11 Passive income ideas

Photo of a dad playing with his kid totally relaxed knowing he's got passive income working for him right now

July 30, 2024

6 min read

If you have a job or have previously worked, you’re familiar with the idea of active income. With active income, you trade your time or services in exchange for money, and you need to be present and working to make that money. But another type of income that has gained popularity in recent years is passive income. Unlike the active income you earn from your day job, passive income is the money you make with minimal ongoing effort, sometimes referred to as “making money while you sleep.”

Here’s what we’re going to cover:

What is passive income
Passive income ideas
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Key takeaways

Passive income is money you earn without doing ongoing work for it, and there are many forms of passive income.
Some well-known types of passive income include sales from something you’ve created, such as a book or digital course, dividends from stocks, and rent from a rental property.
While passive income is said to require minimal effort, the reality is it may require significant effort at the beginning to help you earn money for years to come.

What is passive income?

Passive income refers to money you make without actively exchanging your time to make it like you would at a job. There are many ways to generate passive income, including through:

Creative endeavors: Authors earn passive income from book royalties, and musicians earn it from copyrighted music. With creative endeavors, there’s generally upfront effort in creating the art or product. But once it’s made, it requires little to no long-term maintenance and could make money for years or decades to come.
Financial products: Money you earn from stock market dividends or interest income on a savings account is considered passive. Once you invest or stow away your money, it begins to work for you behind the scenes with no effort on your part.
Affiliate income: If you have a popular blog, you may be able to monetize them to earn passive income through affiliate marketing. Since you’re already spending time creating content for your website, the money you make on top of what you’re already doing could be considered passive.

Passive income ideas

There are many great ways to generate passive income, some using financial products and others through creating a business or leveraging your own creativity.

Leverage financial products to generate passive income

In today’s financial landscape, investment opportunities are open to everyone and may only require a few dollars to get started:

Use a high-yield savings account (HYSA): A HYSA is a bank account that pays an interest rate far higher than the national average for a traditional savings account. Since savings accounts are FDIC-insured, you can safely stow away money and earn interest without risking your balance going down.
Consider Certificates of Deposit (CDs): A CD is similar to a savings account but requires that you commit to keeping money in the CD for a set period of time. In exchange for your commitment, you’ll be offered an interest rate generally higher than a HYSA.
Invest in stocks, preferred stocks, or mutual funds that pay dividends: Companies earn profit, and dividends are part of those earnings which is issued to its shareholders either as a cash payment or a reinvestment in the stock. If you purchase shares in a dividend-paying stock, you may receive money during the period you own the stock if the company’s earnings are positive.
Grow your annuity, pension, or 401(k): Depending on where you work, you may be able to make pre-tax contributions toward an annuity, pension, or 401(k). This means the money is taken from your paycheck before you see it. The money you put into these investment accounts has the potential to grow over time based on how the underlying investments perform. And any increase in the value of those investments is a form of passive income.

Pursue side gigs for passive income

If you have time to work outside of your day job, you might be interested in taking on any number of side gigs to earn extra cash.

Create a course or mobile app: If you have a cause that you’re both passionate and knowledgeable about, you may want to share what you know with others. You can turn that passion into a money-maker by creating a course or mobile app that helps other people. Online tools like Teachable make creating an online course easier than ever before.
Sell your designs or photography online: Those with an eye for design may be able to leverage it to make passive income. For example, if you’re a gifted photographer, you can earn passive income by uploading your images to a stock image site like Shutterstock or Getty Images. You’ll get paid each time someone else downloads one of your images. Designers can create templates or design files and sell them on sites like Etsy.
Start a YouTube channel: For video experts, YouTube can be a dream come true for passive income. Once you figure out your niche and create videos that will appeal to your audience, you may be able to make passive income from ads displayed during your videos.
Use a personal blog for affiliate marketing: Many bloggers start with a passion for writing about a particular topic, whether travel, homesteading, or knitting. If you have a passion that you can teach others about through a blog, you may be able to leverage affiliate marketing to make passive income. With affiliate marketing, you’ll receive a unique link to a particular product or service. Then, you’ll get a cut when someone clicks through that link and makes a purchase.

Develop creative passive income ideas

Sometimes, to earn extra money, you just need to think outside the box of traditional work:

Use your home as a rental: Thanks to sites like Airbnb and VRBO, renting your home or a single room in it is easier than ever. If you have extra space, clean it up and get it rent-ready with all the accommodations a guest might need. Then, check out comparable prices in your area and set up a listing on a home rental platform. If you want to make the process 100% passive, you can hire a rental company to take care of the details, like finding potential renters, checking them in, and taking care of any needs that arise during their stay.
Wrap your car in an advertisement: Are you willing to turn your vehicle into a billboard? Some companies want you to be a driving advertisement for their business, and they’ll pay you to do so. Since many car wrapping companies require you to drive a certain number of miles per day or week, you’ll need to confirm you meet requirements before diving into this passive income effort.
Write a book: While a book can take months or years to create, everything you earn from the sales can be considered passive income. Plus, the rise of self-publishing means you don’t need a publishing house behind you; you can publish on a platform like Amazon for free.

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