Passive Income Guide: 9 Passive Income Ideas to Build Wealth

Passive income refers to an earnings stream derived from investments, royalties, rental properties, or stakes that do not require daily, active involvement from the earner. This income stream is the opposite of active income, or earned income that comes in as a direct result of daily effort, and different from a “side hustle,” or a job an individual takes on in addition to their primary job to make extra money, which usually requires significant effort.

Passive income streams initially require a lot of work upfront to get started and light maintenance once they begin to pay off. Examples of passive income include real estate investment dividends, royalties from publishing a book, or interest from a high-yield savings account.

Individuals typically set up a passive income source (whether alongside their full-time job or to replace it) to achieve financial independence. Earning income from passive activities allows individuals from all backgrounds to build wealth with little effort, so they can spend more time on other areas of interest, like hobbies, time with friends and family, or relaxing.

Here are some of the most common types of passive income opportunities:

1. 1. Invest your money. If you have money for an upfront investment and want to set up a passive income stream, a common approach is to invest funds where you may see increases in the market for large returns on your initial investment. Commercial real estate investing (especially real estate investment trusts, or REITs), dividends and capital gains in the stock market (especially by choosing mutual funds, index funds, or high-dividend stocks through a brokerage), or investing in a local small business or co-op are common options for interested investors with particular financial goals.
2. 2. Publish a book. Writing a book requires a lot of upfront work—whether it’s an instructional guide, a memoir, a novel, a self-help book, or a poetry collection. However, if your completed work is published, you can earn passive income through sales or royalties. While you can send a query to house the book with a major publishing company, self-publishing the work as an e-book is a great way to ensure publication and get you on the road to earning residual income.
3. 3. Generate interest money. Interest money refers to a small percentage of your savings account balance that banks or other financial institutions pay you to retain your business—it’s a very small amount of regular passive income. Many people shop around for banks with higher interest rates, like those that offer high-yield bank accounts, to make the most of this revenue stream.
4. 4. Create an online class. If you have a particular area of expertise, create a passive revenue stream by developing an online instructional course around it—for instance, videos, workbooks, podcasts, downloadable content, or other digital products—that interested students can buy. Assembling evergreen content (consistently relevant content) for your online course can be labor-intensive, but once it’s created, you can sell it indefinitely.
5. 5. Enroll in affiliate marketing. If you’re into online blogging or have a sizable social media presence, you can establish a relationship with specific products or services in an “affiliate marketing” strategy. As an affiliate, the blogger or influencer runs a company’s ads or promotes their products on their blog or social media channels, and the company gives them a percentage of the sales.
6. 6. Rent your property. Many investors use rental income as a reliable form of passive cash flow. If you own property that you’re not actively using, you can potentially rent it to others temporarily—for instance, renting your car or spare room in the short-term or renting a separate property to long-term renters. Of course, this income stream will still require some maintenance, especially if you do not outsource work to a management company and serve as the sole landlord of the rental home.
7. 7. Use a cashback credit card. Many credit card companies offer monthly rewards or percentage points that you can accrue as you spend money on particular items or outings—for instance, dining out, air travel, or hotel accommodations. If there’s a specific area in which you regularly spend money, consider applying for a cashback card that offers a high percentage in that category. Then, use the card for all of the relevant purchases to accrue small earnings every month.
8. 8. Sell stock photos. If you own a high-quality camera or enjoy taking photos, selling your shots as stock photos online can be a reliable passive income strategy. You can choose to sell your photos through a major stock photography website or simply to set up your own sales page where buyers can download your shots.
9. 9. Become a lender. A lesser-known option for passive income is peer-to-peer lending (also called P2P lending), in which you become a lender and offer money to an interested borrower, usually through an accredited company that underwrites P2P lending. The borrower makes regular monthly payments plus interest, which slowly and steadily can make you extra cash.

All investments and investment strategies entail inherent risks and introduce the potential for financial loss or the depreciation of assets. The information presented in this article is for educational, informational, and referential purposes only. Consult a professional investment advisor before making any financial commitments.

Get the MasterClass Annual Membership for exclusive access to video lessons taught by business luminaries, including Sara Blakely, Chris Voss, Robin Roberts, Bob Iger, Howard Schultz, Anna Wintour, and more.