Updated: Jun 27
Passive income is generated from two words. The first being "passive" and the next "income". Passive here refers to using little to none of your precious resources like time. Income refers to cash flow, which can either be spent or invested.
Passive income refers to the money you receive as payment while you go about your 9-5 job. It is usually earned from a second endeavor while you go about your primary job. It serves as a source of additional financial security in case something happens to your primary job.
Passive income is money earned from a short-term activity that requires almost no effort from the individual. With the recent job insecurity in the U.S., having passive income is necessary to keep you standing on your feet in case you quit or, knock on wood, lose your job.
However, you should know that passive income is usually not so rosy at first. In some cases, in the beginning, it requires time, money, and skills from you.
Different passive income sources
The good thing about passive income is that it comes with a lot of variety. So whether you love to go out, sit at home, or even work online in your spare time, there is always something that you can do. The best part is that there is no limitation to the number of passive income streams you may wish to get involved with.
There are various opportunities for passive income, including:
1. Affiliate marketing
This is the means through which website owners, bloggers, or influencers promote products and get a commission. They do this by including the link to the product on their site or social media account. Some of these platforms include Instagram, TikTok, eBay, Amazon, and others. These platforms have become a effective channels to promote products.
The site owner gets a commission when anyone clicks on the link and purchases a product.
It could lead to an increase in traffic on your site, which generates huge income.
It could be time-consuming for startups because they need to build content and generate traffic.
It takes a great deal to attract the right audience.
It takes a great deal to keep the right audience without having them move to another trend or social media platform.
2. Create a YouTube channel or blog
One thing about creating a YouTube channel is that it requires that you have a passion. YouTube channels or blogs are all about your ability to take your passion for a subject and turn it into an income-generating source. It generally involves having a niche and an audience which may not be easy at first but with time would be able to provide a steady source of income for you.
There is room for flexibility until you can build content and a following.
It builds mastery for both yourself and your audience.
It is easy to get sponsors once you have developed your area of interest.
It is usually time-consuming to create content.
If you have a limited niche and it is not appealing to your audience, it would be difficult to maintain them irrespective of the time and money involved.
This involves giving out something for a particular period when you are not making use of it and getting money in return. It could be car rental, home rental, household rentals, etc.
4. High yield account
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5. Peer-to-peer lending
This is simply giving out a loan to another person usually known as the borrower and often facilitated by a third party.
Lenders earn extra income via interest payments from the loan.
The borrower may have an inability to pay back at the appropriate time.
6. Invest in a business
If you have the money and you believe in the growth of a business, then you can invest in that business. First, it would serve as a big encouragement to the business owner. Then, you could potentially make huge profits from it. However, you should not invest more than you are willing to lose because such a business may not go as well as you thought it would.
7. Sell an eBook
Key here is put your knowledge into writing and sell it online. Not only do you get to share a wide array of potential topics with the general public, but you also get paid for doing so. Platforms like Amazon are a great way to sell your eBooks. So get ahead with it and turn your writing passion into an income-generating source.
8: License your music
What a lot of people do not know is that you could get your music to have a license and have people pay to listen or download it for many use cases. Here, not only do you get acknowledged when people use your music, but it also increases your audience in cases where they love your music. Platforms like Spotify are great for licensed music.
9. Create an app
Creating an app generally brings a solution to a problem. Therefore, once this problem starts getting solved through the app’s creation, you could earn income a lot over time. App creation, however, involves a lot of time to create.
10. Real Estate Investment Trust
This refers to a company that manages real estate. This is great because real estate prices increase annually so you get paid frequently as the years go by.
The good news is that you could earn much more when you gain mastery of more than one passive income stream. However, you should understand that passive income is often not a person's primary source of income unless you make it to be.