We all remember 2020, right?
Well, given the frankly unprecedented turmoil, it makes total sense that lots of folks are on the hunt for side hustles and passive income streams to help bring in some extra money and build wealth.
Whether you’re looking to work less (or not at all) or simply top up your regular income with a little extra on top, your bank account would no doubt be grateful for a little cash injection.
There’s no reason why you should work hard to earn more. In fact, there are plenty of ways to generate passive income without investing much of your time or labor at all.
So, if you’re looking for passive income ideas, you’ve come to the right place. In this article, we lay out a range of ways to earn passive income and explain the biggest pros and cons of each.
Okay, but what makes income passive?
Essentially, it’s when you don’t need to put too much ongoing effort into a revenue stream (AKA living the dream).
Unlike most jobs, which require you to clock in for 8 hours a day, these are profitable business ideas or projects which you can pretty much just set and forget.
So, take a look at all our ideas, and see if there’s a match for your interests.
1. Start an online store
Keen to move product?
While it might sound like a big operation, running a small to medium-sized online store doesn’t necessarily need to eat into your time too much.
While you might not be able to call the income passive exactly, as you need to do some upkeep of your website and inventory, investing in a scalable online store is a great way to make money online.
The pros of an online store
- Sell anything. Whatever product range you choose to offer, there’s likely a niche for you.
- Direct revenue. This is one passive income idea where money comes directly to you for each product sold.
- Scalable. From pocket change to thousands of dollars, an online store can make cash in the short term and the long term.
The cons of an online store
- Ongoing work. This isn’t one of the best passive income ideas if you want to do nothing while you earn.
- Seasonal. Depending on what you’re selling, there’s a chance you won’t earn much during certain times of the year.
- Costly. Buying stock and managing inventory will eat into your passive income streams.
An example of a successful online store
To see how an online store can be done right, check out Forrest, a Lithuanian company which uses a Zyro store to offer edible and aromatic delights.
2. Start a blog
A blog is the perfect way to convert your existing passion into wealth. Regardless of what you’re interested in or have to say, there’ll be an audience out there keen to read about it.
In the short term, a blog is a good place to share your thoughts and insights about most anything, and in the over time the attention and traffic you manage to bring to your blog can become a way to earn extra income.
Whether you run ads, add affiliate links, or attach an online store, your blog can generate passive income in various ways.
The pros of running a monetized blog
- Cover any topic. Whatever you’re interested in, a blog is a place for you to turn your dream topic into cash flow.
- Generate ongoing traffic. Once your blog is up and running and you have a reliable source of traffic, it’s easy to sustain itself.
- Independent. You don’t need to partner with anyone else to start your blog. It one of the passive income streams you can entirely control yourself.
The cons of running a monetized blog
- Indirect income. A blog is not a passive income stream in its own right; you still have to monetize it.
- Ongoing work. Unlike other passive income ideas, a blog requires regular updates and maintenance to make sure you keep earning.
- Competitive. Most blogs struggle to make money in an already competitive market.
An example of a successful blog
A great example of the kind of freedom a successful blogger can enjoy is Nomadic Matt. By monetizing his travel blog, Matt not only funds his own nomadic lifestyle but profits off it.
3. Create an online course
This one is for the knowledgeable people out there who want to transform their smarts into wealth.
Unlike running online classes or traditional teaching, pre-recorded online courses need only be recorded once, then bought and accessed by students whenever they want to learn what you have to offer.
Anything from beginners piano to aerospace engineering can be taught online, so whatever your expertise, there’s money to be made. Your skills are the product.
The pros of creating an online course
- Broad audiences. Online courses are a great way to earn money regardless of the skills you have to share.
- Low investment. You can create an online course basically for free from home.
- High profile. If you want to have a public image, an online course is passive income that will get your face out there.
The cons of creating an online course
- Initial time investment. Before you get started making passive income, you need to put work in to create an online course in the short term.
- Knowledge and specialism required. To earn money through an online course, you need to be able to offer real expertise.
- Reliant on platforms. Most online courses are hosted on third-party platforms.
An example of a successful online course
An online course we love is the Learn How to Farm Mushrooms the Low Tech Way by GroCycle. The interesting and informative course is a great additional income stream for the mushroom farmers who put it together.
4. Sell digital products
As well as selling physical product through an online store, you might also choose to sell digital downloads. These are usually some kind of media that people want to consume on their phones or computers.
Most kinds of creative digital projects can be sold as digital downloads, including but not limited to:
- Music and audio
- Graphics and digital art
The sales concept works the same way as with any product sold online, but instead of getting shipping information, you provide your customers with a link to download the product they’re after.
The pros of selling digital products
- Unlimited downloads. There’s no limit to the number of people who can purchase and download your products.
- No inventory. You don’t need to manage stock or ship items to your customer.
- Constantly scalable. You can always grow your income more from the same products.
The cons of selling digital products
- Initial time investment. Developing a digital product for download means investing a fair amount of time and possibly money into the project.
- Risk of copies. There’s a disappointingly high chance that someone will steal your idea to make money off your creation.
- Niche market. Many digital products are only of interest to a limited audience, making them difficult to sell at scale.
An example of a successful digital products company
For a great example of a company selling digital products, check out VFXnut. The company makes and sells video elements for use in YouTube videos. They make it easier and quicker for creatives to find the footage they need.
5. Affiliate marketing
You’ve probably heard of affiliate marketing before, but did you know it’s one of the most popular (and profitable) passive income ideas?
Affiliate marketing involves you (the publisher) sending traffic to third-party companies (the advertiser) and pocketing a share of the revenue they make from sales.
Whether you have a blog, podcast, YouTube channel, or just a mailing list, all you need to generate money through affiliates is some relevant traffic.
Companies in most industries run affiliate programs, so you can pretty much pick and choose the niche you think promises the most wealth.
This money-making idea is perfect for those who really want to keep things passive.
The pros of affiliate marketing
- High returns. Successful affiliate marketers can make millions each year.
- Passive income stream. This is one of the purest passive income streams that lets you make money while you sleep.
- B2B income. You get paid by companies, meaning you don’t have to deal with customers yourself.
The cons of affiliate marketing
- Competitive. Since it’s one of the most straightforward passive income ideas, affiliate marketing is a super-competitive industry.
- Dependent. You rely on third-party partner companies to make cash; affiliate marketing is not direct revenue.
- Only a share. Remember that you’ll only make a small percentage of the revenue your partners make.
An example of a successful affiliate
There’s a good chance you’ve heard of Skyscanner. The price comparison site allows users to find the best deals on flights and holidays, but did you know that it makes the majority of its income from affiliate marketing?
6. High-yield savings account
High-yield accounts are a form of savings bank account that are federally insured and offer interest rates far higher than average bank accounts.
While a regular account might currently net you around 0.07% annually on the amount you have in your bank, a high-yield account might be as high as 1.5%.
This is the perfect form of passive income if you’re already sitting on an amount of seed capital and don’t currently have any other big ideas for what to do with it.
Over time, high-yield accounts represent a reliable form of income.
The pros of a high-yield savings account
- Reliable income. Since these kinds of savings accounts are federally guaranteed, they’re one of the safest places to keep your money.
- Long-term savings. This is a great option if you’re hoping to save money over a long period of time.
- No work. Since this saving style only requires you to deposit some money into a savings account, it’s one of the most passive forms of income.
The cons of a high-yield savings account
- No huge returns. At around 1.5% annually for average interest rates, this form of saving only pays if you have a large amount of capital to begin with.
- No short-term gains. You’ll probably have to wait a few years with your money in the bank before you’ll start seeing decent returns on your investments.
- Ties up capital. While your money is invested in a high-yield account, you either won’t be able to access it or will face penalties for dipping into the fund.
An example of a high-yield savings account
Vio Bank is an online bank that allows users to access its high-yield accounts services with deposits as low as $100.
7. Index stocks
Famously, arguably the most successful investor of all time, Warren Buffett, has recommended becoming an investor in index stocks as a way to secure passive income in the stock market for later life.
An index fund is a form of mutual fund, which carries stocks for all securities within a specific index. This means that the performance of the fund, and therefore the money you’re investing, follows the performance of the index as a whole.
As passive income, investing in index stocks is similar to having savings in a high-yield account, but with a little more potential risk and reward.
The pros of index stocks
- Low fees. The fees associated with purchasing and handling index stocks on an investing platform tend to be considerably lower than with other kinds of stocks.
- Low tax. Generally speaking, index stocks generate less taxable income than comparable dividend-paying stocks.
- Low risk. These are highly diversified stocks, making that a great choice for low risk investing.
The cons of index stocks
- Tied to an index. Since the performance of the money you’re investing is tied to an index, you’ll enjoy the highs of the stock market but have to suffer the lows.
- Management fees. To avoid being at the whim of the markets, it’s wise to have a fund manager actively managing your money, which will rack up fees.
- Profits are averaged. Since your stock is diversified throughout the market, you’re at risk of being limited by underperforming securities.
An example of index stocks investment
The Dow Jones Industrial Average is an index that tracks the stocks of the top 30 rated companies in the US.
8. Real estate
Real estate might sound like the kind of investment that’s only for the rich, but with the help of real estate investment trusts, anyone can get a share of the action.
A real estate investment trust is an organization that owns and operates real estate but allows investors of any size to invest in property and reap the rewards in the form of dividends.
This means you don’t need to buy property outright or even think about its management. You simply need to invest an amount you’re comfortable with and enjoy passive income in line with the size of your investment.
The pros of real estate investing
- Don’t need to buy. You don’t need to sink all your money into buying property in order to generate passive income.
- Properties managed for you. You can set it and forget it while the trust manages properties you’ve invested in.
- Relatively high returns. For the amount of risk you’re taking on, this form of investment is relatively profitable.
The cons of real estate investing
- Lack of control. If a trust is managing property on your behalf, you won’t get much say in how it’s managed.
- Unpredictable market. Since lots of trusts invest in holiday or short-term rentals, there’s certainly risk related to the market.
- Slow to scale. Since you’re tied in to specific properties, it’s hard to scale this kind of investment quickly.
An example of successful real estate investment
One of the most well-known trusts in the USA is the Federal Reality Investment Trust.
9. Sell used items on social media
Sure, social media platforms are great for judging old school friends and finding out what your weird uncle’s current complaint is, but they’re also a money-making opportunity just sitting there waiting to be claimed.
Whether or not a social media platform has a formal marketplace (for your info, sites like Facebook and Instagram do), there are still plenty of people willing to part with money for second-hand deals.
If you’re just looking to make a few bucks, you can rummage through your closet to see what you don’t need anymore that someone might buy. However, there are plenty of users who make okay money buying used items and flipping them for a profit.
Whatever your chosen approach, this can be a real money-spinner.
The pros of selling used items on social media
- Quick start. So long as you have something to sell that someone would be interested in buying, you can start making passive income instantly.
- Sell anything. As long as it’s legal and someone will buy it, you can sell anything you like on social media.
- (Usually) tax-free. If you’re simply selling personal items, you likely don’t need to pay tax on this income.
The cons of selling used items on social media
- Constant work. Buying and selling on social media take some work, so you won’t make money while you sleep.
- Low returns. Unless you can buy super low and sell super high, you’ll be making modest margins with this passive income stream.
- Risky. If there’s no one interested in the goods you’ve bought to sell, you’re likely to lose capital.
An example of successful social media seller
An established retailer that has made the most of the opportunities social media selling has to offer is the California-based Hats Unlimited. Opening a Facebook store allowed the company to reach new customers and sell thousands more hats.
10. Start a YouTube channel
Wanna be famous? Have a passion for something?
With YouTube, you can get your face out into the world while making more all the while.
If you have a novel content idea, something to say, ideas to share, or simply some funny videos to upload, you can get into the earning spirit with the platform.
Successful creators can get money from the ads that play on their videos, as well as sponsorships, affiliate ads, selling their own products, and more.
If you’re able to pivot your YouTube channel into being an influencer in your niche, you can make real money and benefit from brand freebies.
The pros of starting a YouTube channel
- Low investment. Opening a YouTube account is free, and you can record decent footage on most modern smartphones.
- High profile. If you want to have a public profile, getting your face out on YouTube is a great way to start.
- Huge potential return. The top YouTubers get paid hundreds of thousands per month for their content.
The cons of starting a YouTube channel
- High competition. Millions of people upload content to YouTube every day, so it’s hard to get heard among all the noise.
- Reliant on the platform. All income streams related to a YouTube channel are dependent on the platform.
- Difficult to earn money. Upload all the money you want, but you won’t open a proper income stream unless you have a large audience.
An example of a successful YouTube channel
Daily Dose of Internet collates collections of video clips from around the web, crediting the creators, of course. With over 10 million subscribers and multi-millions of views for each video, the channel makes money from both ads and their own merch store.
11. Start a Podcast
Similarly to YouTube, podcasts are the ideal money-making project for people with something they want to say and have a passion for a topic.
Podcasting has seen a huge surge in popularity over the last 5 years, with everything from news and political analysis to true crime and reality TV recaps being listened to by millions of people around the world.
The breadth of topics covered by podcasts makes it easy to find an audience within any niche you’re interested in filling.
Podcasting shares another similarity with YouTubing in that it’s not a direct revenue stream but instead requires you to monetize it. This leaves the door open for a number of revenue streams from just one podcast, maximizing the money you make.
The pros of starting a podcast
- Low investment. As long as you can afford a laptop and some basic recording equipment, you can start making passive income from a podcast tomorrow.
- Only basic skills required. Although you’ll get better over time, you can get started and earn money podcasting with little skill.
- Can be fun. Of all the passive income ideas on this list, this one likely has the highest potential for being enjoyable.
The cons of starting a podcast
- High competition. There are tens of thousands of podcasts out there, making it hard to break through and earn passive income.
- Need a good angle. To get started in podcasting, you need a really good idea to catch attention.
- Indirect income. Since your revenue would likely come from advertising or subscriptions, this is a less direct way to make cash as a side hustle.
An example of a successful podcast
A great podcast with a big following and thousands of listeners each week is Behind the Bastards. The show makes income from advertising and its merch store.
12. Car advertising
Own a car? Great, you can turn that into passive income.
Car advertising involves your vehicle getting printed with advertisements for a specific company. As you drive around, people will see the ads.
This is an unconventional and low volume method of advertising which can put an extra bit cash in your pocket.
The pros of car advertising
- Offset driving cost. Cars are usually just an expense, this way they become a way of bringing cash in instead.
- Choose advertisers. Unlike lots of online advertising, you have the ability to pick and choose between advertisers.
- Make money offline. If you’re looking for a method of making some passive income without turning to the internet, this is a straightforward solution.
The cons of car advertising
- It’s literally on your car. If you’re not comfortable driving around with ads on your vehicle, then it’s not worth investing in this.
- Not scalable. Unless you’re planning to drive more than one car at a time, you’re limited to just one vehicle.
- Not massive income. You might expect on average around $100 for driving around with ads on your car.
An example of car advertising
Check out Carvertise if you’re interested in advertising with your car.
13. Rent on Airbnb
Got a spare room? Pop it on holiday rental site Airbnb.
Rental properties in top locations can make tons of money each night, meaning that even if you just have a single room free, and rent it out for just a few nights per month, you can still make a decent bit of revenue from the platform.
The great thing about renting out your spare space on Airbnb is that you can decide when you’re happy to have people to stay, and when you’d rather have the space to yourself.
You can even just rent out your home when you’re heading off on holiday, meaning you can cover some of the cost of your own vacation with someone else’s.
The pros of renting on Airbnb
- Monetizing existing space. With Airbnb, you can start making money as passive income off a spare room that would otherwise be sitting empty.
- Not (necessarily) taxed. In most cases, you don’t need to pay taxes on the income you make from Airbnb, only service fees.
- No expertise. This way, anyone can make cash off a rental property without the need for specific skills.
The cons of renting on Airbnb
- Sharing your space. You’re letting strangers into your space, which may be your home.
- Constant upkeep. You’ll need to keep the space you rent out clean and in a good condition.
- Regional laws. Many places where Airbnb challenges the local tourist trade have regulations against prospective renters.
An example of a successful Airbnb renter
To see the best way to put together an Airbnb profile, check out Joost’s listing for his Luxurious Suite with Canal View in Heart of City in Amsterdam. This listing shows how rental properties attract users’ attention on the site.
14. Storage rentals
If you’ve not got enough space in your house or apartment to store all your belongings, you might turn to a self-storage provider for extra space. Rent is generally lower than for a residential space, and you can come and go as you please.
The self-storage industry is currently worth an astonishing $38 billion per year, and while you may think that big companies lock up ownership of units, an impressive 73% of all self-storage units are owned by individuals or small businesses.
Buying units or renting them to sub-lease can be a big money-spinner for making passive income.
The pros of storage rentals
- You don’t need to lift a finger. Generally, people can access their units without your assistance, all you need to worry about is general maintenance, making it reasonably passive income.
- High returns. This is a billion-dollar industry with the potential for big money if your location is right.
- Reliable income. Since people tend to rent storage spaces long-term, it’s relatively easy to predict your income from month to month.
The cons of storage rentals
- Infrastructure. Unlike the online passive income suggestions on this list, storage rentals are tied to a specific place and require a decent amount of infrastructure.
- Slow scaling. As passive income ideas go, this storage rentals are relative hard to scale at speed, as they’re location based and require a considerable amount of capital.
- Insurance. It’s likely that insurance will be a major concern and cost as the operator of a self-storage unit or facility.
An example of successful storage rentals
The world’s 804th richest man, B. Wayne Hughes, established his $3 billion fortune in the storage rental business.
15. Create an app
Do you have a digital solution to an everyday problem? Maybe you’ve thought up a great new way to connect people? Or perhaps you just know a great game other people will want to play?
If any of the above sounds like you, it might be time for you to create an app.
While this idea definitely requires more time, expertise, and investment than the other ones on this list, it’s also the one that has the highest potential to making you a millionaire.
There’s a bunch of different ways you might monetize your app, from simply running ads to getting users to purchase subscriptions. Whichever way you choose to go with it, this can quickly generate impressive passive income.
Unfortunately, if you don’t know how to code, you’ll probably just have to suck it up and get someone else to build out your idea for you.
The pros of creating an app
- High potential return. With successful apps garnering millions of downloads, the potential revenue are super high.
- Multiple revenue structures. Whether you prefer subscriptions, ads, or in-app purchases, how you make cash is up to you.
- Ability to update. Once your app is up and running, you can update it whenever you need.
The cons of creating an app
- High initial investment. Apps take a lot of time and money to build before you start making revenue.
- Requires skills. In order to code an app, you need to either have, learn, or hire the necessary skills and knowledge.
- Necessary updates. To stay relevant, you’ll likely need to update your app regularly.
An example of a successful app
Bitmoji is an app that allows users to create an avatar character which they can then use in personalized emojis. This simple but successful app makes money primarily through advertising.