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Super awesome topic for this week’s happy hour: we’re talking about passive income ideas!
We’ve gotten some good feedback on our recent Increasing Income posts:
- 25 Ways to Make Money This Weekend
- Side Hustle Your Way to an Extra $500 Every Month
- 20+ Weird Ways to Make Money in Your Spare Time
So we’re thrilled to give you some new ideas for ways to make money. And today’s ideas are all going to focus on passive income.
What is Passive Income?
Passive income is when you make money without actively participating in the money-making activity.
It’s the opposite of trading hours for dollars (like almost all of us do!). Instead, you find a way to do something once that will pay off over and over and over, without your continual involvement.
Passive income is earning money, even while you’re on vacation. Even while you’re asleep! Like Warren Buffett said, “If you don’t find a way to make money while you sleep, you will work until you die.”
And if you can figure out how to make passive income while you’re young, you’re golden! Because then your entire life is freed up for you to pursue passion projects or jobs you love rather than spending half your waking hours in a job you hate. And you’ll have decades to take advantage of the magic of compound interest to exponentially grow your wealth.
Top 10 Passive Income Ideas
With that, here’s our list of the top 10 passive income ideas for busy millennial women.
Write eBooks
Let’s start with some passive income ideas based on creating a product. You create the product once, and it can be sold over and over for years to come.
eBooks are a great example of passive cash flow in action. You invest the time upfront to research your topic, write a compelling eBook, and publish it online. Then you’re done! From that point forward, people can buy your book with no additional time investment on your part.
You could be on vacation and get a ping to let you know you made another sale and the money is in your account. Ahhh…life is good!
You can self-publish by creating a website with plug-ins to handle the payment and product delivery. Then market the book yourself.
Want a great real-world example?
Elise at House of Brazen has learned how to make $500/month on Pinterest. Naturally, lots of us are interested to learn how to do that! So Elise self-published an eBook: How to Make Your First Affiliate Sale in 24 Hours Using Pinterest. She charges $25 for the book. It’s great for her because she earns $25 over and over and over again for work she did once, and it’s great for the reader because, for $25, they learn how to potentially make hundreds of dollars on Pinterest!
If you don’t want to create a website and market your book totally on your own, you could opt to self-publish on Amazon.com to get exposure to Amazon’s platform and their huge audience. But you’ll pay a substantial cut of all sales to Amazon in exchange.
Either way, you’ll be raking in cash while you lounge on the beach!
Create Courses
Do you have special skills or knowledge people would pay to learn? Teach people how to do what you can do and earn a profit in the process!
Courses are more work than writing eBooks because there’s usually a video component. But they also sell for a lot more than eBooks. In fact, great online courses can earn hundreds of dollars per student.
It’s one of my favorite passive income ideas because 1) you’re building something that you can be proud of, 2) your course will help people, and 3) once the course is built, your only involvement is to answer some student questions (and even that can be outsourced!).
Write a Blog (or just buy one!)
There’s this crazy idea going around the web that blogging is a quick and easy money maker. Uh, no. It takes serious time and effort to build an audience and get them to click your ads and affiliate links or buy your products.
But, if you can stick with it, there is absolutely money to be made. Some bloggers are clearing $100,000 per month after spending years building and refining their blogs. Once your years are invested upfront, you can outsource your post-writing to other writers for purely passive income.
Alternatively, you could buy an existing blog with an existing audience! Blogs generally sell for 24 times their monthly income. So if a site generates $100 a month in income, you should expect to pay around $2,400 for it. This means your one-time investment of $2,400 should get you $1,200 per year in cash flow. You could recoup your investment after 2 years, and everything after that is pure profit.
Of course you’d probably want to give your readers new posts to read and ways to engage, so you could write blog posts as a side-hustle or outsource it for a fee.
Invest in Index Funds
Index funds are like sampler baskets of a bunch of different assets, like stocks or bonds. They passively follow a Market Index (like the S&P 500, for example), so you don’t have to choose individual stocks or bonds. You just ride a wide selection of the stock or bond market as a whole.
So basically, you’re putting your eggs in hundreds of different baskets all over the market.
You can start investing with as little $5. A very small administrative fee of around .11% of your portfolio’s value, (paid from your portfolio earnings, not out of your pocket) is charged each year, but the average returns well-exceed this tiny fee. From 1973-2016, annual returns of about 11.69%.
Now there’s always some risk in investing because the economy naturally goes up then down then up then down. So the general rule is that if you want to use your saving and investing money in the next year or two, don’t invest it. Just tuck it into a savings account so it’s ready when you need it. But if you can invest for the longer-term, and just wait out those market downturns, you’ll come out well ahead.
Index Funds are about as passive as investments come. You invest once, and you’ll be earning returns for as long as you hold your index fund. Or you could set up automatic investments in an Index Fund every payday so you’re always growing the initial amount that will generate more interest.
Oh, and huge bonus: the longer you hold your funds, the greater your returns will be thanks to compound interest. Like we discussed in our Millionaire Savings Plan, you could realistically turn $182,880 (spread out over time) into $1,000,000 just because of compound interest!
Index funds are one of the best long-term passive income ideas we can take advantage of. To start right away, check out How to Become an Investor Today with Just $5. Or take a look at review.com’s recommendations for the best online stock trading sites.
Sell Photos
1) Take photos, 2) sign up as a seller with a few stock photo sites, and 3) wait for people to buy your photos. Easy!
Not to brag, but I’m up to like 5 or 6 photo sales. So many I’ve lost count 😉
The fact is, stock photography is one of the most-tried passive income ideas, so there’s just a ton of competition in online stock photography. And I’m learning that beautiful vacation photos won’t cut it. Ideally, you want to build a portfolio of industry-specific images for an industry of your choosing.
Think about it: who are your buyers? Most likely business owners looking for stock photos for their website, right? So think about those businesses. Electricians need professional-quality photos of breaker boxes, outlets, and light bulbs. Tailors need photos of sewing machines, needles and thread, and fabric. Capture those images for the best odds of selling your photos.
Here are the sites I’m currently using to sell my photos:
Give it a shot! (pun totally intended)
Bonus: once people have paid money for your photos, you can call yourself a professional photographer, and your new camera is a perfectly legal work-related tax deduction.
Sell Music
I’m not going to pretend to know anything about the world of music, how to make it, or how to sell it.
What I do know is that it’s possible to write a piece of music, and license it online for other musicians to sample. Create once, sell in perpetuity.
Because I don’t know anything more about this, I’m going to refer anyone interested directly to Music Industry How To. They know how to make money in the music industry.
Build an App
There may be an app for everything, but many of them suck. If you can create a better app, you can make a small fortune, even at just $1 per download.
Of course app-building is more technical than anything else on our list. So you’ll need to know how to code or know someone you can pay to write the code for you.
Once you have a working demo, you can submit your app for registry in the App Store. You can expect Apple to take about 30% of each sale as their commission for getting your app to the masses.
Invest in REITs
REITs (Real Estate Investment Trusts) are a great investment if you’re interested in earning cash from your investments while you sleep. They’re one of the easiest and, arguably, safest way to invest in real estate. Ideal for investors new to real estate!
REITs allow you to buy a small ownership stake in multiple real estate ventures. So you can be a real estate investor without putting up a large amount of money or taking on debt.
REITs are required by law to maintain dividend payout ratios of at least 90%. Meaning?
…Meaning you actually get a check or deposit to your bank account periodically for investing.
This guaranteed dividend payout makes REITs ideal for investors looking to actually get cash from the investment, as opposed to just waiting for the value to increase, then selling. But many REITs also offer the option to reinvest those dividends so they compound over time if you’d rather build a larger nest egg for the future than have the cash now.
Sell Digital Products on Etsy
You know Etsy, right? It’s the place online for unique, handmade everything.
You can buy personalized gifts, custom jewelry, and wonderfully weird home decor.
But, even better than buying all that, you can sell your one-of-a-kind creations on Etsy as an income-producing side hustle! And even better than that, you can sell digital products to create passive income!
What kind of digital products? Here are some examples to get your personal passive income ideas flowing:
Get started today! Sign up as an Etsy seller.
Buy a Rental Property
I love real estate investing so much!
I really think everyone should own property (once they’re financially ready, of course). Even if you plan to remain a renter for the flexibility, owning real estate has some serious benefits.
Rental properties are a particularly great investment if you’re looking for passive income ideas because they make you money in four different ways:
- Appreciation – even if the housing market slumps for a few years, over time, home values increase.
- Renters pay down your debt – assuming that you carefully choose the investment property, the rent you charge will be more than enough to pay your mortgage, insurance, taxes, and maintenance.
- Renters are putting money in your pocket – the rent doesn’t just cover all your expenses. It should also put money in your pocket every month. This is that passive income cash flow we’re talking about.
- Tax breaks – you actually get tax breaks on your maintenance, insurance, and property tax expenses (you know, all those expenses already covered by the rent anyway!).
I own and manage a few properties, and the time investment is minimal. I get a few calls each year about maintenance issues like an appliance issue, or air conditioning problem. But it’s pretty passive. And if you want it to be completely passive, you can simply pay a property manager a percentage of the rent to manage the property for you.
Buying those rental properties is the smartest financial move I’ve made. And I really want to see this generation of women benefit from owning property.
Bonus Idea: Rent Out Your Unused Storage Space
Have some storage space on your property you’re not using? Rent it out Airbnb-style! STOW IT is the Airbnb of storage space. You can collect a paycheck just for allowing people to store their things in your unused space! It doesn’t get much more passive than that.
Bonus Idea #2: Part-Time Franchise Businesses
Being on the go doesn’t mean you cannot run your own business. And a part-time
franchise is a great way to do this! Many may think buying a franchise has to be expensive, but
this is not always the case. Part-time franchises can usually be started from $1,000 to $15,000,
making them a low-cost business opportunity. If a part-time franchise sounds like your ideal side
hustle, make sure to browse the best part-time franchises using Franchise UK or Businesses
For Sale UK.
Feel Like Sharing?
What did we miss? Please share your passive income ideas in the comments!
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