate an income passively.
Got a skill? You can teach anything from ‘painting a flower’ to ‘how to sell an online course’ if you have expertise. Plenty of people make full-time earning by selling online courses. The best online platforms to create and sell courses are Skillshare, Teachable, Podia, or Thinkfic.
Got a skill and want to learn how to launch an online course and make a passive income? Join free training by one of the most reliable e-course platforms- Teachable
Digital Art, Designs and Printables
If you got some artistic talent then selling your art is another way to earn passive income. Printable wall arts, custom planners, templates, themes or invitations are some of the examples to sell and are always a huge hit on Etsy.
Etsy has a huge customer base and many people earn a decent income selling digital and printable items. For inspiration, check these best-selling printables on Etsy that can help you have a passive income.
Related Reading: Easy Etsy shop ideas to start a small business
Recommended Learning: Check this Etsy digital course that has helped several people earn a good passive income while working on the side. It has got amazing reviews and can help you earn a decent income too.
Graphics designs (also on T-shirts and other products):
With the rise of influencer marketing and Gen Z aging, personalized designs are becoming a hot trend. Be it a t-shirt or a gift item, personalization can make a simple item into a unique treasure.
Websites like Zazzle let you monetize your design and help create passive income opportunity for you by doing all other leg work. If you are a good designer, you can monetize your content or services and earn royalties on every sale.
Pros of selling digitals as a passive income stream:
- You can start with no money literally with e-books and designs
- Never ending supply of inventory
- No shipping hassle – fast and free digital downloads
- Good profit margin as overhead costs (goods and shipping) are negligible
- Unlimited revenue
Cons of this Passive income Idea:
- Fierce competition so your creation has to stand out and need good marketing skills to outshine
- Your ideas can be copied
6. Develop Plugins, Themes, or Apps
Apps: Apps for mobile devices as well as plugins and themes for WordPress are also digital products that can be used to generate passive income. But yes, you need the right programming skills to create them. Developing an app needs an upfront effort but end results can be rewarding if you are able to create something unique and viral.
Plugins: WordPress is a widely used content management system. Plugins for WordPress are small programs that perform various additional functions. These can be solutions for security issues, storage space optimization, or contact forms. WordPress themes determine the WordPress design.
There is already a good competition in both markets but, the development of new solutions can be worthwhile. Once you have created these software products and brought them to the market, you are also responsible for providing support and updates.
The best way to monetize them is by providing a freemium version with an upgrade option at extra cost.
Pros of creating apps or plugins:
- Wide user base for testing
- One of the good passive income idea for college students
- The rise in smartphone technology means a large client base
- Customer retention if your app does well
- Good Revenue potential
- Development can be time-consuming
- There is a lot of learning curve (if you are a total beginner)
- Fierce competition
Passive income ideas that require upfront investment
7. P2P loans or Crowd-lending
Investing is one of the classic methods of generating passive income. The current phase of low interest rates does not offer the best conditions for this. Yet, there are worthwhile alternatives with manageable risks.
If you have some liquid money that you can part with, then a way of investing is by granting loans. We often give loans to our friends and family and turn our relations into sour. Seen that lot of times!
It is conceptually like that but a bit better. Crowdlending (peer-to-peer loans, or P2P lending) is a passive source of revenue where you lend money to businesses or individuals through the use of online services that match borrowers with lenders. Here borrowers are the people who don’t qualify for traditional financing.
The interest rate with P2P is more attractive than traditional forms of investment. Some of the best P2P lending sites to join include Kiva, Prosper, Upstart, Lending Club, Funding Circle, and Peerform. These companies offer return rates in the range of 6-10% which is higher than return from a saving account.
Pros of P2P investment Idea:
- High return on investment
- You grow with the economy
- Helps you get ahead of inflation
- Risks involved as lending platform can collapse or borrower can refuse to pay money (despite of credit check). The best way to avoid is not putting all eggs in one basket and do a good research.
8. Investing in high dividend stocks
Investing in stocks is one of the most popular passive income investments. Many investors while investing their money in stocks are particularly interested in yield stocks to receive the dividend. Dividends are profits paid by the company to its shareholders once or more times a year.
Investors are more attracted to dividend stocks as they not only generate dividend income but can also appreciate with time. Many companies pay dividends on a regular basis, which means they can become a reliable source of income.
Seems lucrative. Right? Well, not always, stocks that pay high dividends always come with risk. If the company gets into loss, it can suspend or chop down the dividends.
Pros of Passive income investment through dividends:
- Substantial return
- Dividend stocks are less volatile
- Reliable and regular stream of income
- Lower price appreciation when compared to growth stocks
- They can be expensive and risky
9. Domain name flipping
Domain flipping, also known as domain name speculation, involves buying and reselling domain names for profit. It is possible to buy domain names for a small sum of money and resell them for a higher price. You may have seen people who flip houses or furniture as a side hustle. Well, domains are basically the real estate of the internet and people make money flipping domains names.
Do you know one of the most expensive domain sold that came to light was Cars.com, valued at $872 million? So no doubt, selling a domain name is one of the lucrative ideas to make money online without big investments.
Though idea is simple: buy domain names at a low price that could be valuable to businesses in the future and sell at higher prices. But it does require good strategy to get good profit. You will need to do some research and make sure you choose keywords that have the potential to make you money in the future.
For starters, the idea is to select a specific area of activity and determine which domain names could sell well in that industry. Focusing on new markets, latest google trends, looking into what is coming next can help you select a good domain name. Once you are able to find a buyer who is interested in a domain name you own, it’s your negotiating skills that will make the difference between a small profit and a big profit.
My best-recommended places to buy domains are Namecheap and Godaddy. You can also sell your domain via auction on Godaddy.com.
- Low purchase cost, you can purchase
- Can yield a high return
- There’s always a demand for domains
- You need to buy thousands of domain names to get large profit, not every domain will be sold.
- It’s not quick get rich scheme
10. Rental property investment
Real estate investment is one of the most common methods of generating passive income and is pretty lucrative. There are two ways to invest in rental properties:
1. Direct Buy
Owing a real estate is the best form of investment and as a landlord, you can also earn a passive income through rent. When you add the necessary administrative work to a real estate property manager, there are very few things left for you to worry about.
The choice of the property determines whether you would be able to build up a passive income or could put a dent in your passive income.
Here are a few tips that might help:
- Research about general situation of the local housing market (vacancy or shortage)
- Check the attractiveness of the location (surroundings, transport links, shopping opportunities, etc)
- Cover Risks (possibility of disruptive structural changes in the area, flooding)
- Access the condition of the property (need for renovation)
- Calculate possible amount of rental income
Thumb rule says to invest in condos or townhomes in decent ranges of 100k-150k and pay 20% upfront as a downpayment. Calculate your monthly EMI after the down payment, expected rental income, and then invest again to create a snowball effect.
Also, make sure you have well-thought-out financial planning. Because besides the loan installments, there are extra costs (operating costs and repairs) that you may not be able to pass on to tenants.
Pros of passive income through real estate:
- Revenue from rentals form a steady income stream
- Revenue from the growth of property value
- Tax benefits
Difficult tenants (sometimes) and the law protects tenants more in case of defaults. Property can sit vacant for too long sometimes.
2. Passive Rental Investment
Another passive income investment idea is by investing in REIT, Real Estate Investment Trust. Just like stocks in the stock market, REITS manage portfolios of real estates and you can invest in these portfolios.
A REIT is a company that owns, operates, or finances income-producing properties- investopodia.com.
Most REITs are publicly traded like stocks, which makes them highly liquid. If you want to dip your toes in a property without getting too wet, it is a good option. Through platforms like Fundrise, you can buy a share in real estate projects from the comfort of your couch and earn a share of the income generated through the REIT investment. Most platforms require a minimum investment of at least $1,000 or more.
Can You Create Passive Income With No Money?
Absolutely, there are many ways to start with no income. For instance, you can write a book, sell digital artworks, or do affiliate marketing with you-tube, niche-sites or Pinterest.
Which Passive Income Can You Start Today?
It depends on if you want to invest money or have upfront time to start. You can set the foundation of your passive income source today but don’t start anything in rush. Take little time to think and take an informed decision
How Much Passive Income Can You Earn?
When it comes to passive income then the sky is the limit. But don’t get excited so soon. To reach this level requires a lot of effort and patience. Start today, build your assets over time and diversify your passive income streams to achieve financial independence.
Which is the best way to make passive income?
As you have seen in this list of the best passive income ideas, there are different ways to generate this automated income. It can be a passive side hustle, a lucrative hobby, or a serious strategy for financial independence.
You can do a lot online and bring in your own personal talents and interests. Yet, do not underestimate the initial effort and so start in small steps. You should not give up your main occupation before you start generating income from your passive income source. The best passive income ideas for me are: Blogging, Investing in real estate, and saving accounts.
What is your favorite way to create passive income? Have you started with any passive income stream? If not, what’s holding you back? Do let me know in the comments.