31 Passive Income Ideas To Stop Trading Time for Money

I set out to write the best damn passive income ideas post on the Internet.

Because here’s the thing…

Most “passive income ideas” posts just repeat the same boilerplate ideas—open a high interest savings account, for example.

And yes, that will earn you a small amount of passive income, but my guess is you’re looking for something a little more substantial.

In this post, I’ll:

• Break down the 4 types of passive income.
• Share my own actual passive income streams.
• Present other legit passive income ideas you can take action on today—and back those up with real-life examples.

The 4 Types of Passive Income

The allure of passive income is exciting. I mean, if the idea of making money in your sleep doesn’t get you excited, I’d check your pulse.

On top of that, passive income is important.

I’ll let Warren Buffett explain:

“If you don’t find a way to make money while you sleep, you will work until you die.”

I think we can all get on board with that.

So how can you get some that sweet, sweet passive income—or “mailbox money”—for yourself?

Here’s what you need to know.

In general, passive income is the money you earn from assets you control. (Assets are simply things that other people value; cash, real estate, physical goods, attention, etc.)

The drawback is assets usually take either time to build or money to acquire.

Here are the 4 types of passive income you can start working toward today:

1. Buy cash-flowing assets

This is the “make money with money” option. Under this category you’ll find options like dividend investing, business lending, real estate, and stuff like that.

It’s great—if you already have money to invest!

2. Build assets

Building something of value—say, a digital product or website that earns advertising revenue—is a viable path to passive income. These things take some time to create and market, but can run relatively passively often for years if set up correctly.

We’ll explore some examples of how I’ve done this and how other side hustlers have as well.

3. Share or sell assets

There are ways to make relatively-passive income renting or selling assets you control.

This could include extra space around your house, stuff you have collecting dust, or even the data generated by your phone (see below!).

4. “Reverse” passive income

“Reverse” passive income comes from cutting your ongoing monthly expenses. A penny saved is a penny earned, right?

Well, because of taxes on earned income, it’s actually better than that!

I’ll show you some of my favorite ways to earn some reverse passive income. No extreme couponing, I promise.

Ready?

Let’s dive in.

1. Earn Affiliate Commissions

I got my start in affiliate marketing back in 2004, and it’s been a significant piece of my revenue pie ever since.

How affiliate marketing works is I earn a commission for referring leads and customers to other products and services.

My first affiliate business was a comparison shopping site for footwear. It helped people find the best price on their next pair of shoes, and earned commissions from Zappos and other footwear retailers when those people made a purchase.

Once the site was built, I earned these commissions whether or not I was actively sitting at the computer.

Here’s a look at my daily affiliate commission trend back in the day:

Even today, affiliate marketing is a really important revenue stream for me. This site (and yes, this post too) includes lots of affiliate links to products, apps, services, and software I think will be helpful to my audience.

Here’s an (over-the-top) example of a post monetized with affiliate links. Still, over its lifespan, it’s generated over $40,000 in commissions. From one post!

2. Write a Book

It’s never been easier to create a book of your own and put it up for sale on Amazon.

I received my first author royalties in 2012 and have added several more titles since then. It’s one of my favorite side hustles and one of my most passive income streams—write the book once and collect royalties for months or even years whenever it sells.

Over my lifetime as a professional self-published author, my books have earned over $70,000.

When you price your book between $2.99 and $9.99, you’ll earn a 70% royalty. Outside of that range, it’s 35%.

For every Kindle book you write, it probably makes sense to add paperback and audiobook editions. Thankfully, Amazon makes this incredibly easy with its KDP Print service and ACX, the Audiobook Creation Exchange.

Related: Free Self-Publishing Workshop

3. Buy Dividend-Paying Stocks

Investing for dividend cash flow has helped me get off the sidelines and into the market. (I’m the person who always thinks we’re due for a correction!)

My basic strategy has been to buy shares in companies with a long history of paying, and increasing, dividends. These include mostly name-brand businesses like Target, Chevron, AT&T, and Proctor and Gamble.

Because they’ve been around forever, they’re not likely to have explosive share price growth, but they do spin off consistent passive cash flow.

Over the last few years, I’ve slowly built this up to over $2000 a month.

Check out a service like the modern brokerage M1 Finance to get started yourself.

You can trade stocks for free, or select one of their pre-built portfolios. (That’s an example of an affiliate link; I’ll receive compensation from M1 if you create an account.)

4. Sell an Online Course

In 2014 I created an online video course on Udemy about how to launch non-fiction Kindle books on Amazon. It earned $3500 in the first couple months, and has gone on to earn passive sales ever since.

The total is now over $25,000!

All I have to do is respond to the (pretty infrequent) student questions or comments. Again this falls under the model of “create something once, and sell it over and over again.”

What could you teach? Consider what people already ask you for help with. What do you know more about than the average person?

With services like Teachable, it’s never been easier to create and sell an online course of your own. These can command premium prices ($100-$2000 or more) and allow you to help more people than you could with one-on-one consulting.

Over the years on The Side Hustle Show, we’ve seen people making money with online courses on just about every topic imaginable. Some of the more creative case studies include:

• Piano
• Microgreens farming
• Sourdough baking
• Motorcycle repair
• Getting dressed in the morning
• and so many more!

How will customers find you? If you don’t have an audience or traffic source, one method that seems to be working well lately is the YouTube-to-evergreen-webinar model, as described by Nate Dodson in this episode.

5. Sell a Digital Product

Several years ago, I decided to test selling a couple of my books on Fiverr. I figured it would be another interesting “buy button” platform to experiment with.

Sure enough, people bought them. And in fact they continue to buy them.

Fiverr definitely has not been a focus lately, but in total I’ve earned over $13,000 on the site since late 2013.

(Full disclosure: A good chunk of that revenue was NOT passive; I sold book editing and video website reviews in addition to my digital products. Over the years, Fiverr has shifted to become primarily a freelance platform, so the strategy today would be to create a compelling service offer.)

Similarly, Jodi Carlson reported earning over $5k a month selling digital activity guides for Girl Scout troop leaders. She’d started a blog documenting the activities she was doing with her scouts, mostly just as a reference for herself and other local leaders.

Before long, troop leaders from the other side of the country had discovered her site through Google or Pinterest. They emailed asking what other ideas she had.

That’s when Jodi began compiling her activity guides into PDF documents. She uploaded them to Teachers Pay Teachers, a site to buy and sell lesson plans, and made several sales in the first week.

6. Create Print on Demand Designs

This is a low-overhead, low-investment way to build a little passive income. In our house, Merch by Amazon is a fun little side business and generates around $60-200 a month for us.

How it works is you upload t-shirt (and now other product) designs to Amazon, and the e-commerce giant does the rest. When someone orders it, they’ll print it in the size and color selected, and ship it to the customer. You earn the spread between whatever price you set and the cost to print it.

Our best month was over $500 in profit, which I think we could hit consistently if we dedicated more time to creating new designs. (That hasn’t happened since the arrival of Little Hustler #2.)

Here’s an example of one of our designs:

For more on getting started with Merch by Amazon, check out Episode 216, in which my guest earned over $50,000 in profit doing this.

7. Collect Ad Money from YouTube

If you have over 1000 subscribers and meet a couple other requirements on your YouTube channel, you can enable Google’s built-in monetization.

Lately this passive income steam has been around $500 a month:

This is the income stream I’m probably most excited about right now, because it feels completely new.

And to be sure, creating video content takes time, but once your videos are up there, they can earn passive income for you for years—as some of mine have.

8. Buy Commercial Real Estate

Fundrise is a cool “alternative” way to invest in real estate.

They have several funds that operate like mini REITs or real estate investment trusts, where you’re buying a combination of debt and equity in a range of commercial properties they’ve bundled together.

You can start this passive income idea with just a $10 minimum investment.

Historically the company has paid 5-8% dividend yields. I’m about 6 years into my investments there and they’ve paid out every quarter so far.

(Of course there haven’t been any major real estate downturns that time either!)

9. Earn More Interest

BlockFi is my best new find of the year. When you deposit dollars, the platform converts them into stablecoins — cryptocurrency pegged to the US dollar. Then they pay you 8-9% interest on your account.

(Unfortunately temporarily closed to new account holders.)

You can withdraw back to your bank account at any time and there are no minimums. They’ll even give you a bonus in Bitcoin—up to $250 worth—on your first deposit.

Compared to the interest rates elsewhere, this has been a huge win. For example:

• Our Capital One savings are earning 0.4% interest.
• “High yield” CIT Bank is paying “up to 0.4%”.
• Our free checking accounts with Chase are paying .01%. What’s even the point?

10. Make Short-Term Real Estate Loans

With PeerStreet and Groundfloor, you’re essentially helping real estate flippers with their acquisition and rehab costs, and earning 6-9% passive income on your investment.

The big advantage over other peer-to-peer lending is the loans are backed by the real property so if the borrower stops paying, you have some recourse — namely foreclosure.

The loans are shorter term, generally 1 year or less, instead of 3-5 years.

PeerStreet is also currently only open to accredited investors, but Groundfloor is open to everyone and has much lower minimums.

11. Let Banks Give You Free Money

Credit card rewards are one my favorite passive income ideas because I earn them just from spending money like I normally would.

In our house, this stream is worth hundreds of dollars a year in the form of cash back, free Amazon gift cards, and travel.

The magic really happens when you take advantage of certain sign-up bonuses for new cards — earning the equivalent of 20%, 30%, 40% cash back or more in travel value or statement credit.

Here’s just a really simple example:

Related: Credit Card Rewards 101: How to Earn Free Cash and Travel by Spending Smarter

12. Get Easy Cash Back

Aside from credit card rewards, I use several cash back apps to earn “reverse passive income” every time I shop.

Among those are: