Most of us exchange something for income – our time.
Passive income allows us to purchase more of it. It gives us the freedom to do things we wouldn’t normally have time to do, and at the end of the day it’s all about protecting our time. Who wants to spend it all working, right?
There is only a certain number of hours in a day that we can actually work to earn an income, and without passive income the only other way to grow our income is by working more hours or advancing our skills. The scarcer our skill, product or service, the higher we earn.
It’s is important to remember that money is actually a tool for us to use to take us to where we want to be, however, most of us don’t use it for what it is intended for.
As Warren Buffet puts it; “if you don’t find a way to make money while you sleep, you will work until you die”. 
What is the difference between active and passive income?
Passive income can be defined as money you earn that requires very little effort to maintain. It may require a significant once off cost in the form of time, effort, or money, but the perpetuity of that income is what creates the passive inflows.
Good passive incomes take time to build up, so if you aren’t willing to put in the effort to make it work – it simply won’t. Work once – Get paid forever.
Active income is the most common form of income that we are familiar with, and that is trading our time in for a wage - a price to give up our freedom.
Is it really fun living paycheck to paycheck, being underpaid and desperate to escape? The point of this article is to give you back some of your freedom.
Let’s dive right into the different forms of passive income one can earn.
1. Dividend paying stocks
Dividend payouts can be one of the most passive forms of income because it is the most predictable. Shareholders benefit from companies that pay out dividends.
For example:
If I bought 100 shares of company XYZ for $35 a share. My initial investment would be $3500 once off. If company XYZ pays $5 a share, annually, then you would receive $500 a year. This would be $500 in passive income EVERY YEAR.
Dividends are usually paid out from company profits, and stronger companies usually always pay dividends unless there is a serious economic downturn and they go into restructuring or cost cutting. But companies like;
Coca-Cola
Procter & Gamble
Chubb
Church & Dwight
General Mills
having been paying dividends for years. They have become reliable forms of income and extremely trusted brands.
This form of passive income obviously requires an initial capital investment before you can benefit from earning dividends, but the beauty about it, is that it's predictable and the more you contribute the more dividends you earn in the long run.
Become a shareholder today.
2. Affiliate marketing – blogging
Affiliating marketing involves promoting 3rd party products on your personal or business socials, it includes links to the product or service that the 3rd party is offering.
The more traffic that you direct to the 3rd party’s site the more earning potential there is. Every purchase or sale that is made you’ll receive a commission, basically a finder’s fee on the internet. You can be an affiliate for almost anything these days.
Check out my two favorite platforms that offer Affiliate programs:
- GumRoad
Another form of marketing that doesn’t get much attention or appreciation is emails. This underused strategy involves targeting people by email, and no, I’m not talking about spamming them, I’m talking about genuine advertising that leads to sales.
If you can grow your email contact list then you have a direct line to potential customers who are already interested in your content, or people who have already bought from you before.
3. Course Sales
The internet isn’t going anywhere, and in fact, more people are now turning to the internet for education than ever before. There will always be a place for top tier universities, but not everyone can afford expensive degrees. So, the next best alternative is learning from courses from experienced and knowledgeable people online.
Do yourself a favor and go check out Udemy, you’ll be amazed at what you can learn there, or teach.
Creating educational courses gives you the keys to opening the door to a new income stream, a passive income stream. You may have to update your course material from time to time to stay relevant, but it definitely offers income perpetuity.
It also requires a lot of time and effort to create all the content you need. So don’t think of it as a get rich quick exercise. If you aren't creating value, then you are going to battle to earn income. People are after value and knowledge at the end of the day. Would you pay to go to a university only to receive a below average education? Probably not, right? So why would people buy your course if it has no real value or utility.
Think about what you are good at or what skill you have, then consider teaching it or giving information about it.
Another good option is to build up a following by giving out free valuable content, and then offer a special subscription at a small fee for those that would like more detailed information. This can be turned into a monthly membership program, where your followers pay a bit extra to get more inside information.
This is a popular strategy used by language teachers. They give out FREE content and offer private lessons to students wanting to improve in a particular language. This then attracts students, because who doesn’t want to learn for free? These teachers then create enrollment windows where students can sign up for monthly subscriptions or buy courses. Once a student has become accustomed to a certain teaching style, they hardly ever want to change their teacher.
Stock traders also utilize this strategy to build up a reputation. They give out technical analysis and stock tips for free, which incentivizes other's to wanting to learn more. They don't mind paying for premium content that's only available to a few because they now trust you, and they believe the extra information is more valuable than what others will receive.
The key here is to continue creating valuable content and to be consistent – This is how you build trust.
4. Selling digital products – eBooks
No one lives forever, but our eBooks do. This creates an opportunity for one to earn a passive income. It also doesn’t require a lot of money to do, however, it does require a lot of time and effort in lieu of money
The beauty about creating digital products is that they will be on the internet forever – its just a matter of people finding it. You can also create eBooks that you plan to give away for free. If you want to capture someone’s email – consider giving them something for free, and what better way than an eBook filled with quality information. Pretty good trade off, huh?
Once you have their email, you will be able to retarget them in the future or even offer them additional benefits, like becoming an affiliate for your products.
Remember, just because you make an eBook doesn't mean it will automatically sell. You need to consider who is your target market, what niche you are aiming at, and how you will market your eBook.
You’ll need to get your eBook seen for it to be successful.
Check out my eBooks as examples:
5. Writing a book
This fits hand in hand with eBooks, but writing a book is more extensive and taxing. If you can successfully pull this off, you could find yourself in the best seller’s category, and earn yourself residual income in the process. The beauty about it, is that you don’t even have to write it yourself, you could hire a ghost writer and then an editor to check the work – all at a cost of course.
Personally, I prefer educational books because they seem more rewarding, but there are readers for all genres, so you can literally begin writing about anything. If reading financial books are your thing, then check out this YouTube video below.
TOP 10 financial books to read.
All these authors continue to earn residual income from every book that's sold. They put in the effort once off and now they continue to reap the rewards from their efforts. Consider taking your skills and knowledge and turning it into a book for the world to see.
6. Selling teaching Content
This has become one of my favorite forms of passive income. There has been such a mad rush to move education online that teachers have been forced to work around the clock.
Consider saving people time by making content for them for a small fee.
Thousands of teachers are always looking for new content that they can use to teach their students, it’s just a matter of finding those that want to pay for it. Many teacher's prefer not to spend their time on creating content, and those that do try usually produce halfhearted garbage- trust me I’ve seen it.
The thing is, people are generally lazy, and not many people still want to work when they get home after working a full day for someone else. YOU can simply get ahead by outworking the rest.
Think of someone working a 9-5 job, most of the time they want to get home and relax – maybe watch a movie. But you on the other hand get home and dedicate 1 hour a day to creating content, after one-year you’ll have so much material that you could potentially sell it to people in the future.
People pay for convenience at the end of the day, and if you can save someone time doing something, why would they not pay for that?
If you are meticulous and don’t mind spending hours in front of your computer banging out content for teachers, then this could be something that you could do. English, science, math, geography are just some subjects that teachers would be willing to pay for.
You could create teaching materials that you turn into courses, or you could easily compile a book and try to sell it to schools.
7. Rental properties – cashflow
Rental income is what many of us dream of, it’s the dream many of us want to have. It’s so popular that it has become synonymous with ‘easy money’. It is thought of as the godfather of passive income and has been preached as the ultimate savior to boost one’s income, it has become the de facto rule we all want to obey.
But is this really the case?
The problem is that people don’t do their numbers correctly when working out their return on investment (ROI). So, passive income ends up being a fictitious dream, and more like a horrible nightmare you can’t wake up from. You just end up becoming another causality added to the pile of unsuccessful property investors.
Firstly, if you are considering getting into property for the passive income aspect of it, then you need to ask yourself several important questions:
- Do you know what gross yield is?
- Do you know how to calculate it to see if your property investment is even viable?
- Do you know property requires maintenance costs?
- Do you know the difference between sectional and freehold?
If you answered no to any of these questions, then I’d highly recommend checking out this property investment eBook. It’s a small price to pay now, to save you from financial pain in the future. It may even be the best decision you ever make and could end up saving you a ton of money, and a chance of actually earning passive income from property.
8. REITs
Real Estate Investment Trusts (REITs) are a great alternative to owning property yourself - and a guaranteed passive income. The law requires REITs to pay out their profits to shareholders. That’s the whole point of being able to qualify to be a REIT.
This is a great way to get exposure to property without taking on the risk of it yourself.
Imagine this:
Defaulting tenants
Maintenance costs
Emergencies
Rates/taxes
Insurance
All these things are extra logistics and they add to the running costs of owning property. REITs eliminate all this for the individual property owner, saving you time, effort, and money on migraine tablets.
For me it’s a no brainer, if I can’t get the property at the right price and it doesn’t offer me the income potential I expect, then REITs are the answer. In fact, I have a Tax-Free Savings Account (TFSA) that owns REIT’s, which allows me to benefit from capital appreciation and paying no tax on my dividends.
If the risk-reward ratio is not in your favor, then don't be afraid to walk away from the deal.
9. Subleasing/ subletting
Do you already own a property? Then consider subletting out a room or a back flat to earn additional income. Don't be despondent if you don't own a house, there is even opportunity for you too. You could look for vacant rental properties that are searching for tenants. Then contact the owner(s) and find out the price they want for the rental and then go and do the legwork for them by finding tenants. You could negotiate a deal with the owner for finding tenants for them, you’ll receive a percentage of that person's rent, or maybe a once off fee - be creative.
10. Renting out equipment, tools or plant.
I remember working at a construction company from 2012-2017. When we had many different teams and projects running, we sometimes didn’t have the equipment we needed to complete the job. So, it was viable renting that piece of plant/equipment for the day instead of losing time on the job.
Although we had to spend money to use equipment the company already owned. It made financial sense because we lost no time on the site – so indirectly we saved money by going to rent equipment rather than letting the work stand still and losing working hours in the process. The worst thing is to fall behind on a contract, not only do you lose money for the company, but you get grilled in meetings.
A simple situation like this is common in the construction industry, and it could easily be an income generator for anyone willing to spend a bit of capital upfront.
11. Renting out your car
Have you got a reliable 2nd hand car that you aren’t using? Consider renting it out to help pay for the financing costs, or just to generate extra income for yourself. If you have a truck or a vehicle you could easily advertise it and rent it out to people who are moving, or to people who want to remove rubble, garden refuse, or general waste.
Again, I know this is an opportunity because it’s coming from firsthand experience. When I lived with my mother, we had to maintain the garden where we lived and we didn’t have the transport to remove the wastage, so we either had to hire a garden service or rent out a truck to dispose of it, otherwise it would collect up and be more of a mess at a later stage. My mother was a single parent, so at the time we never had the resources to move our wastage.
This could be an opportunity to do a bit of research in your area and look for people living in areas that don’t have the equipment to dispose of their wastage, like single moms, old pensioners, student digs, etc.
12. Renting out parking space
Chances are, there may be people out their willing to pay for your parking space.
Do you live close to businesses, commuter links, or even stadiums? Then demand for parking near these areas will be much higher. Consider turning your yard into a secure parking site for people attending a football match, or consider turning your unused garages into rental facilities for people to utilize to store things or to park their cars.
I know for sure, that if I have just bought a brand-new car, I don’t want to be parking it out on the street outside of my place of work. If it is going to be beneficial for me, I’d rather pay a monthly fee for a nearby parking site that is secure. This would give me peace of mind about not worrying about the safety of my vehicle while I work during working hours.
13. Advertise with your car
Imagine driving your car around and earning money. Sounds appealing, right? Most people underutilize their assets - their cars. Look for ways to turn your depreciating asset into a cash generative vehicle (excuse the pun). If you are only using your car to get to work and to the shops, then you aren’t creating utility for it.
Try contacting agencies or businesses and see if they would be interested in advertising on your car. Start recording your mileage to see how many kilometers you drive, look at it as how much exposure you can offer. Better yet, if you have a tracker in already, this would automatically give you proof of how much you drive. Maybe you are driving 100km each day - that’s free exposure right there to whoever has advertising on your car.
Everywhere you go, people are going to see your car with advertising on it - make that fact known. Even if it is for your own business, if you aren’t advertising on your car then you are losing out on potential leads and customers. Forget about how silly it would look for having a pancake advertisement on your car, if it’s bringing in moola, then who’s really laughing here?
Don’t let your car go to waste, capitalize on it.
14. Micro lending (peer to peer lending)
How do you think banks make money? They charge interest. Obviously, this comes with risk. But if you aren’t risk adverse consider lending money to people who need it. Be careful though, try not to lend to people who need it for consumption, but rather lend it to small business owners who cannot get financing for the expansion of their business. You could become an investor like this too. Instead of wanting interest back from them, you could exchange it for equity.
This is a high-risk opportunity, so please be careful if you head off down this path, you may lose all your capital.
15. Vending machines
Let’s look at Warren Buffet as an example, he didn’t buy a vending machine, but he bought a pinball machine for $25 in 1946, and then charged people to play it. You could follow the same strategy as he did, charging people to use a machine you own.
An excellent example is vending machines, you could put them outside schools or hospital and stock them with popular treats. Make them eye catching and colorful. Maybe the vending machine itself could resemble a popular movie character of some sort, which students could relate to. On top of this, you could start an Instagram (#) that encourages students to share what they bought, next to the character vending machine. #cartoontreats #getyourstoday #imwithironman
It's also important to remember this; don’t be scared to pivot if you don’t succeed at first. It doesn’t necessarily have to be a vending machine, you could try coin-operated pool machines too, where you charge people for each game they play. Look at sports pubs in your area and chat to the managers to see if you can work out a deal.
16. Design t-shirts
This idea is simple but effective. You could design a couple of cool trendy t-shirts and market them by wearing them around town, or by uploading a video of you wearing it, etc. Honestly, you don’t even have to have made the t-shirts yet. You could make one or two as examples and then advertise them and get people to pre-order if they would like them. This prevents you from ordering stock or making too many and not being able to sell them. There really is no point being stuck with inventory nobody wants, and worst of all, you won’t even be able to change the design or spend money on other apparel products.
Think t-shirts, caps, shoes, or socks – anything really.
This will involve a small cost upfront, but if you can capture people’s attentions with your designs or artistic skills, you may end up selling 1000s of t-shirts or other trendy garments in the process.
17. Flipping domain names
Imagine the soul that bought bitcoin.com, probably sitting somewhere in the Bahamas smiling straight to the bank. Although this isn’t as popular or profitable as it used to be - the opportunity still exists.
Look at upcoming trends and search for keywords on google. You may be able to scoop up quality domain names at a good price and then flip them off to someone else who actually wants to use them for their business. With that being said, consider looking at local businesses in your area. Many small or local businesses might not even have a website yet, consider buying their business name domain. So, if one day they have a change of heart and they actually want their business name to match their online presence name - they would have to buy it from you.
Check out this cool story of an Argentinian man buying googles domain name. This practice is known as “Domain squatting”- the practice of buying up domain names for no reason other than their desirability to others. (click here to read the story)
18. YouTube ads
Most people using the internet are consumers and not creators. People spend hours scrolling and looking at garbage. They would rather watch a video on YouTube than try to actually create one themselves. YouTube can be a great source of income for you, consider starting a YouTube channel about something you are passionate about, and once you are able to monetize it, you can earn revenue from adverts on your videos. Yeah, I know it sounds easier said than done, but everything in life requires consistency and effort. If you have the grind and the commitment to make it work, it really could change your life.
On that note, feel free to subscribe to my YouTube - Id appreciate it a lot. :) (click here)
19. Create an app
Applications are downloaded a million times every day. I’m pretty sure even you have downloaded an app at least once in your life.
I know I know, not all of us are whiz kids, and like myself, this is one idea I prefer to stay away from simply because I don’t have the technical skills to do it. But if this is your sort of thing, and your area of expertise is in coding and creating apps, then look into this opportunity. You could either do it for yourself or as a freelancer for other aspiring entrepreneurs.
This could seriously change your life if you take the time to create a functional app that has a specific use. It starts small, and then all at once.
20. License your music
Music is intangible, and because of the accessibility the internet has given users, music can be duplicated and copied quite easily. To ensure that you'll be compensated accordingly, you'll need to license your music. By licensing your music, you agree to lend out the right to the usage of your music in exchange for a fee - compensation. It's basically when another business, usually a distributor or record label, purchases the right to use your music. They'll pay you a set fee that the two of you agree to and then they will own the rights to that music.
Most of us are music users and are unaware that if we are using someone else's music in a video or a remix, we actually are committing an infringement, we require the licensing to use it- meaning you need permission from the creator. If you are a music creator this is good news for you because you can earn passive income by lending out the rights for music users to use your music.
Check out the video below as an example, what these creators are doing here is paying for the right to use a music creator's music in their video. Then what they do next is pay video photographers for quality footage. Then they use the licensed music and combine the footage, from videographers, with the music to make hour long tracks of irresistible beats to keep us entertained.
Forgive me for the thumbnail, it's not my video, but as you can see these creators are professionals, using eye catching thumbnails to make you click.
A win for the music creator, a win for the videographers, and a win for the owner of the YouTube channel. It is an expensive hustle, but as you can see these videos get millions of views, and eventually their return on investment pays off + some.
Found my content interesting? Then consider thanking me by buying me a coffee. If coffee is not your thing, then check out my eBook - The Psychology Behind Money (click here)
