If you have a full-time job working 40 or even 50 hours per week, you know how exhausting it is and Friday is always the favorite day for a lot of people.
If you hate Mondays and want more time freedom and even the possibility to quit your job, you need to find extra ways to make money, so you don’t need to depend of your soul-sucking job to have enough money to pay your bills.
For this important reason, it’s extremely important that you have multiple sources of income, and with absolutely no doubts, passive income is the best type of income stream.
What is the definition of passive income?
First of all, you should understand the definition of passive income. So what can be considered passive income?
To start you need to know first, what is active income; if you need to be actively working to earn money and when you stop the same happens with your income, then this is considered active income.
The most common example of active income is your 9-5 job. Take a few months or weeks off from your job and obviously, you’ll not get paid. Active income, in other words, is trading your time and labor for money.
You are basically selling your precious time and efforts to get paid. This is certainly the main income for 95% of the population.
The passive income definition is very simple: when you don’t need to be actively working to earn money you are making passive income. The most common examples are business investments, payouts from rentals, royalties, etc.
Now It’s easy to understand why people love passive income; you don’t need to best “wasting” your time doing some work that you don’t like and you still have a source of income if you have the right investments.
The Importance of Passive Income and why you should build it
If you are like me, and you don’t like the idea of spending 40 hours or more per week in most cases working in a job that you don’t love and even worst is if you have a low paycheck.
So it’s easy to understand the importance of building several streams of income. If you have a good amount of money being generated every month from your passive income sources, depending of your situation and how much you are making from it, maybe you can quit your job and spend your time doing the things you love.
And even if you love your job and you have a great salary, there is always the risk of getting fired for several reasons or other worst events like getting sick.
Getting the job you love with a high salary and staying active on it for your entire life is probably not going to happen, at least for the majority of us.
And here’s why having a passive income (especially multiple sources) is very important: we can’t predict the future, we can be fired from our amazing jobs, we can get seriously sick, a financial crisis in the country we are living, etc…
If you are making $1,000 per month from passive income and get fired from your job, at least you will have some emergency funds to pay for groceries and other essential stuff.
How much money can you make from Passive Income
Better than making money without having to work on your job is making a lot of money from passive income. But how much money is it possible to earn passively?
Here’s the cold truth: you’ll not make a lot of fortune from passive income overnight, because while on your job or business (if you own) you are actively working making sales or selling your time, on passive income, the opposite happens.
To build a big portfolio of investments that will allow you to make a lot of money with passive income, you’ll need to invest money in a similar proportion, for this reason, you’ll not get rich overnight just with passive income.
And to build a source of passive income that can make you thousands of dollars per month if takes time. For this reason, if you want to build several sources of passive income, you need to have a lot of o patience and have realistic expectations, or you’ll end up frustrated and spending all the money you earn instead of saving it.
Below are what I consider the best passive income opportunities for beginners:
#1. Make passive income online with a blog
Since I was very young, my main goal or dream (you name it), was to have time and location freedom. But I knew that my options to get rich and live from passive income were very limited:
- Work as hard and save as much money as possible and live from investments after my 40s or 50s
- Save a lot of money to start an offline business with high chances of failures
- Win the lottery.
- Marry a rich girl.
Option #1 is totally possible but it’s exhausting, requires patience and can take ages to become possible. Option #2 is also possible, but the chances of building a successful business offline are not so high. Not to mention that in many cases you need to sell your soul to make it happen.
And for the sake of God, I’m kidding with options #3 and #4, although it happens in some cases, I’m not a lucky person.
That’s why many years ago I started searching on the web about the best ways to make money online, or passive income that would allow me to earn money even when I’m not in front of the computer.
To be very honest, I lost money on pyramid schemes, tried to build several small online businesses that failed. And for the last option, I tried to start a blog to make money.
Again, my first two blogs failed miserably, only with this blog, after a lot of trial and error, I started making some tiny but constantly growing income, allowing me to quit my job after 2 years of blogging.
By starting a blog you have some amazing benefits and advantages, that no other business model has:
- Very low cost to get started
- High chances of success if you follow the right strategy
- It’s very scalable; it means that you can start making only $500 per month and scale to $10,000 or $20,000/month and beyond
- You can start working only 1 or 2 hours per day if you have a full-time job
- You can make money blogging and traveling the world at the same time.
- And many more benefits.
And how to make money blogging?
Being very honest, to create a successful blog you need to invest a lot of time, efforts and energy. But with no doubts, blogging is business #1 for many reasons as explained above.
There are top bloggers runs by single individuals making over $50,000/month, and you can also replicate at least a small fraction of this income.
In a nutshell below are the steps required to create a successful blog:
- Choose a good domain name and web hosting.
- Choose a profitable niche
- Create your blog using WordPress
- Get visitors to your blog
- And monetize it with affiliate marketing.
This is a summary with step-by-step articles (just click the links to read them) about how to create a profitable blog. There are several skills that you should master, and it’s also important that you like to write, if you want to create a successful blog.
I consider blogging as one of the best passive income generators that you can find online.
2. Investing in REITs and Stocks paying high dividends
Again, this also one of the best passive income opportunities that it’s available for any individual, even if you are not rich. Try to imagine that with a low amount of money you can buy a small fraction of a solid and profitable company that is worth billions and is well managed, consistently paying fat dividends for their shareholders, would you invest or not?
The problem I see is that many people don’t understand the power of compound interest, these people tend to think that an annual dividend yield of 5-7% is very low and not worth to invest. Probably is not your case, but this kind of person is that one crying because they have lost money after “investing” on that new and “trusted” pyramid scheme promising wealth overnight.
Many stocks and REITs – Real State Investment Trust, has a solid story of dividend yields of 4-8% per year with a constant and increasing in their dividend payouts, meaning that in many cases, investors have an annual return of over 10-12% – there are no better passive income generators that can make so much money on auto-pilot like REITs and stocks with high dividends rates.
Even if you start investing only $100 or $200 per month in stocks and REITs, as time goes by, you’ll notice the effect of compound interest and you’ll be making a great passive income from home that don’t require huge efforts or sacrifices.
3. Affiliate marketing
I consider this another great method to generate passive income for beginners, surely you’ll need to develop some skills and build some knowledge to make money from affiliate marketing, but this is something that can be learned in a short period of a few months.
But first of all, what is Affiliate Marketing?
Basically, Affiliate Marketing is a business model where you are paid a commission just for selling other’s people products. There are thousands of companies like Amazon (see below) that will pay you a commission if you make a sale from their products or services.
How much money can you make from Affiliate Marketing?
Every company has its own rules. For example, Amazon will pay anywhere from 4% up to 12% of their products. Meaning that if you sold a product valued at $100, your commission will vary from $4 to $12.
What is the best type of affiliate programs to promote?
As said previously you can find tons of companies with their own affiliate programs, however, some of them like Amazon have low commissions rates. The best type of affiliate marketing is those from digital and informational products like courses, eBooks, videos, and audio or coaching.
Here are three great affiliate networks:
These are 3 of the biggest players online, the best and most trusted affiliate networks where you can find thousands and thousands of products in several niches to promote and earn a nice commission.
How to promote affiliate products?
Selling is not so easy and for this reason, it’s very essential that you use a solid strategy to produce sales and commissions, otherwise you’ll only waste time and resources.
Check this step-by-step guide to earn money as an affiliate, follow these tips and you’ll make some good amount of money online.
4. Selling informational products
Probably one of the most profitable sources of passive income is by creating and selling informational products. Informational products are digital assets that you can create and sell “unlimited copies” of it.
Real examples: online courses, coaching, ebook, softwares, guides, photos, etc.
The biggest advantage of informational products?
Create it once and you can sell unlimited copies. For example, if you created an eBook or online course, you just need to work on creating it, after it’s done you just need to market it. It doesn’t happen if you created a physical book where you need to produce every piece before selling it.
No inventory, no shipping fees, and much less headache.
However creating an informational product that really sells will require your expertise, research, and many skills. But on the other side, it’s one of the most profitable online businesses to generate passive income.
After that you passed through the process of creating and marketing it, you can make fortunes with minimal work.
5. Using Amazon affiliate
Amazon is the biggest online store in the world, it started selling books 20 years ago and nowadays it is a huge marketplace to buy anything you can imagine.
If you own a blog, using Amazon Associates (how they call their affiliate program), you can make an extra income promoting their products.
Because of their low commission rates, you can’t expect to make a lot of money, however, it can be a great source of passive income online.
There are a few strategies that you can use to make sales using Amazon:
- Creating articles about how to resolve a specific problem and recommend Amazon products as the solution of this problem;
- If you have a blog, you can simply put Amazon banners on your blog and expect that people will buy it.
Amazon Affiliate program is great if you already have a blog and just want to earn an extra passive income online. I don’t recommend it if you don’t own a website, because you’ll need to pay for ads and it will be hard to make profits.
6. Become a YouTuber
The word YouTuber has become more and more popular these days. And there’s a good reason for it… from channels for kids and tutorials, there are famous YouTubers making fortunes online.
Add the fact that people tend to love watching interesting videos and that YouTube is the second biggest search engine, and the result is that you can have a gold mine in your hands.
Becoming a YouTuber is not that type of set and forget option of passive income like stocks or REITs, it will require that you be active with a certain frequency. However, if you are good at using a camera and creating videos, you can generate a great amount of money from passive income publishing a couple of videos per month.
How do YouTubers make money?
By having a YouTube channel your options to make money are more limited:
- With advertisements from Google Adsense
- Sponsored videos or ads from companies paying you
- Selling your own products or services by discreetly placing a link on video descriptions.
To earn passive income as a YouTuber, you must love what you do and it’s important to pick a profitable niche that has a large audience.
7. Cashback Apps
You’ll not make huge profits with this option, but this is the easiest passive income strategy to generate money.
What are Cashback apps and how they work?
Cashback apps as the name suggest are programs that will give you cashback when you make purchases on their partner’s stores.
Using these apps is very simple, you just need to download them, link your credit card and when you make purchases using their platform you’ll automatically get a cashback that can vary from as low as 2% and up to 20%.
Other passive income ideas and opportunities
Above is a “small” list with 7 of the best passive income streams, with no doubts there many other examples of income generators. However, I consider these seven examples, the best passive income generators for beginners without a lot of money to invest.
As you can see below there are other ways and methods like business and jobs from home that can generate an extra residual income:
- Getting paid as a writer, as a profitable example, you can write blog posts
- Teach other languages or work at home as a translator
- Make money as a photographer at your spare time or even selling feet pictures (it’s weird but it’s possible)
- Become a computer programmer and develop apps, selling it later or getting passive income from royalties or business created from it.
- If you already are wealthy, you can easily generate passive income with rental property.
And many other examples.
Generating thousands of dollars per month from passive income is the dream of most people (even if they say that money is not important). And as you can see there are many passive income examples, ideas that you can you simply create.
However, what is more, important is that you focus on only 1 or 2 passive income opportunities and ideas to make money or you’ll end up overwhelmed and frustrated.
But do you want a valuable tip to generate passive income easily, even if you are poor?
Start a blog, work hard, and with the money that you’ll make invest it on stocks and REITs from solid companies that are paying big dividends.
Why am I suggesting that you start blogging and invest in stocks to earn dividends?
Because blogging is the best online opportunity to generate passive income, you can start a blog right now even if you don’t have a lot of money to invest and if you have persistence you can earn a lot of money.
And by being a shareholder of solid companies you’ll be investing your money on stable companies that can be staying paying your bills for the last of your life.