Over the past couple of years, India has experienced a massive boom in digitisation across sectors. The fin-tech sector has brought investments and money-making instruments closer to people than ever. Furthermore, the digital marketing revolution has helped create considerable passive income opportunities to generate that additional cash flow you were always looking for.
Having stable ways to make passive income in the current inflated economy can go a long way in creating sustainable long-term wealth generation. Moreover, having different types of passive income will also help you maintain your lifestyle if you are between jobs or decide to take some much-needed break from your professional life.
This article aims to give you the 16 best passive income ideas that will help you make money. So let’s dive right in.
Top 16 Ways to Earn Passive Income
Here are the potential money-making passive income ideas you can explore:
1. Affiliate Marketing
Affiliate marketing is the process of making money online every time a customer purchases a product based on your recommendation. This allows you – ‘the affiliate’ – to earn a commission and helps the product owner increase sales. Affiliate marketing can be a great choice for online entrepreneurs, bloggers, or anyone who is willing to build an audience they can serve authentically.
- It is a passive income source because you only add links to your social media profile or website.
- You need to generate considerable traffic on your profile to make consistent revenue.
- If you create a niche, there are chances of earning higher commission rates than usual.
- It takes time to become an influencer on social media.
- You need to learn additional skills such as content marketing, targeting the right audience, driving traffic through SEO and more.
- Your visitors will jump ship and look for another influencer if they do not find you relevant or genuine.
- You need to keep tabs on most, if not all, trends emerging on social media to attract new audiences.
Also Read: Passive Income: What It Is and How to Make It
2. Take online surveys
Another best passive income source can be taking online surveys. In recent years, it has become a hugely popular way to make passive income among students and professionals. All you need to do is to fill up the survey forms in your free time. It is as easy as it sounds, and you get rewarded for it. The topics for surveys can range from books, products, and software services to movies, etc.
Big corporations use surveys to get insight into their consumers. These surveys are an excellent source of consumer behaviour, habits, and preferences. The feedback received from these surveys is critical to these companies’ marketing and sales strategies. Hence, they are ready to reward those willing to participate. There are many websites that offer paid surveys, which will create additional passive income opportunities for you.
- You learn about new and upcoming products or services through these services.
- Filling out simple forms in your spare time is as easy as it gets.
- There is virtually no risk in such activity.
- However, you must check for the credibility of the website and the survey that you are applying for.
- Only sign-up for websites with a proven track record for payments and data protection.
- Passive income stream through online surveys is thin. You need to fill out a lot of surveys to earn a sizable income.
Also Read: Passive Income Investment: Best Ideas to Build Wealth
3. Build a bond ladder
A bond ladder can be another passive income idea that will help you earn more. An investment-based option, it is essentially a series of bonds with different maturity periods over the years. These staggered maturity periods will help you mitigate the risk of reinvestment. Reinvestment risk is when the money from your investments will not offer similar returns as your initial investment.
- The bond laddering mechanism has been one of the best passive income investments for years.
- When the investment matures, you can reinvest that amount into new bonds. For instance, you purchase three bonds with a maturity of a year, three years, and five years, respectively. After the first bond matures, you can use the entire amount to purchase another bond with a maturity period of, say, seven years. This leaves you with your next bond with two years left to maturity, which can then be reinvested into another bond. Such “laddering” helps you create steady passive income streams that will continue for years.
- The most significant risk of bond laddering is the interest rate risk.
- If the interest rates are lower, reinvesting the matured face value of the first bond will generate lower returns.
- Moreover, corporate bonds may also face default risk.
4. Invest in Mutual Funds and Equity Dividend
Investing in mutual funds can be one of the best ways to make passive income. Depending on your risk profile and investment horizon, you can choose mutual fund schemes. Such passive income investment will help you generate wealth over time and help achieve your financial goals.
Similarly, another form of passive income can be through investing in shares of companies that offer dividends. Corporations offer cash dividends out of their profits, and shareholders are eligible for these. The more shares you own, the more dividends you will earn.
- With a decent long-term investment horizon, you will develop a great passive income source without much effort.
- The most prominent risk in these types of passive income is market volatility.
- Companies may not declare a dividend for a couple of quarters.
- Choosing the right stocks or mutual fund schemes is tricky and needs some additional research and expertise.
Read More: Invest With Rs. 500 in Mutual Funds – SIPs Starting Rs. 500
5. Build and monetise your blog
Blogging is another smart passive income idea. You can create a blog on WordPress, Blogger, or Medium and monetise it through ads and sponsorships. There are several examples of individuals who started a blog as a hobby, which is now a full-fledged passive income source.
- Blogging needs a low initial investment. You can turn your passion or hobby into a passive income source.
- The more you deep dive into the topic and create engaging content, the greater the chances of earning.
- You need to be consistent. Building a blog from scratch and creating a dedicated reader base takes time.
- If the niche you aim to create has no takers, that will impact your passive income.
6. Publish an e-book
Another excellent form of passive income is publishing an e-book. You can write and publish your own e-book or get a licence to publish a printed book online. You can write on a variety of topics, including travel guides, memoirs, how-to manuals, technology, or religion. There’s absolutely no limit.
- With the digital revolution, publishing your work online is quick and easy.
- You can earn great royalties on sales through these digital platforms.
Risks: Building a loyal audience and credibility may take time.
7. Asset Leasing
Asset leasing can be another great passive income idea. You can lease out a range of assets, including tangible ones like furniture, equipment, and your car. You can also lease out intangible assets such as copyrights. By leasing your assets, you create a passive income source through rent or interest. It can be a good passive income stream for a short-term duration ranging from 11 to 24 months.
- People usually prefer renting out assets to buying them outright.
- This creates multiple passive income opportunities depending on the range of assets you are ready to lease out.
- Any asset you lease out will go through strict scrutiny and eligibility tests.
- The asset needs to be in proper working conditions with minimal damage. You may incur consistent maintenance costs for your physical assets.
8. Flip retail products
Flipping retail products has emerged to be among the best passive income ideas in recent years. You can search across different e-commerce websites such as Amazon, eBay, or Flipkart and buy products at the lowest rate possible. You can then flip the products elsewhere by arbitraging and earning through the rate difference.
- You can leverage the price differences of products over an average consumer due to a wide range of options.
- You can discover products that others may have overlooked and make huge profits.
- Reliability of the product source is a big risk in such situations.
- It requires initial investment to create a sizable inventory and flip it to make a profit.
- If the demand for the product goes down, you will be left with unwanted goods that you may have to sell at a discount.
9. Peer-to-Peer Lending
Peer-to-peer (P2P) lending can be a smart passive income idea over the long term. It is an excellent passive income investment wherein you earn interest on the loan you have given. A third-party platform typically facilitates the loan.
- P2P lending offers great passive income opportunities.
- With growing digitisation and the ever-present demand for money, P2P lending can be a smart passive income idea.
- The primary risk you face is the default risk, i.e. the borrower defaulting on paying back the principal and interest.
- You must vet the borrowers carefully before lending money.
- It may take some time to master the nitty-gritty of P2P lending.
10. Invest in a Business
Investing in a business at an early stage is among the different forms of passive income. You can earn through equity, royalties, debentures, etc. You can also opt to become an angel investor if you have a large sum of money to invest.
- As an investor, you have a passive income source through the channels mentioned above.
- You also are part of the overall growth story of the business.
- The inherent challenge is identifying a good business model and having the patience to see the business grow and deliver the expected returns.
11. Sell Stock Photography
In recent years, selling stock photography has emerged to be among the best passive income sources, if you have good photography skills or love photography in general. There are several websites and apps available online that facilitate the sale of photographs.
- The increasing popularity of digital content through social channels has opened many opportunities.
- You can pick your category, follow your photography passion, and also make a passive income.
- There is virtually no risk in it.
- You may need to spend on photography equipment and gain expertise in the field.
12. Create an Online Course
Creating an online course can be a great passive income idea. It is a one-time effort but with lifelong value. You can sell these courses on multiple knowledge-sharing sites online.
- Knowledge has no boundaries. You can start with a foundation course and then take it up a notch.
- You can keep on updating the study material with changing trends.
- You can determine the product’s price and set your passive income stream.
- It is a challenge to develop a product that adds value and incorporate regular updates in it.
- Creating multiple courses takes a lot of effort.
- The reviews on the hosting site may influence sales.
13. Build a no-code app
Our lives are directed and driven by apps. We have seen people make a fortune by creating apps. While previously, the app development process was limited to the IT geeks, it is not so anymore. You can create an app without a code and sell it online.
- You can come up with a unique idea and develop an app for it.
- You may also attract investors to help you in the process, thus creating an excellent passive income opportunity.
- No code apps come with limitations such as scalability and data privacy issues.
- Users may not have a proper understanding of the software.
14. Buy and Sell Website Domains
Buying and selling website domains is another smart passive income idea. You can book domains of highly searched words at lower prices and sell them at a profit. You can potentially auction trending domain names for a fortune.
- Buying domain names can be hugely profitable if a big business or a company wants the name.
- The investment may become obsolete if there is no demand for domain names.
15. Advertise on your car
Advertising on your car or another vehicle can be another passive income idea. You can use the space on your vehicle to advertise products or services to different companies. In return, the companies will pay you rental or commission. While it may not be super stylish in terms of the looks of your personal vehicle, it can be among the different ways to make passive income.
16. Virtual Bookkeeping
Virtual bookkeeping or cloud accounting is another type of passive income you can earn through online work. As the name suggests, you work with your client remotely through accounting software. Using the software, you and the client keep track of the transactions, accounts, invoices and business statements.
- For companies, it is cheaper to hire a virtual bookkeeper than to have a local person on-site.
- You can leverage the growing demand for virtual bookkeeping to earn yourself a steady passive income source.
- Proficient knowledge of accounting and software handling is a must to earn such a type of passive income.
Which are the best passive income ideas for you?
This article discussed the different forms of passive income with their respective opportunities and risks. These passive income ideas can be a great way to earn extra money to meet your financial objectives. Determining which passive income idea is best for you depends upon your skill set. You also need to set realistic goals and horizons to achieve these objectives because earning significantly through passive income is not a one-day process.
These passive income ideas are just a way to help you explore additional ways to make money. You also need to take care of the tax on this additional income. Different types of passive income strategies will yield varying degrees of results. You must be prepared to put in additional efforts to fulfil your financial dreams.
Can I make a living with a passive income?
Yes, you can. However, earning a substantial passive income is a long-term process and depends on the strategies you have deployed. If you have more than two good-yielding passive income streams, you can make an easy living.
How can a beginner make passive income?
You need to start investing early in different projects to earn passive income. The ideas discussed above can be a good starting point.
How can I make a passive income with no money?
Affiliate marketing, content writing, writing an e-book etc., are some of the best ways to earn passive income with no investment.
How can I make passive income with money?
You can buy bonds, mutual funds, or stocks to earn passive income in the form of returns. Also, flipping retail products or purchasing a property for renting out are also popular passive income investments.
What are the three types of income?
Active income, passive income, and portfolio income are the three main types of income.
1. Active income is the money made from providing a service. This is paid to you in the form of a wage, commission, tip, or salary.
2. Passive income is derived through enterprises or investments in which you are not actively involved. These can be things like rent money, savings account interest, or your pension.
3. Portfolio income is generated if you choose to invest for the long term and elect to buy stocks, bonds, and other investments that don’t require you to actively work to earn money.