What if you could step away from working for a week, month, or even a year and still be making money?
That’s passive income.
Income that comes in, even if you aren’t working.
It’s scalable, enjoyable, and allows you to create a lifestyle that isn’t possible from just active income.
So, what exactly is passive income, and what are some ways to earn passive income?
What is Passive Income?
Passive income is a dream of many: earning a living while doing nothing. It’s important to know exactly what passive income is, that way you have something to aim for.
Passive income definition: true passive income is income that does not require active involvement – usually obtained through investing. It is a source of income that will come in even if you are not actively working.
However, don’t let this definition limit you.
While, yes, there are only a few truly passive income sources you can have, they almost always require you to have money to start. If you don’t have money, however, you are not out of luck. If you lack the funds, you can still invest time to build up passive income sources.
Time? Isn’t that the opposite of passive?
Spot on! However, if you have no funds, what are your options?
The only option is to invest time upfront, in place of money, and reap the benefits of passive income down the road.
See, you can build passive income over time, but you will need to invest either time or money to make it happen. There is no way around it (sadly).
For this reason, this list of passive income ideas will cover both passive income opportunities that can be obtained through either investing money or time.
Passive Income vs Active Income
The difference between passive and active income is huge: active income is income that comes from exchanging time for money. For example, the typical hourly, salary, or freelance jobs are all considered active income. Another way to identify active income is to consider what happens if you stop working. If you no longer make money, it’s active income that you are making.
How to Make Passive Income
There are three main ways you can make passive income.
- Investing money
- Investing time
- Capitalizing on things you already do
If you have money, you’ll have access to all three on this list.
If do not have money, you can still utilize number two and three. There is nothing wrong with this, it just means you should expect it to take longer to start earning passive income.
In this list, we go over ways to earn passive income with or without money, and some things you can do no matter which category you fall under. Before we start, though, here is how to use the list of passive income ideas.
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Passive Income Rating System
To make using this list easier to sort through, you will find ratings at the bottom of each passive income idea. The rating will be ranked out of 1 to 100, the higher one is, the more prevalent it is in regards to that channel of passive income. These ratings include:
- Cost. This will factor the amount of money it will (usually) require to earn some passive income from that idea. Some on this list will be high, others are near zero. This is a good way to quickly identify if the idea is for you (or not) depending on how much money you have to put towards building passive income.
- Time. This factors the amount of time you’ll likely need to invest to achieve passive income from the idea. Typically, this will be higher if the cost rating is low, and vice versa. If you lack funds, you’ll want to be on the lookout for ideas that require higher-time investments with lower-cost investments.
- Potential. Every passive income idea has a different potential in terms of how much it can earn for you. This rating is based on personal experience and public case studies that can be found on the subject. The higher, the better. But also remember that this isn’t a good indicator in and of itself. For example, if it has high potential, it may cost a lot to get started and (or) require a lot of time upfront. But, there are a few gems in here that have a decently high potential upside for what you’ll have to put into it.
That’s it! Use these indicators carefully, because they don’t always tell the whole story. Hopefully, though, they act as a guide for you to a passive income source that fits your situation.
No matter if you have money, time, or both; anyone can benefit from #1 on the list: