Passive income is widely considered to be the key to financial success and freedom.
Passive income refers to money that is earned without you putting in any work to receive it. There will usually be some effort initially to create the product or income stream, but once that’s finished, you’ll continue to earn regular income without putting in any further hours.
Some people refer to passive income as earning money in your sleep. This is because once the source is set up, you can pretty much forget about it until you reap the rewards each month when the money comes into your account.
Financially rich people understand that to be financially free, you need to drop the idea that you have to trade time for money, and instead, they look for ways that they can earn a living whilst doing what they love or doing nothing at all ☺
Being cash rich is meaningless if you have to work every hour under the sun to support yourself, rather than being able to actually enjoy your money and spend time with your family.
So today I have put together a list of some of the best sources of passive income, which pretty much anybody can create for themselves. These will require some initial work to be put in at the beginning, but over time you can build these income streams enough that they provide a full time living without you lifting a finger.
7 Best Forms Of Passive Income
Property is commonly considered as one of the best financial investments anybody can make. Property always goes up in value over time – even if the property market dips or drops completely after a recession, at some point the market recovers and long term, property prices increase.
Investing in rental properties earns you money in two ways: the monthly rental income that you receive from your tenants and the value of the property itself that is increasing each year.
So if you’re sitting on a large sum of cash savings and aren’t quite sure what to do with it, then consider investing in a few rental properties to provide your regular income and security later in life.
STOCKS & SHARES
Investing in the stock market means that you invest a portion of money into a company, in return for dividends of the profit that the company makes over time.
It’s important to know that investing in the stock market is risky, and short term, you could end up with less money than you put in. However, if done correctly and over the long term, investing in stocks and shares can be a fantastic source of passive income.
There is so much to learn when it comes to investing in the stock market, but if you’re a beginner, there are many Stocks & Shares ISAs which you can put money into and the bank or provider that you invest with will track the stock market and invest your money in the companies with the best return, or the lowest risk, depending on the criteria that you choose when you open the account.
(Stocks & Shares ISAs are available in the UK – please research similar products in your country if you are outside the United Kingdom.)
START A BLOG
Blogging is a fantastic way to earn extra money from home, while also having an opportunity to share your experiences, ideas and opinions with the whole world.
Starting a blog gives you a space to share your thoughts on all sorts of topics – fashion, food, photography, art, health, fitness, business and more.
Unlike posting on YouTube, Twitter, Instagram or any other social media platform, blogging gives you a space online that is completely your own, that nobody can take away from you.
Earning money from blogging is a slow burner. You need to genuinely enjoy writing and engaging with your readers, and it will take at least 6-12 months of consistent posting and sharing your blog before you see any significant amount of money coming in.
However, if you commit yourself, you could comfortably turn blogging into a full time business within a couple of years. Bloggers earn money in a number of different ways, however, the most common income streams include advertising income, affiliate marketing, sponsorships and selling original products on your website.
CREATE A PRODUCT
Create a product or service that you can sell to help others solve an issue or learn something new.
Products such as courses, eBooks and resources are a great place to start, as you can create something with a relatively small financial investment – if it’s an online or downloadable product then it’s going to be more of a time investment to create the material rather than a monetary investment.
Share your knowledge, experience and expertise and add value to the lives of others and you will certainly be on track to creating a product that people really love.
Once you have spent the time working to create the product, this will be a relatively passive form of income as you can just enjoy the monthly income from generating sales.
RENT OUT SPACES
Make money each month by renting out spaces in your home. This is different to buy to let property investing, as you are renting on a short term basis and you don’t need to be a homeowner to get involved!
Let out anything from a parking space to spare bedrooms in your home. Airbnb is a great place to advertise for short term accommodation availability and you can accept or reject bookings as you please based on your circumstances month on month.
Maybe you have a garage that you never use… you’d be surprised how many people in your area are looking for storage solutions who would much rather pay you than extortionate rates to rent out a storage unit from a bigger company.
If you have extra space on your driveway to accommodate another car, then advertise online that you have a parking space available to let. If you live in a built up area or near a train station, many people would rather rent a residential space on somebody’s driveway than pay top whack to park in the centre of town in a multi storey car park.
PEER TO PEER LENDING
Peer to peer lending refers to lending your money to individuals or businesses who then offer loans out to people who are looking to borrow money.
You can offer loans directly to people on a one on one basis in exchange for a high return rate, or you can sign up with a P2P lending network who will do the nitty gritty for you – you just invest the money and enjoy the return rate.
This is more of a long term investment plan as agreements tend to be fixed for at least 3-5 years, but if you’re happy to stash that money away for an extended period of time, then this is a great option to consider.
House sitting isn’t technically passive as you are turning up somewhere to offer your time, however very little work is actually involved.
Some families will seek out house sitters to stay in their homes whilst they are away on vacation, business trips or any other reason that they are out of town for an extended period. You could be asked to house sit from any period of time from a week to six months or more.
Little work is involved, but it’s your job to live in the house, make sure that the place is taken care of, water the plants, care for pets etc.
Whilst this is technically a job where you’re trading time for money, you’re getting paid to live in a house… which you would be doing anyway in your own home.
If you land a gig that requires you to stay for several months, then you might even be able to save on rent, or let out your home on a short term basis and earn some rental income on top of what you’re being paid to house sit!
To Finish Off…
I hope this post gave you a few ideas for ways that you can earn some passive income to boost your savings, debt repayments or just to give you a little extra spending money each month.
Earning money without working for it is such an amazing feeling and is truly the key to financial freedom later in life.
Make sure to let me know in the comments below any other ways that you like to earn passive income, and be sure to check back here soon as I post new lifestyle and personal finance tips on The Angelina Archives every single week.