Passive Income: How to Make Money While You Sleep

how to make passive income

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Earning passive income can help you earn some extra cash or even make a living—all without lifting a finger.

Thanks to the internet, it is easier than ever to generate thousands of dollars a month in passive income. And you don’t need a degree or a bunch of money to get started.

The ways to make passive income on this list aren’t ideas or suggestions. They are strategies that are proven to generate income in the long term.

Are you ready to make money while you sleep?

Passive income is money you earn without making an effort. An example is collecting royalties from a book that you wrote.

This is opposed to active income, which is a direct payment for your time or effort. For example, an office worker is paid for their time (~40 hours a week). They cannot generate this income if they don’t actively go to work every day.

What are the Benefits of Having a Passive Income?

Having a passive income stream can change your life. Here are a few of the benefits.

How many passive income streams should you have?

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Start with one passive income stream. Choose a method from the list below and put your full attention into building it into a passive money machine.

Once you have one income stream, you will have more time and money to pursue others.

The total number you should have depends on you and your goals.

We recommend setting a goal for 10% of your income to be passive. This will require less work upfront and allow you to build your savings. This is a reasonable goal for those who are working full time.

Must-know Passive Income Tips

tips of how make passive income

DO NOT choose a passive earning method before reading these tips.

1. Diversify Your Passive Income Streams

2. Don’t Ignore Your Passive Income Streams

If you have a passive income stream, it doesn’t mean you can ignore it and continue to make money forever.

You need to monitor and manage your income sources (or pay someone to do it for you).

If you don’t, your income stream could die.

For example, if you have a popular website, you need to be aware of your competition to avoid losing customers.

3. Beware of Scammers

No legitimate passive income stream can make you get rich quick.

But, there are plenty of scammers that will try to convince you of that.

Remember, if it feels too good to be true, it probably is.

Generating real passive income takes commitment and time.

4. Do What You Can Do, Not What You Want To Do

If you can make passive income by following your passion, then that’s great. But, most of us can’t.

Take advantage of the resources and expertise you have. It will be much easier to make money that way.

For example, if you’re an accountant, it might be your dream to write a novel and make money from the sales.

But, you’d be much more likely to succeed by writing an ebook on how to get a bigger tax return.

The Best Ways to Make Passive Income

best way to start passive income

The best way to make passive income is to be patient and take one step at a time.

First, choose a method below that interests you. Next, make a plan and a list of resources you’ll need to accomplish your goal. Then, all you’ll need to do is follow your plan to start making money.

You might need to do some research before getting started. Luckily, Income Ninjas has a bunch of free guides to help you!

Here are our proven strategies for making passive income. 

1. Affiliate marketing

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Affiliate marketing is a way to make money by marketing other people’s products. You don’t need to have a product or service of your own to do this, which means no overhead, no barrier to entry, and no upfront costs.

There are millions of affiliate marketers making thousands a month simply by driving web traffic to amazon.com and other sites.

As an affiliate marketer, all you have to do is start a website and advertise a product. When someone visits your site and buys the product, you’ll receive a commission.

2. Invest in Cryptocurrency

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Bill Gates called cryptocurrency “a technological tour de force.” It’s the future of money and banking, and it’s also a great way to make investment income.

There are currently thousands of cryptocurrencies that you can buy and sell like shares on the stock market.

Because cryptocurrency values fluctuate a lot, you can make quick trades and grow your investment by up to 20% every month.

Trading tools like Profitfarmers specialize in automating these quick trades by working with crypto experts and using algorithms. They do all the work for you—buying, selling, and earning—so you can live your life while your investment grows in the background.

3. Start a blog

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Blogs are much more than online journals. Successful blogs offer many opportunities for passive income online.

First, advertisers will pay you to put ads on your blog. You could make money every time someone clicks on an ad.

Second, companies will pay you to post on your blog. You won’t even have to write your own articles once it becomes popular!

Finally, you can make a lot of money posting affiliate links on your blog and taking a percentage of sales (similar to the affiliate marketing method above).

You can start a blog for free right now. Then, start spreading the word and grow your following!

4. Invest in stocks

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You can make a passive income by investing in the stock market when you invest long-term. Here are some of the best ways to grow your money in the stock market:

5. Start a YouTube Channel

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YouTube has 2 billion users per month. And the number of viewers keeps growing.

A YouTube channel is an income machine. YouTube will pay you to put ads on your videos, and you can work with companies to advertise within your videos too.

Your fans will also be hungry for more of your content. They will be your loyal customer base for any products or services (aka new passive income streams) you start in the future.

It’s easy and free to start a YouTube channel. You could post your first video within the next 30 minutes!

6. Create an App

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You don’t need to be a tech genius to create an app and sell it on the App Store.

If you have a great idea, you can hire a developer to build an app for you. Then, you can upload it to the App Store and start making money.

Next time you have a brilliant idea for an app, follow these steps to build it and sell it.

7. Sell Stock Footage

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Do you have an eye for photography or film? If so, you could make money by selling your visual content on stock footage sites.

Businesses and content creators are always looking for visual media to use. You can sell your photos and videos for hundreds of dollars—and not just to one person.

You get paid every time someone buys the rights to your images. 

Getting started is as easy as taking a photo and starting a profile on a stock footage site like shutterstock.com.

8. Write an ebook

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You have information that’s valuable to others. Whether it’s about cooking, carpentry, or funny cat facts, someone wants to hear what you have to say.

And they’ll pay you for it.

You can write an ebook on Google Docs or Microsoft Word and sell it on Amazon or your blog. It’s digital, so all you need to do is upload it, set a price, and spread the word.

Ebooks don’t have to be long, either. Many profitable ebooks contain fewer than 20 pages.

9. Rent a Property

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If you own property or wish to invest in real estate, you can make rental income by renting to tenants.

It’s important to understand that tenants have rights and landlords have responsibilities. Therefore, we recommend hiring a property management company to handle the day-to-day activities.

When a manager does all the work, you can sit back and wait for the checks to come in.

10. Become an Airbnb Host

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If you live in a tourist-friendly location, you can make a lot of rental income on Airbnb.

Charging per night can make you 10 times more income than renting monthly to a tenant.

You can rent an entire property or a room in your home. Airbnb handles all the financials and deposits your income directly into your bank account. It’s easy and free to start!

Hosting on Airbnb will require a lot of attention and upkeep because new guests arrive frequently. We recommend hiring a manager for your Airbnb property.

11. Become a Silent Business Partner

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Does your friend need $1000 to start a home bakery? You can give them the money in exchange for a percentage of company ownership (and profits).

Many new businesses look for silent investors. You could find yourself owning 10-20% of a new company with the right investment.

If the company does well, your income stream will flow indefinitely.

12. Peer-to-Peer Lending

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Lending money to other people can earn you passive income in the form of interest.

This is a great way to grow your savings at a much quicker rate than a savings account or certificate of deposit (CD) account.

Sites like Lending Club allow you to loan money to others at interest rates up to 35%. That means if you lend $2000, you could make $700 in passive profit.

Collections are managed by the site and payments arrive monthly, so all you have to do is lend the money and collect the monthly checks. 

13. Create an online course

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Creating an online course is similar to writing an ebook—but with much more income potential.

A course is a bundle of resources, such as ebooks, tutorials, and videos. It provides people with everything they need to accomplish something or become an expert.

An example of a course is: How to set up a profitable affiliate marketing website.

Many online courses sell for thousands of dollars.

If you have something valuable to teach others, creating an online course might be the best way to make passive income online. 

14. Search the Internet with Swagbucks

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How much time do you spend online every day? By using the search engine at swagbucks.com, you can get paid for the browsing you already do.

You might not think you’re online very much, but you probably are. The average person spends over 6 hours online every day! And that adds up quickly as the weeks pass.

Many Swagbucks users report making over $50 per month.

15. Keep your Money in a High-Yield Savings Account

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This is the best way to make easy passive income.

Your money is probably already in the bank, so why not collect some interest?

A high-yield savings account will earn you around 1% interest annually on the amount in your account.

It’s not much, but it’s literally earning money for doing nothing. Throughout your career, you could make thousands simply by switching bank accounts.

Passive Income Streams to Avoid

passive income streams to avoid

There are a lot of passive income opportunities that aren’t really passive. Others risk your money more than you might like. These are income streams you should avoid.

Renting a property without a manager

Renting a property is a lot of work. Even if you spend a lot of time renovating and preparing for your new tenants, it doesn’t mean your income will be passive.

Far from it.

Being a landlord requires constant attention. Not only to keep your tenants happy but also to protect your property.

Doing all the work yourself and making all the profits might sound like a good idea, but hiring a manager is essential if you don’t want your rental to become a part-time (or full-time) job.

Starting a “passive income” business such as vending, storage, or a car wash

Starting a company that generates passive income is not nearly as passive as you may think.

Owning a business takes a lot of work and requires costly marketing to succeed. Not to mention a large initial investment.

If you cannot devote 100% of your energy to your new business for at least the first 5 years, then you shouldn’t do it.

Opening cashback credit cards

Opening multiple cards for the perks will not generate income. In fact, it will probably hurt you financially.

Opening and closing multiple cards will negatively impact your credit score. This can cause you to get poor loan rates in the future (and decrease your income). 

And, if you miss a payment, your credit card interest payments will eliminate all of the benefits from the card.

Owning a credit card is not a bad thing. But, opening multiple cards and incurring debt is not the way to generate income of any kind.

Passive Income FAQ

FAQ of passive income

You can generate income with no money by using your skills or expertise. If you have information that will help people to live a better life, then you can sell that information to them.

Examples include writing an ebook and starting a blog.

Your product doesn’t need to be informative or educational. You could start a YouTube channel to showcase your comedy or write a book of short fiction. You can use your personality, experience, and passion to make an income with no money in the bank.

Yes. But it might take some time. The fastest way to make $1000 a month is to rent a property or invest your money in the stock market.

If you don’t have money or property to spare, you can start a website or create a course and promote it online. Over time, you can generate thousands of dollars each month with minimal work required.

It depends. The best passive income stream is:

  • Safe
  • Sustainable
  • Achievable by you

One of the best ways to make passive money is by investing in index funds. But, if you don’t have a lot of expendable income, this will be very difficult to do.

In this case, we recommend using your expertise to sell a product or generate a following online.

For example, if you’re a home chef without much cash, one of the best passive income ideas might be to start a blog or a YouTube channel. 

The fastest way to make money passively is to use valuable capital that you already own.

For example, if you invest $10,000 in a stock that pays dividends, you could make $100/month.

Or, if you rent a property in a tourist destination, you could make thousands every month.

If you don’t have much money, you can make income fast by using trading signals to invest.

Trade signals tell you how to trade to make the most of your money, and you can automate your trades so your income is truly passive.

With a $1000 investment, you could make hundreds a month by using trading signals. There are many tools to help you do this, but our favorite is profitfarmers.com.

Some examples of passive income include collecting royalties on a book or piece of music, generating ad revenue from a website, collecting rent from a property, and making dividends from an investment.

Yes. Passive income is not just a real way to make money. It is also a smart way to make money.

Wealthy people say that you need to invest money to make money. When they say this, they are telling you how to make passive income.

When you buy property, make a loan, or invest in a business, your money is working for you.

The same is true if you create a product or service that will make money in the long term.

The Best Time to Start Making Passive Income

The best time to start making passive income is NOW.

You have great ideas. You have skills. You have valuable resources. And you have stories to tell.

The sooner you start using them to generate income, the sooner your income stream will grow from a trickle to a steady flow.

 

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