17 Best Passive Income Ideas For Working From Home In 2020

An average millionaire today invests in at least seven streams of income. This does not mean that they have seven jobs. They rely on passive income to generate their wealth. We would all love to relax and as the money flows in. That is not what Passive income is entirely about. You will need to apply some effort, however minimal.

Some of the passive income strategies may not solve your problems instantly, but they have a great cumulative advantage that could make you a millionaire in the near future. This guide will help you fully understand what passive income is, various passive income ideas, and how to select the best ideas for you.

What Is Passive Income?

Passive income is the type of income generated with little effort to maintain or to earn from income avenue. You can earn money in your absence if you have a passive income source. It is also called residual income. Examples of passive income include real estate, online businesses, stock markets, and more.

The Main Approaches to Passive Income Generation

There are two ways you can use to build assets to generate passive income; investing money and investing your time for passive income. We will use them to categorize the 17 best passive income ideas.

1. Investing Money For Passive Income

The first option you have is to invest money. When you invest in passive income assets, you will require minimal effort to earn from your investment. Examples of passive income ideas that require money investment include:

  • High Yield Savings accounts
  • Build a CD ladder
  • Invest with a Robo Advisor
  • Rent a room or your entire house
  • Buy Stock that pays dividends
  • Buy Investment property
  • Crowdfunded Real estate
  • Peer-to-Peer Lending
  • Shopping Cashback

2. Investing Time and Effort For Passive income

Alternatively, you can invest time and effort for passive income if you have a skill they can market, have assets they can use for business, or have a shortage of cash to invest money for passive income. Examples of passive income ideas in this category include:

  • Affiliate marketing
  • Create a YouTube Channel
  • Create an online course and sell it
  • Create an eCommerce website
  • Sell Photography Online
  • Earn money with your car
  • Write an eBook
  • Launch an advertising agency

Investing Money For Passive Income

Do you have that extra income you want to invest? Consider the following 9 alternatives:

1. High Yield Savings Accounts

Traditional savings accounts offered by brick and mortar banks have very low-interest rates, and some consider it virtually non-existent. The average annual percentage yield for savings accounts countrywide is about 0.09%. This rate does not yield any significant income.

Before the development of online banks, you needed a Certificate of Deposit (CD) to earn an interest rate of 2% or more on your savings. However, the certificate of deposit has one major drawback. Your money is inaccessible for the period stated on the certificate of deposit. Savings accounts will let you access your money at any time, but their interest rates are significantly lower.

Thanks to the internet and the creation of online Banks, individuals are now able to access high-yield savings accounts. These online banks can offer higher interest rates, which provide a high yield.

Why Do Online Banks Offer Higher Interest Rates Than Brick and Mortar Banks?

The answer is simple. Overheads. Brick-and-mortar Banks have more overhead costs, which minimize the interest rates they can offer. Examples of these overhead costs include utilities and Taylor fees and all other expenses that come with opening and maintaining various branches.

Since online banks do not need to pay any rent, they can increase their interest rates and offer high-yield savings accounts. You should look up some of the Top online savings accounts before you select one. Use factors like their policies such as Annual Percentage Yield to determine the best option.

2. Build a CD Ladder

Certificates of Deposits (CDs) are still valid investment options despite the major drawback we mentioned in the passive income idea above. A CD ladder is an investment strategy where you will divide your investment money equally and purchase CDs that have varying maturity dates.

Ladders address the drawback that comes with the purchase of a single certificate of deposit. Thus, you'll be able to access bits of your investment in a shorter time.

The term ladder has been used to describe continuous investment. For example, when your first investment matures, you get to reinvest and purchase a CD with the most prolonged investment.

Take a look at the example of a CD ladder below:

Let’s say you purchase the following three CDs.

  • A 6-month CD with an interest rate of 1%
  • A 12-month CD with an interest rate of 2%
  • An 18-month CD with an interest rate of 3%

The 6-month CD will mature first. When you go to renew it, you will not buy another 6-month CD but rather an 18-month CD. This will sustain a 6-month gap between your investments. For every renewal, you will purchase an 18-month CD. Thus, you will be earning an interest every six months.

This period depends on how you choose to space your investments. However, the shorter you space your money, the faster you will be able to earn your interests. If you invest in a long term CD, you will be charged penalties when you withdraw it before the maturity date.

Remember, select a bank that offers the highest interest rates.

3. Invest with a Robo Advisor

Before technology advancements in the financial sector, people used to rely on human financial advisors and investors to manage your investments and build your wealth. However, these managers are only accessible to those who were already wealthy. It proved to be an expensive option for the middle class and lower-class investors.

In the current age, technology has brought forth sophisticated computer programs called Robo-advisors. Robo-advisors are accessible to everyone, and thus, everyone has a chance to make investments and grow wealth. Furthermore, unlike human financial advisors, Robo-advisors provide remote access to investment opportunities.

Previously, you had to visit a financial advisor’s offices or call them to make the necessary arrangements. Robo-advisors, do not limit your investment amount like financial advisors who will ask for a minimum investment amount. You have a variety of choices when it comes to selecting a Robo advisor for investment. Analyze a list of the best investment apps and select the best for families.

You can use criteria such as their management fee rate and the type of investment you can make. For example, Wealthfront is one of the top Robo advisors. You can use it to invest in an individual stock and low-cost exchange-traded fund ETF. They will charge a management fee of 0.25% of the investment.

It is one of the best Robo advisors for low-maintenance investors as the minimum amount needed to open an account is $500. One of the downsides of using some robot advisors is you have little or no control over the trades they will make.

4. Rent a Room or Your Entire House

Are you a homeowner? You can easily make a lot of passive income if you rent out your spare room or condo. How do you get the clients? You simply need to sign up as an Airbnb host. It is up to you to come up with a living rule that sets a daily rate for renting out the room.

Airbnb is a highly efficient platform that has a rating system for both the host and the renter. As a host, you will be able to view the renter’s reputation before you can agree to host them. Airbnb offers and insurance coverage of up to 1 million dollars for any damages or claims the host files.

You can do research and get a rough idea of how much you stand to gain if you list your house on Airbnb. Visit the Airbnb website and look at similar rentals within your locality. Compare your house to others in terms of the number of bedrooms, bathrooms, location, and other factors. You can then look at how much a similar room or rental costs for both weekdays and weekends.

Airbnb is a flexible platform as you get to choose when to list your space as the relationship is not a long-term commitment. You should also sign up for AirDNA, which is a handy tool. It provides extensive data on Airbnb markets. It will help you know how much you can expect to make and when your market has a high demand.

5. Buy Stock That Pays Dividends

This is one of the oldest passive income strategies available. It is also one of the easiest as you do not need to put in much work to earn. Ensure that you invest in a stock that pays quarterly dividends. A dividend stock is better than regular stock.

The basic principle of stock investments is to try and buy it at a low price and sell high. When it comes to dividend stock, you will earn when the value of the stock goes up, and you will also earn dividends.

Dividends are the amount a company pays you because you own a portion of its earnings. Dividends are usually shared equally among the shareholders of a company. The company has a dividend amount, for example, 0.35-dollar dividends per share. This if you have invested in this company, your total dividend income will be 0.35 dollars multiplied by the number of shares you own in the company.

You can also rely on apps and Robo advisors to invest dividends on your behalf. These apps offer a lot of conveniences when it comes to making trades, and they charge lower fees than human stockbrokers and financial advisers.

You can link your bank account to most of these apps to easily find your investments. Look up some of the best investment apps to find out which one suits your needs. You can use criteria like the minimum amount of investment required and the annual percentage fee. If you prefer to invest by yourself, you can also look up some of the top online brokers to buy and sell the stock.

6. Buy Investment Property

Most of us are intimidated by the idea of running a rental property, especially finding tenants. However, you can rely on Roofstock, which is a property trading platform. You can acquire properties for as low as 20% off and get a property that already has tenants. Thus, you will start earning immediately when you invest.

Thanks to Roofstock, there is no need to make physical visits to each of the properties you wish to invest in or already own. People often confuse Rooftstock with a real estate Investment Trust like Fundrise. However, it is a better option because you will be buying and selling individual properties.

Roofstock offers an added advantage, especially when you live in places with high real estate prices where you may find it hard to invest in. It is also a good platform when it comes to investing in single-family homes.

Roofstock ensures that the management of your assets is reliable as they will thoroughly vet their property managers. These managers take over the day to day landlord operations such as scheduling maintenance and collecting rent.

Alternatively, you can choose to create your real estate groups. A real estate group is usually a team of investors who seek to learn from each other or pool their money together to compete with other players for a share of market profits.

Real estate investments usually offer high returns. Thus, you should consider reinvesting in another source of passive income. Remember, the average millionaire has at least seven passive income streams.

7. Crowdfunded Real Estate

The real estate market has a lot more to offer. Some individuals ultimately rely on income from real estate investment due to its large income flow. You have the potential to make hundreds of thousands on a single property. The main sources of income in real estate are rent and appreciation of buildings.

Traditional investments in real estate usually require large upfront capital. This minimized the number of players in the market as most people do not have that financial power. However, the real estate market is more accessible through crowdfunded real estate ventures like Real Estate Investment Trust (REIT).

What is a REIT?

A real estate investment trust is a collection of funds from different investors for real estate investment. The investors will put a professional real estate investor in charge of making the investment decisions. Each investor will receive disbursements based on their level of investment.

Furthermore, REITs are a completely passive source of income. The professional real estate investor will handle the landlord duties such as a collection of rent, which he or she will later disburse. Traditional REITs required a substantial initial investment. However, there are investment apps like Fundraise, which let you get into the market for as low as $500.

This platform offers various investment options, for example, supplemental income investments, long-term investments, balanced investments, and short-term investments. REITs will help you to easily diversify your real estate investments as you generate income and access markets that were previously inaccessible.

8. Peer-to-Peer Lending

Peer-to-peer lending is commonly referred to as P2P lending. It is still a growing business that provides another way for people to borrow and lend money. P2P lending creates a marketplace that connects people who have money and people who need it.

If you have that extra cash laying around, you can join such a marketplace and loan cash to your peers. You will earn interest like any other lending institution, for example, a traditional bank. However, unlike the bank, you will not have to pay any overhead costs, for example, opening a branch.

Peer-to-peer lending is like lending money to your friend but with interest. Let's say you have $10, and your friend borrows it and promises to pay you back with a dollar extra to make it $11. Your friend will be able to address his needs with the loan, and when he pays it back, you will earn a 10% interest. Peer-to-peer lending works on a larger scale.

An example of a P2P lending platform is Lending Club. As an investor on this platform, you will get to compare loan details like the purpose of the loan interest rates grade or subgrade and borrower information.

Lending Club offers 12 types of loans for both investors and Borrowers, they include debt:

  1. Consolidation
  2. Home improvement
  3. Major purchase
  4. Home buying
  5. Car financing
  6. Vacation
  7. Business loan
  8. Green loan
  9. Moving and relocation
  10. Credit card refinancing
  11. Medical expenses
  12. More.

You can also take a look at other top P2P lending platforms before you settle on one.

9. Shopping Cashback

Some various platforms and institutions offer cashback rewards for your various online shopping expeditions. If you want to make passive income through cashback rewards, there are two main strategies you can engage in.

a. Credit Cards Cashback

Execute a Strategy first, and you need a credit card. The next important step is you need to pay off the balance in full every month. If you fail to clear the balance, the interest fees will accumulate, and you will have very minimal chances for cashback rewards. Most credit cards will offer 1.5% cashback on the purchases you make.

Some credit card institutions award cashback based on the shopping category. For example, you may get a credit card with a 2% cashback on groceries and gas. There is another requirement to get sign-up bonuses and cashback from credit card institutions.

They usually set a minimum amount you need to spend in the first 60 to 90 days after you open your account for you to qualify for a bonus and cashback rewards.

b. Cashback from Online Shopping Platforms

There are those of us who already earn credit card cashback. You should try and earn cashback from online shopping platforms like Rakuten. This platform lets you earn cashback ranging anywhere from 1% to 40%. You can get an account for free and begin earning. We recommend that you download the browser extension to maximize your potential to earn cashback rewards.

This extension will notify you of the latest cashback deals available and reward the cashback if you shop in any of the platform’s partners, which include Amazon, Target, Best Buy, and more. You can look at a list of the top shopping apps with rewards to discover more platforms like Rakuten.

Investing Time and Effort for Passive Income

Are you ready to invest your time and effort to generate passive income? You may still need to support your idea financially, but your effort and time have the most influential role.

1. Affiliate Marketing

Affiliate marketing is a marketing strategy where we promote our companies or other people's products and services to earn passive income. Take an example where a company sells its products for $100. If the company chooses to pay a 5% commission, you will earn $5 for every sale they make through your recommendation.

Most people will like the idea of already having it but do not know how to get started. You should know that the most successful affiliate marketer is the one who can reach the greatest number of people. One way to reach a large number of people is by starting a blog or becoming a successful social media influencer.

A blog opens up numerous other avenues of income. For example, you can make money by advertising on your blog. A successful blog will focus on a specific topic or niche, for example, a food website or a business website.

Blogging will help you earn money in the long-term and the short-term. This is because even the information you posted a few years ago could still be helpful today and draw traffic to your website.

You will need to learn how to create and run a successful blog. It is easier to start a blog now than it was before. You do not need website design knowledge to get started. Various platforms provide website templates and hosting for a small fee, either monthly, yearly, or even for a lifetime. A good example of such a platform in WordPress.

2. Create a YouTube Channel

Many people around the world make money through YouTube videos. Once you create interesting content that will attract viewers and that you will be able to advertise and promote products and services from various organizations on your YouTube videos. Previously, you could insert ads in any video on the platform.

However, YouTube updated their policies as of January 2019 concerning the placement of ads in videos. There are some categories where you can insert limited or no ads.

This applies to videos with the following topics or content:

  • Violence
  • Adult content
  • Inappropriate language
  • Drug-related content including recreational drugs
  • Family content with adult themes and more.

You will start earning from YouTube when your videos reach a specified number of views. One of the major advantages of creating YouTube videos is that there is a lot of content out there you can cover, including travel guides, makeup tutorials, funny videos, and more.

3. Create an Online Course and Sell It

Are you knowledgeable about a specific topic, or do you possess a skill you can transform into a course? Create this course and list it on popular platforms like Teachable or Udemy. The only initial investment you will make in creating the course and signing up for the platform. Afterward, you will earn for every student you get.

You should come here with two platforms actively to know which one works best for your needs. Both Udemy and Teachable are user-friendly and intuitive platforms. Teachable gives you control over the pricing of the course. However, on this platform, you are responsible for all the marketing activities.

Udemy, on the other hand, does not give you much control over the course and takes a larger share of the revenue. However, it offers a ready market with students, so you do not have to engage in marketing activities.

4. Create an eCommerce Website

Online selling is another marketable passive income idea. You will need an e-commerce website to display your products and services. An e-commerce site is open 24/7, which is the potential to make money round the clock.

You may need to put in some work to set up most e-commerce websites properly. However, once you find your rhythm with a system that works, it is a very lucrative source of passive income.

There are three main business models when it comes to e-commerce sites. They include:

i. Selling Your Own Products

You will list products that you either source or manufacture yourself.

  • Benefit. You have all the control over the products, and the profit margin is high.
  • Drawback. You will require a significant capital investment, and it takes a lot of effort.

 ii. Selling Another Company’s or People’s Products

In this model, you will sell products from one or more companies. You are not limited to the types of products you can sell. However, they need to be legal products.

  • Benefit. Your eCommerce site will offer a variety of products that you acquire at a wholesale price.
  • Drawbacks. It is hard to stand out in the market as you are reselling another company's products. You will also face a lot of competition, especially when it comes to pricing.

iii. Dropship the Products

This is an eCommerce business model where you sell products without actually having any inventory. You will agree with a supplier or manufacturer, and you will list their products on your site. Once a customer makes an order, the manufacturer will ship it directly to them.

  • Benefits. You do not incur any inventory costs, and you have less work to do as compared to other eCommerce models.
  • Drawbacks. You have little control over the quality and delivery fulfillment. The manufacturer may experience shipping delays that are out of your control.

5. Sell Photography Online

Did you know you can earn money online if you take and upload pictures? It is a straightforward process. First, you will need to register with a platform where you can sell your photos like Shutterstock. Shutterstock was created in 2003, and up to now, its contributors have earned more than 500 million dollars. It is a popular platform with low barriers to entry.

You can earn money on Shutterstock regardless of your level of expertise. The more images you upload, the more passive income you stand to earn. Shutterstock pays its contributors for every download made from their account.

However, the amount you earn depends on who downloads the photo. You will earn more if a customer specifically days to get your photo. The amount is lower as compared to when a customer with a subscription randomly downloads your images. You stand to earn more for every image as interest groups in your photos.

This venture has the potential to make you a lot of money because you can take and upload very many images of different subjects, perspectives, colors, items, and more. For example, you can take images of certain species of animals, plants, locations, people, culture, food, technology and more.

6. Earn Money With Your Car

Do you have a car that you are currently not using? It may be because you're on vacation traveling, or the vehicle is idle even on normal days. You can let this vehicle stay parked and depreciate, or you can use it to generate passive income.

Here are two ideas you can use to earn passive income with your vehicle:

i. Rent Your Car Out

You stand a chance to make thousands of dollars a year if you rent out your car. It is much safer to rent out your car even to a stranger with the help of platforms like Getaround. You can rely on this platform to make up for the annual average cost of owning a car. Getaround accrues your monthly earnings and sends them on the 15th of the next month.

There are numerous other perks of Being a Getaround car owner. They will give you a monthly credit of $50 to rent anything you like. You will also have access to some of the best parking spots in town and primary insurance coverage of up to 1 million dollars. Get your free Getaround account to get started today.

ii. Use Your Car to Advertise

You can also receive payments to advertise businesses and brands in your car. Sign up with Warpify to earn passive income while advertising on your car. You will need to download the app, which will track your driving. 

Once you qualify to be a Wrapify driver, the platform will inform you of marketing campaigns available, and you can get your car wrapped in advertisements to earn. 

7. Write an eBook

Do you still wish to sell content using another method other than blogging? You can venture into ebooks that you can publish on your own. An eBook is usually a lot shorter than a normal book. That you do not have a lot of work to create masterpiece content.

Nonfiction books top the list of book demand examples of nonfiction books include how-to guides or other descriptive pieces that address a specific topic, for example, graphic design. You do not need your own website to create an eBook and access it's market.

There are platforms like Amazon Kindle Direct Publishing, which is one of the easiest platforms for an eBook beginner. You can publish your eBook in a matter of minutes, and it will list on global Kindle stores in one to two days.

In most countries, you will earn a maximum of 70% royalties for each eBook sale you make on Amazon KDP. You are responsible for pricing the book, and you can edit the book at any time.

8. Launch an Advertising Agency

Advertising, especially on social media, can be a little challenging for small businesses in your locality. It may be hard for them to gain the attention they need in today's crowded news feed. However, you can help if you own a Facebook ad agency.

This is a very efficient venture, as you will need to put in little work. You need to do check-ups for a few minutes a day. It is possible to act as a marketing agent for an individual or a single company. Alternatively, you can choose to represent multiple clients, which will improve your earnings.

You may need to pick up a little skill and experience within your first month. Some agencies earn $1000 to $2000 a month from each client. You will have a better income stream as your reputation grows, and as you get more clients.

If you have many clients, you may need to hire an assistant to manage the business actively. This way, you will make the income passive.

Difference Between Passive and Active Income

You need to be able to distinguish between active and passive income so that you can decide on the best option to invest your time and money in. Active income is a type of income where you exchange your services for payment.

The payment could be in the form of an hourly wage, commissions, or monthly salary, tips, or any other agreement. You will dedicate your time and skills to earning the dollar. Active income is not a bad thing as you will routinely earn some money. However, your earnings are usually limited.

Passive income, on the other hand, requires some form of initial investment, for example, making a deposit when investing in stocks. Then your portfolio manager could handle your stocks and direct the dividends to your account. There is no limit to what you can earn when it comes to passive income.

How to Choose the Best Passive Income Strategy for You

You can choose to go with one passive income strategy, but we advise you to combine numerous strategies. The right strategy or combination of strategies for you ultimately depends on factors like :

  • Your short-term goals
  • Your long-term goals
  • How much time is available?
  • How much you wish to make
  • How much time are you willing to invest?

There are numerous other factors to consider, for example, how much control you want to have or if you have a passion you want to pursue.

Wrapping it All Up

Passive income is income you earn without active participation in the activities of income Avenue. The main difference between active and passive income is that you exchange your services for payment in active income.

This payment could be in the form of a monthly salary, hourly wages, or commissions. Active income offers money on a routine basis. However, one of its major drawbacks is that your income is ultimately limited and like with passive income.

Passive income can be further subdivided into two categories. These categories are distinguished by what you invest in. They include:

  1. Invest Money For Passive Income. These are passive income ideas where you need money to generate more income. You will be less actively involved and unlike the other category.
  2. Invest Time and effort for passive Income. In this category, you will need to make an initial investment, which is either time, effort, or both.

Our list of the 17 best passive income ideas Falls under these two categories. These ideas include:

Invest Money For Passive Income.

1. High Yield Savings Accounts
2. Build a Cd Ladder
3. Invest With a Robo Advisor
4. Rent a Room or Your Entire House
5. Buy Stock That Pays Dividends
6. Buy Investment Property
7. Crowdfunded Real Estate
8. Peer-to-peer Lending
9. Shopping Cashback

Invest Time and Effort for Passive Income

10. Affiliate Marketing
11. Create a Youtube Channel
12. Create an Online Course and Sell It
13. Create an eCommerce Website
14. Sell Photography Online
15. Earn Money With Your Car
16. Write an eBook
17. Launch an Advertising Agency

Most millionaires have at least seven income-generating avenues, and most, if not all, are passive income strategies. Thus, we advise that you invest in more than one of the recommendations we have given.

 

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