27 Best Passive Income Ideas To Build Wealth

by | Apr 19, 2021 | Personal Finance | 0 comments

Are you looking to earn more income by creating passive income streams? You’re in the right place! We are going to give you the best passive income ideas to help you begin building massive wealth.

This article will cover many passive income ideas including, starting an online business, investing in rental properties, paying down debt, creating a side hustle, investing in stocks, and much more.

Why You Should Consider Creating Passive Income Streams

A large portion of people live paycheck to paycheck and are never able to get ahead financially. This means that most people end up working until they die or run out of their retirement savings early.

Creating passive income can help you in times of financial distress or even be used to cover all of your living expenses. Using passive income to get to financial freedom will allow you to do whatever you want with your time.

One of the biggest secrets to life is figuring out how to make money while you sleep. If you can do this, you will surely be able to obtain financial freedom and live the life that you desire. Many of the passive income ideas in this article can help you get there!

The Truth About Our Best Passive Income Ideas

Ok, let’s set a few things straight. Creating passive income streams can be easy but you will need to either trade your time or your money. If you already have the money, you might be able to create truly passive income streams. If you don’t have any money, you will need to sacrifice some of your time and energy to begin building up your passive income.

It’s important to remember that trading your time upfront isn’t actually passive. But keep in mind that you might be able to turn that initial effort into a passive income stream later.

Start with setting some smart money goals to help you stay focused on sticking with your passive income ideas. Without a goal, it’s easy to lose sight of what you want to achieve and completely give up.

The Best Passive Income Ideas

We’ve compiled a list of our favorite ways to generate passive income. Some of these examples of passive income streams will require you to use your money to get started, while others will take an investment of your time.

When working through this list try to think about which of these passive income ideas would work best for you and your schedule. You want to select something that you can stick with over the long term for success.

1. Pay Down Debt

Paying down your debt can instantly put more money in your pocket every month. Start by analyzing what debts have the highest interest and begin to build a plan to pay down those debts. It’s typically best to start with credit card debts and move on to other debts after you’ve paid those credit cards off.

After you’ve paid off all of your debts, you’ll have created an amount of money that you can now save or use for investments.

Here’s a list of some of the types of debt that you can pay off to save money every month.

  • Credit Cards
  • Auto Loans
  • Personal Loans
  • Student Loans
  • Retail Debt

2. Start A Side Hustle

Creating a side hustle can be a powerful way to create passive income. Be aware that selecting the right side hustle idea for you is crucial for success. If you don’t succeed with your first side hustle, try to move on to another that works better for you.

Spend some time thinking about ways you can potentially turn a passion or a hobby into a moneymaker.

3. Dividend Stocks

Dividend stocks are stocks that provide each shareholder with added income through dividend payments. Basically, that particular company shares its profits with its shareholders.

If you don’t have much money to get started with, it can take some time to build up substantial dividend income.

Consider reinvesting all of your dividend income until you actually need to tap into income produced from your dividend stocks. This is also known as DRIP investing which is short for dividend reinvestment plan.

4. House Hack

Do you have an extra room in your house that you can rent out to get some extra income?

Consider going the house hacking route! This involves renting out a room or spare space in your home to earn some additional income. House hacking can also help cut into your personal living expenses by covering your rent or mortgage.

House hacking is another great way to get started investing in real estate!

5. Robo Investing

Robo Investing allows you to get started investing with smaller amounts of money. Most Robo Investing companies don’t have account minimums. With Robo Investing, you will be leveraging Robo technology to choose which stocks you will make up your portfolio.

This is a great way to begin investing if you are worried about trying to pick stocks on your own.

Here are some of our favorite Robo Investing Services:

  • Acorns – Great for beginners and easy to use.
  • Wealthfront – Can help with financial planning.
  • Ally Invest – Easy to get started with.
  • Betterment – Good pricing and user experience.

6. Start A Business

This can take both time and money but can be highly rewarding if you are able to create a successful business. Most businesses do not make it past the first year so be sure to do your research and create a solid plan.

Make sure that your business solves a particular problem or does that better than your competitors. Set your business up for success by doing thorough research!

7. Exchange Traded Funds (ETFs)

You can leverage the knowledge of experienced investors by investing in these funds. These funds are groups of selected stocks that are managed by an investment firm. You will pay a commission fee when purchasing ETFs. Research each ETF to find the ETFs with the best returns and lowest fees.

ETFs are powerful in that you don’t have to worry about picking your own stocks and they help you diversify your portfolio. ETFs are also a fantastic option for anyone looking to begin investing in stocks.

8. Print-On-Demand Shop

Print on demand involves creating products that are printed or created when the actual purchase is made. This is great because you don’t have to worry about managing stock and all of the printing and shipping is handled by a third-party company.

If you have a keen eye for design then creating a print-on-demand shop might be perfect for you! Be sure to understand your targeted customers and pick a good niche before you get started.

Here are some of our favorite print-on-demand resources.

  • Shopify – This allows you to create your own online store and is very easy to set up. They have awesome customer support
  • Printify – Printify is a service that you use to create the actual products and ship them to your customers. It integrates easily with Shopify!

9. Rental Properties

Rental properties are an awesome way to create passive income and build long-term wealth! It does take quite a bit of money to get started investing in real estate. You also have to manage your rentals yourself or hire a property manager to truly make it a passive income investment.

We got started by turning our first home into our first rental. If you do want to get into real estate investing, it’s really important to do some research and pick a strategy that works for you.

Here are a few good strategies for beginners.

  • House Hack – Rent out extra rooms in your home to save more money. Use the money you save to purchase more rentals.
  • Nomadic – Purchase a new primary residence every 2 – 4 years and turn your previous home into a rental.
  • Vacation RentalĀ – Rent out part of your home or even just a single room on Airbnb or VRBO.

We have an entire article on real estate investing strategies if you’d like to learn more.

10. Real Estate Investment Trust (REITs)

These are similar to ETFs but they deal specifically with real estate companies. This can be another way to invest in real estate without actually owning any physical property.

Some REITs offer really nice dividend income as well. Spend a bit of time researching REITs to see which one is the best passive income idea for you.

11. Crowdfunded Real Estate Investing

This is also a way to get into real estate investing without needing to own properties. With crowdfunded real estate investing, you are able to pool your money together with other investors to purchase properties.

Crowd Funded real estate investing can be much cheaper than purchasing your own properties. More than likely, it will take quite a bit of time to see good returns.

Here are a few of our favorite crowdfunded real estate investing resources.

12. Vacation Rental

Starting a vacation rental can be a great passive income idea. You can potentially offset your entire rent or mortgage by running a vacation rental.

It is quite a bit of work if you manage and clean the space yourself. So keep this in mind if you are considering starting up a vacation rental.

Add some quirk or charm to your vacation rental to set your space apart from your competitors and become a super host!

13. Individual Stocks

Selecting individual stocks can be super exciting but also risky. If you aren’t a seasoned investor, you are bound to pick some losers. Always be sure to do the proper research and fully understand each company and stock before purchasing.

Starting out with ETFs is typically a better choice for newer investors. You can also get in touch with a financial advisor to help you with your investments.

14. Create A Course

Do you have a ton of expertise in a certain field or on a specific topic? If so, you could create an online course and sell it to others.

It can be a large effort to create a course so you want to be sure that the topic is in demand. Do a little research on existing courses to see if people are looking for more information on that particular topic.

After your initial investment of time, all of your earnings will be passive income!

Check out these resources for selling your courses.

15. Drop Shipping

With drop shipping, you will be selecting products that you can market and sell for a larger amount than what you purchase them for.

It can be tricky finding a balance of selecting a solid product, marketing to a specific audience, and earning enough profits to make it worthwhile.

I wouldn’t recommend dropshipping unless you have some previous online marketing and advertising experience or if you’ve already run a successful online shop.

16. YouTube Channel

There are people making really good money with YouTube. Shooting and editing the videos can take a lot of time so keep that in mind.

Similar to creating a course, this can be an excellent option if you have a large amount of knowledge in a particular area. You can leverage that knowledge by creating multiple videos and uploading them to YouTube.

This can be a powerful passive income idea if you don’t mind talking and being in front of a camera. It can take months or years before you start to see any solid passive income from going this route so be ready to stick with it for the long term.

17. Put Ads On Your Vehicle

Did you know that you can make extra money simply by placing ads on your own vehicle?

If you drive around for a living this might be a good option for you. Check with each company to see if your vehicle meets the requirements necessary to get started with one of their programs.

The downside is that you’ll have ads all over your vehicle. You can potentially earn more money by putting larger ads on your car.

Here are a few companies that will pay you to put ads on your car.

18. Affiliate Marketing

You can earn passive income by promoting other company’s products on an existing website or social media channel. Some affiliate programs might work better for your audience. This can be a great passive income source if you already have a presence online.

It’s best to promote products that you’ve actually used and would recommend. Your audience will be able to tell if you are just trying to push products to make quick money.

19. Bonds and Certificates Of Deposits

Personally, I’m not a huge fan of either of these but they can offer better returns than letting your money sit around in lower interest checking and savings accounts.

These types of investments also tie up your money for long periods of time. They might be an option for diversifying your investments.

20. High Yield Savings Accounts

This can be a good place to put money that you save for your emergency fund.

Although the interest in these accounts is higher than the typical savings account, it still might not actually make you any money if the interest rate doesn’t keep up with inflation.

21. Write And Self Publish An Ebook

Do you enjoy writing and have a particular topic that you are super passionate about? Consider writing and self-publishing an ebook as a way to earn some serious passive income.

Writing a book will take a considerable amount of time but can be highly profitable. Once you’ve learned the process, you can begin writing more books to earn even more passive income!

22. Rent Out Your Car

Did you know that there are services out there that will allow you to rent out your car? This might be a wise choice if you have a vehicle that you don’t use often.

The downside is that someone else will be driving your car around and you might have to pay a little more for maintenance and insurance.

You could potentially earn enough to pay for the car and insurance and turn a liability into an asset!

Check out these companies if you are interested in renting out your vehicle.

23. Refinancing Your Mortgage

Rates have recently been at all-time lows! You could potentially create some serious passive income simply by refinancing your mortgage at a better rate.

Make sure to understand the difference between how much you will save every month and how much interest you will pay out over the life of the new loan.

It might be best for you to stick with the same term of the loan that you are currently at to avoid paying more in interest.

For example, if you are currently on a 30-year loan and you have 25 years left, you can refinance into a new 25-year loan.

Check out our article about mortgage refinance tips and learn how we are saving over $1200 a month just from refinancing!

24. Peer To Peer Lending

With peer-to-peer lending, you can lend your money out to others that might want to start up a business or need capital. Typically, these peers aren’t able to get loans through the traditional routes.

Peer-to-peer lending is another form of crowd-funded investing. Your money gets put together with other investors and then is borrowed out.

You might have to lock your money up for long terms when you invest this way. Check out some of the following peer-to-peer investing companies for more information.

25. Vending Machines

You can purchase and set up your own vending machines to create additional passive income. This will take a little bit of capital to get started and some time to get the machines placed.

After you’ve built out a solid system, you could potentially hire someone else to run the machines for you to make this a completely passive income business.

26. Flip Retail Products

Do you have experience in finding really good deals on particular products?

If you are able to buy low and sell high, you could potentially earn a nice profit from flipping retail items. You can take these products and sell them on Amazon, eBay, or your own online shop.

This passive income idea will require some dedicated time to hunt down the deals and list them on your marketplace. You might also need somewhere to physically store these products if you are purchasing them in bulk.

27. Blogging

Blogging can be another awesome option for earning passive income. You can create multiple passive income streams on your blog by using ads, affiliate marketing, and selling your own products.

It’s very easy to get a blog started. Blogging is more of a long-term play because it takes time for your articles to get indexed by google. Stay constant and keep pumping out those quality articles to generate traffic that you can monetize.

To create a successful blog think about your audience, niche, and how you will begin driving traffic to your blog. If you are able to drive traffic, you’ll find a way to create passive income from your blog.

Things To Remember About Our Best Passive Income Ideas

Creating passive income isn’t easy! You will more than likely need to get started by leveraging your time and energy.

Pick the best passive income ideas that align with your investing principles and strategy.

Be willing to invest money in yourself by purchasing books, courses, and workshops. However, be aware of self-proclaimed gurus that will try to push their expensive products at you. Knowledge is power! Especially when working towards building multiple passive income streams.

Wrapping Up The Best Passive Income Ideas

Working towards creating passive income is a great way to start your path towards financial freedom. Stay focused on which investments work best for you, your spouse, and your family.

Creating smart money goals will allow you to work towards building up those passive income streams to help you better your financial standing.

Have fun with the investing process and invest in things that you are passionate about. Seek out a trained financial advisor to help you make the best investing decisions with your money.

We hope that you’ve found at least one passive income idea from this article that helps you generate more wealth.

What is your favorite passive income idea?