Just a couple of decades ago people could start a job, stay there for years, save a bit of money, and retire pretty comfortably. Today, it’s completely different, people are constantly looking for additional ways to and there are lots of Instagram-perfect success stories, where people manage to replace their 9-5 with the side hustle they started.
If you’re just looking for additional passive income sources, you can start with something small and sustainable in the long run. Whether you’re a student or a young adult here with 15 smart passive income ideas you can try out to start earning now.
What is Passive Income?
We’re all familiar with active income. It’s our day-to-day job which requires a specific amount of time we must dedicate to a single paid activity. Passive income, on the other hand, is an activity that usually doesn’t require a lot of effort or involvement and has a high potential for recurring revenue with minimal maintenance. Eventually, you still get paid for your idea.
Some types of passive income like real estate or renting properties may require significant upfront investments.
Other examples can be much easier to maintain, like dividends from stock market investments, royalties from intellectual property, opening savings accounts, investing in cryptocurrencies or NFTs, and revenue from digital products or services that can be automated or scaled with minimal effort.
Top 15 Smart Passive Income Ideas
Looking for additional sources of income is a great way to supplement your main source of income. Long-term goals can even include financial freedom and even transitioning to a more comfortable work setting, and more.
1. Paid online games & surveys
Probably the easiest way to dip your toes into passive income is through paid online games and surveys you can even earn while playing GTA online! Besides that, there are lots of platforms to choose from and one of them is Pawns.app. Whether you’re looking for quick online surveys or fun paid games to earn extra money, the platform has it all.
To get started you have to sign up with your basic information and enter the Pawns.app dashboard, and choose the passive earning method you want – that’s it! People make around $7.50 per month doing online surveys, and around $43 with paid games on Pawns.app.
Key advantages
- This passive income stream only requires an internet connection and a smartphone.
- Both online surveys and games have almost no entry requirements, besides age in some cases.
- You decide how much time you spend completing surveys or playing games.
Key disadvantages
- While it’s a great way to earn a bit of extra cash, doing online surveys or playing paid games won’t amount to a significant sum.
- Compared to other income sources, taking multiple surveys or playing games regularly may not be worth the time you put in.
- There’s no guarantee that online surveys will always be available.
2. Selling Stock Images and Videos
If you’re looking for quick passive income ideas, selling stock photography and videos is a great way to earn passive income if you have photography or videography skills. You can generate income every time someone downloads your visuals. Stock platforms like Shutterstock, Adobe Stock, and Getty Images open up global audiences to find your content. This is incredibly useful as the clients come to you rather than the other way around.
While selling stock photos and images can start with modest returns, around $200 to $500 per month, earnings can quickly increase as you grow your portfolio.
Key advantages
- If you already have an unused portfolio, you can start selling your visuals immediately.
- Stock visuals are always in high demand by different companies and sectors.
- Popular images and videos can continue to sell for years.
Key disadvantages
- Generic content doesn’t perform well, so you’ll have to select a narrower niche.
- Typically, stock platforms offer lower commissions per download.
- The majority of stock platforms have high visual standards, which can require proper equipment.
3. Handmade Goods and Crafts
Have you ever considered handmade items, or wondered how interesting it would be to learn a new craft? Whether it’s jewelry making, leather work, woodwork, decorations, clothing items, or making giant plushies – Etsy, Amazon Handmade, and local craft fairs are great platforms to both sell your works and showcase your talent.
It’s estimated that the handicraft market can reach $1720.52 billion by 2031. Some sellers on Etsy report making over $50,000 per year, and others sell even more, but this highly depends on the product and strategy.
Key advantages
- Whether you decide to monetize your creation or leave it as a hobby, you have total control over your designs, products, and tools.
- You don’t have to spend a lot of money on tools and products, especially if you’re just starting, or learning.
- Product listings can remain the same for some time, you only have to look after production.
Key disadvantages
- If you’re not properly prepared for a sudden increase in demand, it could lead to serious delays and unhappy customers.
- Marketing and promotion is an important part of building an online business to turn it into passive income.
- If you want total control over your production, you’ll have to take on different roles to run your handmade business.
4. Online Course Creation
If you have specific experience in a particular subject, you can condense that knowledge and publish it. There are many different platforms to choose from like Udemy, Teachable, or Skillshare. Having a YouTube channel could be a good start, just keep in mind that it takes time to grow a YouTube channel. As a result, profits will also be slow.
Most instructors earn between $200 and $1,000 per month, but successful creators can earn anywhere from a few hundred dollars to several thousand dollars per month. According to Fortune Insights, the E-Learning market size is expected to reach $319 billion by 2029.
Key advantages
- Once you create your course and set it up on a platform of your choice, there’s very little maintenance.
- The only equipment you’ll need is a camera and a microphone, making this a great cost-effective method for generating passive income.
- Uploading your courses to a professional platform allows you to reach global audiences and utilize the platform’s premium features.
Key disadvantages
- Developing a good, high-quality course is a time-consuming process.
- Your online course income can fluctuate if you aren’t consistently promoting it or if it isn’t in a high-demand niche.
- Platforms often take a percentage of your earnings and dictate pricing, which makes profit control difficult.
5. Print-on-Demand Business
The print-on-demand (POD) model is another popular passive income stream that allows you to create custom designs for products like t-shirts, mugs, phone cases, and posters. Platforms like Printful, Teespring, and Redbubble make it easy to set up a POD store and integrate it with your website or their marketplaces.
According to ZipRecruiter, the average monthly salary pay in the POD business is around $4,000 and can even grow up to $8,000.
Key advantages
- You don’t need to invest in inventory or printing equipment.
- The POD model takes care of production, packaging, and shipping.
- As your designs become popular, you can easily add more products or designs to your store.
Key disadvantages
- The POD model involves working with third parties, which means a part of your profits will go to these companies.
- You need to focus on marketing and research the right niches due to market saturation.
- There’s a risk of product quality issues as logistics and handled by third-party companies.
6. Dropshipping Business
Ever since Amazon and eBay came to the scene, the dropshipping business started to boom. Both platforms provide amazing features and take care of major production, distribution, and logistics problems, allowing individuals to do commerce online.
You can choose Shopify, WooCommerce, or BigCommerce for setting up a dropshipping store. As for production, AliExpress, Oberlo, and SaleHoo have become super popular.
Successful dropshipping businesses can earn anywhere from a few hundred to several thousand dollars a month. For example, 25% of eBay dropshippers earn around $1,000 per month.
Key advantages
- Say goodbye to inventory management.
- You’re free to select products from different suppliers, test the waters, and choose the right one for you.
- Low overhead costs as you only have to take care of your website, marketing, and order processing.
Key disadvantages
- Working with supplies means having lower profit margins.
- Relying on third-party suppliers can lead to product quality control issues.
- Dropshipping is a highly competitive space, so you’ll have to invest more in targeted marketing.
7. Digital Product Creation
Creating and selling digital products is an incredible way to generate passive income for online entrepreneurs, especially for those with expertise in design, writing, coding, or content creation. Listening a podcast for entrepreneurs might be useful as well.
Templates, software, music, graphics, or printables – if it’s digital, it can become a digital product. You can try platforms like Gumroad, Etsy, or create your own website to sell digital products to a global audience.
The global digital commerce market size is expected to grow to $10.32 trillion by 2028. That’s a ridiculous market size, which only shows how massive the market need is.
Key advantages
- Virtually no initial investment besides the tools you need to create the product and website or platform for selling the product.
- The digital product you create can be sold repeatedly to an unlimited number of customers.
- No inventory or logistics headaches because digital products are sold and delivered instantly.
Key disadvantages
- Creating high-quality digital products can take significant time and effort.
- The digital product space is highly competitive, so starting out is challenging.
- Digital products can be easily copied or shared without permission without proper protection.
8. Product Design and Merchandising
This model allows you to earn passive income by turning your creative ideas into physical products for brands without managing production or inventory. Redbubble, Zazzle, and Merch by Amazon are great examples of the platforms you can use to upload designs and list them on a wide range of products such as t-shirts, tote bags, phone cases, and more.
Glassdoor reports that the average in-house Product Designer earns around $100,000 per year. So, if you have an artsy flare or previous designing experience, this could be a great choice for you to try to earn passive income.
Key advantages
- You don’t need to invest in inventory or worry about product storage.
- As your designs grow in popularity, your income potential increases without any additional effort.
- You can expand your product list using the same design on different products.
Key disadvantages
- Third-party involvement can lead to lower profit margins.
- The custom-designed products market is highly competitive.
- It can take some time to create a good portfolio to attract brands.
9. Ebook and Blog Writing
Whether you’re sharing fiction, nonfiction, how-to guides, recipes, tutorials, or niche topics, you can create valuable content that continues to earn passive income long after the writing is finished, especially so for blogging.
You can publish and sell your ebooks on Amazon Kindle Direct Publishing (KDP) or Apple Books, while blog posts can generate income through ads, affiliate marketing, or paid subscriptions.
If you choose blogging, realistically speaking, you can potentially make between $500 to $2,000 per month within the first year. As for ebooks, while it can take time to grow an audience, experienced indie writers can make an average of over $10,000 per year.
Key advantages
- All it needs is your time, creativity, and possibly a small cost for tools like editing software.
- Just like with digital products, ebooks can be sold over and over again. With blogs, if regularly updated, they can bring consistent organic traffic.
- You have full control over your content, including how it’s written, distributed, and marketed.
Key disadvantages
- Writing the content is only half the battle, effective marketing is crucial to gaining readers and driving sales.
- Blog traffic and ebook sales can fluctuate based on market demand, trends, and competition.
- Despite high-quality content, there’s no guarantee of success if you’re targeting low-interest topics.
10. Affiliate Marketing
Affiliate marketing promotes products or services from other companies. And if people click on affiliate links provided in your blogs or social media platforms, you earn a commission. There’s a huge number of companies offering affiliate programs, making it accessible to anyone with an online presence.
Glassdoor reports that a person can earn around $50,000 per year in this sector if they have a medium-sized social presence. Larger and well-known individuals can earn up to even $150,000 in a year.
Key advantages
- All you need is a platform to promote products like a blog, social media account, or YouTube channel.
- Once you have a system and grow your audience, affiliate marketing can scale easily and quickly!
- Affiliate marketing is super flexible, you can pick products that match your interests or really resonate with your audience’s needs.
Key disadvantages
- Earnings can fluctuate based on the traffic to your platform and changes in consumer behavior.
- The space is highly competitive, especially in popular niches like tech, fashion, and fitness.
- Your income depends heavily on the terms set by the affiliate programs you join.
11. Peer-to-Peer Lending
Peer-to-peer (P2P) is a method for earning passive income as it involves lending medium or small-sized sums with interest directly, without the big banks stepping in to take their cut. To make the process more legitimate and safer for those who choose this passive income method, there are platforms like LendingClub or Prosper.
With this passive income method, it really depends on the amount of money you lend on an annual basis. However, returns from P2P lending can range from 4% to 10% or even higher every year.
Key advantages
- Peer-to-peer lending has a high return potential compared to traditional investments.
- You can invest small amounts across multiple loans, spreading out your portfolio.
- Once you’ve made your initial investments, the income becomes relatively passive.
Key disadvantages
- One of the biggest risks in P2P lending is that borrowers can fail to repay their loans.
- Loans are repaid over time, meaning you won’t see significant returns immediately, and your investment could be tied up for several years.
- P2P platforms typically charge fees for facilitating loans, which can eat into your returns.
12. Dividend-Paying Stocks
With dividend-paying stocks, you invest in companies that regularly distribute a portion of their profits to shareholders. These dividends are usually paid out quarterly and can provide a steady stream of income. Many well-established companies, particularly in sectors like utilities, consumer goods, and finance, are known for consistently paying dividends.
If you choose this passive income method, keep in mind that on average, dividend yields range between 2% and 5%, depending on the stock. Besides, you should also consult with specialists before investing in anything.
Key advantages
- Dividend stocks provide a reliable, regular passive income.
- Stock prices can grow over time, increasing your passive income without you doing anything.
- Many investors reinvest their dividends to buy more shares, which steadily increases the return.
Key disadvantages
- The value of dividend-paying stocks can be strongly influenced by market trends.
- Companies can reduce or eliminate their dividend payments during tough financial periods.
- To generate substantial passive income from dividends, you might need to make a significant investment.
13. Investing in Startups
If you have more money saved up and don’t think that P2P is the right passive income way for you, why not research potential startups? Investing in promising startups offers the potential for significant returns by providing capital to early-stage companies in exchange for equity. You can use platforms like AngelList and SeedInvest which make the process clearer for first-time investors.
It’s difficult to estimate how much you can make with this passive income stream, but it’s certain that if successful, investing in the right startup could double your initial investment.
Key advantages
- Investing in a startup with the potential to grow in the future can lead to huge profits.
- Becoming an investor also includes you in the shaping process of the company.
- Startup investments can add significant diversity to your investment portfolio.
Key disadvantages
- Startup investing is risky and requires experience and risk tolerance.
- The money you invest can be tied up for years until the company goes public or gets acquired.
- Making good investment decisions requires deep knowledge, and even then, success is never guaranteed.
14. Renting Properties
Renting out properties is an incredibly popular passive income method for large and small real-estate players. If you own a property or inherit one but don’t know what to do with it, you can just rent it. Whether it’s a residential home, an apartment, or a commercial property, rental income can provide consistent earnings with usually minimum maintenance.
Rental properties can generate anywhere from a few hundred to several thousand dollars per month, depending on the location, type of property, and rental market.
Key advantages
- Renting residential property on popular platforms like Airbnb can be incredibly lucrative in the long run. Especially if you can buy Airbnb with no money.
- In addition to rental income, real estate often increases in value over time.
- With real estate, you can use borrowed money to buy properties, which can increase your potential returns.
Key disadvantages
- Buying a rental property involves a large investment and can take years to recover through rental income.
- Owning rental properties means handling maintenance and tenant issues yourself which can get messy really quickly.
- There’s no guarantee that you’ll have tenants, leaving you responsible for mortgage and other additional expenses.
15. Investing in Index Funds
Investing in index funds is a simple but very effective way to generate passive income besides high-interest savings accounts. These investment funds are mutual funds or exchange-traded funds (ETFs) that track a specific market index, like the famous S&P 500.
Index funds are one of the best long-term investing strategies because they require minimal management and, depending on the market performance, offer consistent returns, ranging from 7% to 10%.
Key advantages
- Index funds don’t require constant monitoring and are one of the safest investment strategies.
- Index fund fees are typically low, which means your money stays invested, boosting potential long-term returns.
- You don’t have to worry about reviewing markets because Index funds track market growth.
Key disadvantages
- There’s a risk of investment value depreciation over time or during market downturns.
- You don’t control the sector choice, so if some stocks begin to underperform, you can experience lower returns.
- Index funds are designed for steady, long-term growth which means you won’t see profit quickly.
How to Get Started with Passive Income
Starting a side hustle or a full-on passive income business can be super exciting, but definitely daunting. Here are some steps to help you get started:
- Identify your interests and skills you could leverage to create passive income streams.
- Research relevant niches, market needs, competition, and legal requirements.
- Create a solid action plan that outlines your goals, strategies, timelines, and resource requirements.
- Set a budget that takes into account your daily needs, and savings.
- Don’t invest a significant sum and test your ideas first.
- Start building awareness on social media.
- Review your action plan and budget, and keep track of your progress regularly.
Remember, passive income is not a get-rich-quick scheme. It’s a strategic approach to financial freedom. Have patience, do your homework, and try to enjoy what you do!
Wrapping Up
Whether you choose to invest in real estate, create digital products, or become an online entrepreneur, the key is to identify the right passive income opportunities for you.
Many people fail because they set overly ambitious goals without considering whether they like the activity in the first place. If you’re new to making passive income, start slow and small, and take your time to learn the ropes. Who knows, maybe this could grow into something big!
