15 Ways to Create Passive Income

As I mentioned in my last post, I have become extremely interested…okay, actually downright excited…about the idea of finding ways to create passive income for myself. I mean, who doesn’t want to make money while they sleep, am I right?!

What is Passive Income?

Passive income is money you earn with little or no maintenance from you. Most passive income will require work in the beginning, some more than others, but eventually will require very little, or no, effort.

Did You Know?

Most self-made millionaires have multiple streams of income. A little bit of trivia that I found in my research on ways to create passive income. Okay, let’s get to the good stuff…

1. Investing in Dividend Stocks

If you have a bit of extra money to do so, investing in dividend stocks is one of the easiest ways to create passive income.

I, myself, got into buying dividend stocks awhile back, because I am wanting to build them up to be as high a dividend as they can when it’s time for me to retire. I also like the idea of retiring early so that would be some pretty nice “icing on the cake” so to speak.

If you are not familiar with what dividends are, they are an extra little “reward” that some companies pay to their investors either on a monthly or quarterly basis generally.

If you are interested in getting into investing though, make sure you do your homework. Learn about investing, learn about the companies you would like to invest in (their success, if they’ve always paid investors their dividends, how long they’ve been around, their financial statements, etc, etc, etc.).

So if you are interested in investing in the stock market as passive income, dividend stocks are the way to go!

Note: I am not an investment professional, so again, do your homework if you are looking to get into investing.

2. Investing in Real Estate (Through REITs)

Who says you have to go buy a physical property and have the hassle of renting it out to potentially bad tenants in order to eventually profit? There’s a much better way to make passive income from real estate, and that’s through REITs.

What is a REIT? It stands for Real Estate Investment Trust. These are companies that own and/or operate income-producing real estate.

With these, you can be more on the risky side of things and purchase individual REITs on the stock market, or be on the safer side and purchase them through an ETF (Exchange Traded Fund), which would consist of several different REITs, allowing you to invest in a diverse assortment of properties.

I have personally bought individual REITs that include dividends (as I talked about previous to this), so I get the best of both worlds. So, if this is something that interests you, combine these and you already have two ways to create passive income right there!

3. Cash Back Credit Cards

These are a great way to earn a bit of passive income, as long as you’re careful (well duh, right?). Of course we all know that credit cards are “bad debt”, but they can benefit us if we use them in the right way.

That’s where cash back credit cards come in. So, what are they exactly? Pretty much how they sound. They provide you with a percentage of cash back on your purchases. This can be either as a credit on your statement or directly into your bank account, depending on the financial institution you obtain the card from.

You earn certain percentages back for different kinds of purchases, depending on the card you choose. For example, some have a higher percentage for gas, or groceries, etc.

The redemption procedure varies with each credit card company. It may be once per month, once per calendar year or simply just anytime.

Some institutions also offer an introductory promotion that offers more of a percentage on purchases in the beginning. That’s definitely something to consider and look into.

This method, if done right, can provide you with hundreds of dollars per year in passive income. Pretty easy, hey?

Here are just a few (in Canada) to look into: BMO Cash Back Mastercard, SimplyCash Card from Amex, CIBC Dividend Visa Card and Meridian Visa Infinite Cash Back Card.

4. Blog

Starting a blog is a very inexpensive way to create passive income. However, I won’t sugar coat it, it takes work in the beginning. If you enjoy writing though, it really doesn’t feel like work.

Some people will tell you that you can’t make money blogging. Well, they would be right…if you give up on it. Many people will start a blog, write a few posts and then not see anything for that effort and give up. Or they don’t take the time to work on it. It does take time in the beginning. If you are serious about it, and take the time to put in the work (as I type this, I am up an hour before having to get ready for my day job), then you most definitely can make money…enough to quit your day job someday, if that’s what you desire.

How long does it take to start seeing success from your efforts? It will likely take anywhere from 6 months to a year, if you are consistent with it. This is why so many people give up, because they want immediate results. Like anything else in life though, you have to put in the work for the “rewards”. If you keep at it though, the rewards can be hundreds of thousands of dollars eventually.

Now, how does this fit into the passive income if you have to work so hard at it, you ask? Much of the work comes in the beginning, but eventually you can even hire someone to do the work for you down the road. There are even places like Fiverr where you can have someone inexpensively write posts for you if you so desire.

How do you get income from a blog?

– Affiliate marketing (I’ll explain that in #5)
– Write an e-Book such as Kindle and sell it on your blog
– Display ads (such as Google Adsense, etc.)
– Blog sponsorships (an advertisement on your blog, in the form of a sponsored review, etc., in exchange for money)
– Selling physical products
– Display ads (those ads you see in a website’s sidebar, for example)
– Create an online course (if you’re an expert in your niche, this can be quite profitable!)

Starting a blog is very easy and inexpensive these days. You can get started using the WordPress platform to create your blog, and then some inexpensive hosting (I recommend either Host Gator or Bluehost) and a domain name (I like GoDaddy for this). Then you can start writing!

5. Affiliate Marketing

Affiliate marketing is definitely one of my favourite ways to create passive income.

What is Affiliate Marketing?

Simply put, it’s where you earn a commission for promoting other people’s products on your website or blog. For example, let’s say you have a blog. You would write a blog post inserting a link(s) to another person’s product. Your reader clicks on that link and purchases said product, and you receive a commission. Boom! Done!

This can be done on any type of website as well. Another example is that you could create a comparison website, comparing different products and then add affiliate links from Amazon directing your customer to the product.

You could also have an informational website, adding valuable information, such as articles, and add affiliate links to articles or do a review post and add them there. There are many ways to do affiliate marketing.

This is so great for passive income because you can earn commission from just one post even years down the road for little to no maintenance.

Where do you find affiliate programs?

There are many. There are programs you can join such as Clickbank, Commission Junction, Shareasale, Flex Offers and Amazon Affiliates to name just a few. If you want to promote something off someone’s website, a good idea is to check out the very bottom of their website and see if they offer an affiliate program in their menu there. That’s where many companies will list that information.

6. Dropshipping

Dropshipping is one of those somewhat unique ways to create passive income. How so, you ask?

I’ll begin by explaining what it is exactly. It’s where you sell products on your website but when someone orders a product, your manufacturer sends it directly to the customer.

It’s a great way to do e-commerce because you never have to store the products. However, before you do advertise a product, I would highly recommend just ordering one and having it shipped to you. This way, you can see what kind of quality it is, as well as knowing how well it was packaged and how long the shipping time was. All of these are very important factors for customers and for your reputation. Sound good? Great, let’s move on!

Where can you find manufacturers, you say?

There are many websites that offer dropshipping, but I like Aliexpress the most because they are free to use and offer anything and everything you can think of to sell. There are literally thousands of products on there. Sky’s the limit!

Another great thing about the manufacturers on there is that when you are going through the buying process, you have the option to send the seller a (already done for you) note not to put their company information, etc. so when your customer receives their item, they don’t know it didn’t come directly from you.

7. Cashback or Discount Apps

Remember the good ol’ days of having to sitting there clipping coupons? I bet you miss that, don’t you?

Well, technology has made saving money even easier, with cashback and discount apps. You download the free apps onto your smartphone and start saving money on purchases, such as groceries, that you would buy anyway. You can’t beat that deal!

Some of the best ones are:

Checkout 51 (grocery items)
Rakuten (formerly Ebates) (partnered with Indigo, Sportcheck, Lululemon, Walmart, The Bay, Amazon, Expedia, Bath & Body Works, etc.)
Drop (partnered with Old Navy, Sephora, Cineplex, Starbucks, etc.)
Swagbucks (partnered with Skip the Dishes, Home Depot, Carter’s, Nike, etc.) – Note: Also make money here doing surveys, watching videos, and more!
PC Optimum (for products exclusively at Superstore, Shoppers Drug Mart and other Loblaws stores)

8. High Interest Savings Account

This is definitely one of the simplest ways to create passive income, as all you need to do is open up an account and start putting money into it.

Just make sure it’s a high interest savings account as opposed to a regular savings account, so you get the biggest bang for your buck!

I find the best ones are the online banks. I have listed 5 of the best ones in this previous post.

9. Sell Stock Photos

If you enjoy taking photos, and heck, are even good at it, then this is definitely a passive income idea for you.

There are websites where you can submit your photos, and if someone purchases one, you get paid. This is passive income because people can purchase your photos again and again and again.

You will have to apply to most, if not all, photo websites and be accepted. Once you are, you submit your photos and they just have to be approved by the photo website before they go live.

Where can you submit your photos?

There are several but a few of the most popular ones are Shutterstock, iStockPhoto, Dreamstime, Adobe Stock and Getty Images.

10. Rent Out an Extra Bedroom/Basement Area

This is one of those ways to create passive income that may not be for everybody. After all, you’re letting a stranger into your home to stay for a period of time. But…

This could also be a not-so-complete-stranger in the event that you know someone, or someone of someone, that may need a temporary place to stay.

If you decide to go the Airbnb route, you can submit your listing at Airbnb.ca.

11. Write an e-Book

Have writing skills? Or maybe you are an expert in a specific area, such as home improvement, DIY, cooking/baking, finance, etc., etc., etc! The sky is the limit here really.

Don’t have writing skills, but think this is a good way to create passive income? Pay someone to write your e-Book for you. You can outsource this as smart blogger, Arman Assadi does, and he makes $2700/month doing it!

I love this idea because people could potentially be buying your e-Book for years.

I would highly recommend specifically writing a Kindle e-Book. Why? Because these are sold through Amazon and they see Amazon as being a credible source to buy from.

12. Display Ads

If you own a website or blog, or want to start one of these, display ads are a good way to earn passive income from your visitors.

What are display ads, you wonder?

As per Wikipedia’s description, display ads are “graphic advertising on Internet websites, apps or social media through banners, or other advertising formats made of text, images, flash, video and audio.”

There are many companies that offer display advertising but one of the most popular ones is Google AdSense. How AdSense works is that Google picks out your ads, which are relevant to your site’s content and they are added to your website or blog. You can even customize where they appear or remove any that you don’t like.

How does display advertising make you money?

Advertisers pay for the ads posted by Google Adsense (or whomever you use). So, when your customer clicks on the ad, the advertiser will pay you a certain amount. This amount varies depending on what each advertiser pays. You get paid per-click and per-impression.

13. Create an Udemy Course

If you are not familiar with Udemy, it is a website that sells courses on many different subjects.

If you are an expert in a particular topic, this could be a very lucrative way to create passive income. I’m not going to sugar coat it though, it will be a bit of work in the beginning, but well worth it.

Check out how 30-year-old, Phil Ebiner, makes more than six figures per year selling courses on Udemy in this Forbes article.

14. Peer-to-Peer Lending

Peer-to-peer lending is essentially a loan agreement made between you and a borrower via a third party lending platform, such as Lending Loop if you are in Canada, or Lending Club or Prosper are popular ones in the U.S.

How do you make money from peer-to-peer lending?

Simply put, you loan someone money through the lending platform of your choice, and you make money off of the interest. You can typically invest as low as $25 per loan.

Aren’t there risks to this, you ask?

Yes. You are faced with the risk that someone defaults on their loan from you. To reduce this risk, make sure you do your homework and analyze the previous history on each borrower you choose to loan money to beforehand.

15. Becoming Debt Free

So although this isn’t technically passive income, I’ve added it to the ways to create passive income list due to the simple fact that if you become debt free, you will have more money in general.

If you have debt, you are likely paying interest on that debt. So, of course, if you don’t have debt, you are not paying those interest payments anymore. Interest payments can obviously get pretty high, especially on credit cards. Once you stop paying that, you have that extra money as passive income. Pretty great, huh?

Thoughts?

So, that’s the list of ways to create passive income. Please add to this list if you have any additional ways that you personally use to make passive income. I would love to hear!