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Updated January 15, 2019

Passive Income: Practical Ideas to Build Wealth

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Passive income is when you make money without actively working. Here are 25 smart passive income ideas to keep your cash flowing even as you sleep.

© CreditDonkey

Making money without working — now that's the real American dream. We'll show you how.

Here are 25 passive income opportunities that actually work. Whether you want to keep your day job or are looking for financial freedom, these ideas can get you started on earning extra cash.

Read on to learn all about passive income: how to make it, mistakes to avoid, and ideas you can start today.

What Is Passive Income?

© CreditDonkey

Passive income is money you make even when you're not actively working. It usually requires either:

  • Investing some money to grow more money, or
  • Investing time and upfront work to create something that will earn money

It could be hard work, but all that work can pay off big time IF you stay patient.

Tommy Palm, creator of Candy Crush, earned more than $200 million per year and still makes royalties today despite leaving the company in 2015.

Leading up to that success, however, Palm went 6 months without a paycheck. But his passion and perseverance ultimately paid off…big time.

Think you have the resources and/or time for a passive income side gig? We've got 25 great ideas to earn you money.

In this guide, we'll cover:

Make Passive Income with ZERO effort:

If You Have MONEY to Invest:

If You Have TIME to Invest:

What's Involved?

© CreditDonkey

Keep this in mind: passive income DOES require some effort. You'll need an upfront investment in the form of money or sweat equity (hard work).

What are some examples of passive income? Passive income can mean anything from real estate rentals to investment portfolios to YouTube videos, book royalties, and drop-ship online businesses. Read on to find the right one for you.

Some patience wouldn't hurt, either. Very rarely will passive income lead to overnight profits. In fact, you may lose some money at first. Consider:

  • Rental properties need repairs
  • Investment portfolios need maintenance
  • Online businesses need upkeep
  • Ongoing marketing may be necessary
  • Any income will need to be tracked and reported to the IRS

Wondering how to transform your talents into profits. We've got you covered below.

What Skills Do You Need?

© CreditDonkey

This depends on the type of passive income stream you create:

  • Someone trading stocks needs a basic understanding of the stock market.
  • A person writing a blog needs subject matter expertise.
  • A real estate investor may need to be a jack-of-all-trades.

It all depends on your plans. Instead of asking what you'll need, consider the skills you already have. Start with these questions:

  • What are my passions?
  • Do I have any secret talents?
  • What are my "areas of expertise?"

Once you have the answers, find a way to carve out a passive income niche.

We all love extra money but don't waste time on a passive income gig that makes you miserable (you already have a dayjob for that!) Find an idea that's fun AND profitable.

Here's an example:

Let's say you have a knack for writing and DIY projects. You can combine both skills to create passive income.

Start a blog and monetize it. Or write an e-book on DIY. You do the hard work upfront (writing) and collect the royalties (passive income) later.

Passive income gigs aren't right for everyone. See if they're a match for your financial needs.

Low-Effort Passive Income Ideas: Some passive income ideas don't seem all that passive. A few, like writing an e-book, require a lot of effort, especially upfront.

Here's a list of our Top-5 low-effort ways to earn passive income:

  • CD Ladder
  • Investing with a robo-advisor
  • Opening a high-yield money market account
  • Using Rewards Credit Cards
  • Advertising with your car

Earn Passive Income With No Effort

© CreditDonkey

Passive Income Apps

It may sound too good to be true, but there are some apps that allow you to earn money simply by using your phone.

These apps are all free to download. All you have to do is allow the apps to track your phone usage. And you collect the cash.

  • SavvyConnect: You simply install the app and surf the web as usual. You also need to participate in surveys when asked. You can earn $5/month for each device type (phone, table, and computer), up to $15/month total.

  • Smart Panel: This app collects your usage data to study how people really use the internet. You must have a working VPN installed on your phone. You can get $5/mo, plus loyalty bonuses every 3 months. You can also complete surveys for a extra few bucks.

  • Nielson Computer & Mobile Panel: Similar to the above, download the secure app to your device and use the internet as normal. You can receive up to $50/year.

  • Cash Magnet: This is only for Android users. Unlike the others, this app is making money when you're NOT using your phone. When you're not using your phone, the app is browsing sites and installing games, viewing and clicking on ads. This earns money from their sponsors, and they share with the users.

    How much you earn depends on how often you run this app when you're not using your phone.

Of course, you don't earn a lot with passive income apps. Read on for other ideas that could earn you more money.

Passive income ideas for beginners:
To start your passive income journey, it's smart to invest in some ideas with less risk and faster results. Try:

Keep reading to learn more about them.

Top Passive Income Ideas If You Have Money

Got some capital to get you started? Let your money MAKE money with these great passive income ideas.

What is the difference between active and passive income?

  • Active income is money you earn when you're actively working (hourly wages, weekly salaries, and tips).
  • Passive income is money that generates without your active participation (including rental income, investment income, and royalties).

Buy Dividend Stocks

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Established companies like GM and IBM often pay dividends to their shareholders. These are regular (usually quarterly) payments from a company's profits.

Dividends are separate from the profit or loss you'll take from buying or selling stocks.

Note: A payout ratio is the percentage that companies pay in dividends compared to their total profits. Companies with a 70% payout ratio generally offer the most stability.

Those paying out 100% of their profits can be risky. It's usually a better sign when companies save some of their profits.

You don't need to be a financial guru to purchase dividend stocks. But you will need to do some research to make educated choices.

The guidance of a reputable stock brokerage can also help. We did some research for you here.

Take your time in choosing--the right dividend stock can set up a nice little passive income stream for the future.

What you need:
  • Money:
    • Up-front: $500+
    • Ongoing: N/A
  • Time:
    • Up-front: Enough to learn stock market basics
    • Ongoing: Minimal monitoring

    Ally Invest

    Ally Invest: Get Up to $3,500 Cash Bonus and Commission Free Trades for 90 Days

    Expires 4/30/2019

    New Ally Invest customers only. Account must be funded for at least 60 days to be eligible for cash bonus. Terms apply.

Invest with a Robo-Advisor

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If you have money to invest but are short on time, consider using a robo-advisor. Companies like Betterment and Wealthfront offer automated investing.

You just need to state your risk tolerance and investment goals. The software program then selects investments for you and automatically manages your account.

Several companies specialize in robo-advisor investing. Some even offer features like consultations, professional human oversight, and tax advice. Traditional firms like Charles Schwab are branching into this type of investment, too.

What you need:
  • Money:
    • Up-front: $200+
    • Ongoing: N/A
  • Time:
    • Up-front: Just enough to set your preferences online
    • Ongoing: Almost no monitoring

    Betterment

    Betterment: Get 1 Month Managed Free

    Deposit $15,000 - $99,999 within 45 days and get 1 month managed free

How can you create passive income streams WITHOUT seed money? Time IS money, as the saying goes. If you're short on cash, consider investing your time and skills instead.

Enjoy writing? Create an ebook. Know how to code? Make an app. Like taking photos? Sell your work online.

You can even use the things you own like renting spare bedroom, your car, or some of your possessions.

Scroll down for passive income ideas that require your time and energy, NOT money.

Try a CD Ladder

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If the money you've stashed in a savings account isn't earning much interest, look into creating a CD ladder.

This means splitting up your investments into different CDs with different rates and maturity dates. The "ladder" provides you with fixed income at set times. As each CD matures, you can withdraw the money and choose to re-invest. This ensures that you always get the best current rate and regular cash flow.

CDs are practically risk-free with guaranteed returns, (unlike stocks), but the rate of return is usually lower.

We review some of the best CD rates here.

What you need:
  • Money:
    • Up-front: $3,000+
    • Ongoing: N/A
  • Time:
    • Up-front: Minimal
    • Ongoing: Almost no monitoring

Become a Peer-to-Peer Lender

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Lending has taken on a whole new look thanks to the Internet. People who don't normally qualify for bank loans can now get financing through Peer to Peer Lenders (P2)…like you.

That's right—you can use your money to fund loans for others using P2P platforms like Lending Club and Prosper. You earn money as they pay back the loan with interest.

Peer-to-peer lending is a good way to diversify your investments. You may see returns between 5% and 10% on P2P lending loans.

But note: there is a risk for default with P2P loans. If borrowers stop making payments, you can lose your investment. Both Lending Club and Prosper only require a minimum investment of $25 per loan. Investing in multiple loans can minimize your financial risk in case some borrowers default.

What you need:
  • Money:
    • Up-front: $1,000 (Lending Club account minimum); $200 (Prosper)
    • Ongoing: N/A
  • Time:
    • Up-front: Minimal
    • Ongoing: Minimal monitoring

Invest in Real Estate

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Even if you don't have a ton of money to buy your own property, you can still invest in real state.

REIT (Real Estate Investment Trust) investing is like crowdfunding for real estate. This is when you pool your money with a bunch of other investors to purchase real estate together.

You make money in the form of dividends (when rental income is collected), and/or when the value of the shares appreciate.

Fundrise is a platform that allows you to invest in crowdfunded real estate. You only need $500 to start.

What you need:
  • Money:
    • Up-front: $500+
    • Ongoing: N/A
  • Time:
    • Up-front: Minimal to set up account
    • Ongoing: Minimal monitoring

If you have more to invest, check out these options:

  • Roofstock: This is a turnkey real estate investment company that helps you buy single family homes. Fundrise does all of the work for you, like valuation of the property, inspections, and even finding tenants.

  • Realty Mogul: If you're an accredited investor (minimum net worth of $1M), you can invest in crowdfunded commercial real estate with Realty Mogul. You can also participate in REITs if you're not accredited.

Use Reward Credit Cards

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Shoppers rejoice! You can earn money just by making purchases with your credit card.

Rewards credit cards offer cash back or points for every dollar you spend. Bonus categories will allow you to earn even more.

Sign-up bonuses give you a nice chunk of cash when you spend a certain amount within account opening.

You DON'T need to splurge on expensive purchases to earn rewards. Just by charging your daily expenses, you can make money back. Think of it like an rebate on your regular purchases.

For example, let's say your card offers 1.5% cash back on all purchases. If you charge $1,000/mo on your card, you're automatically making $15 a month.

But be sure to pay off your card every month. The interest from carrying a balance will more than wipe out your cash back.

Chase Freedom Unlimited
Apply for Chase Freedom Unlimited
At Chase's Secure Site
  • 0% Intro APR for 15 months from account opening on purchases and balance transfers, then a variable APR of 17.24-25.99%. Balance transfer fee is 3% of the amount transferred, $5 minimum
  • Unlimited 1.5% cash back on every purchase - it's automatic
  • Earn a $150 Bonus after you spend $500 on purchases in your first 3 months from account opening
  • No minimum to redeem for cash back
  • Cash Back rewards do not expire as long as your account is open
  • Free credit score, updated weekly with Credit Journey℠
  • No annual fee
Intro APR for PurchasesIntro APR for Balance TransferRegular APRAnnual Fee
0% for 15 months
0% for 15 months
17.24% - 25.99% Variable
$0

What you need:
  • Money:
    • Up-front: N/A
    • Ongoing: N/A
  • Time:
    • Up-front: Very little time to apply.
    • Ongoing: N/A

Get Cash Back for Shopping and Dining

© CreditDonkey

Nowadays, there are many websites and apps that gives you cash back for everyday activities. Some of our favorites are:

  • eBates: Earn cash back when you shop online through eBates. Standard deals offer between 2%-5% cash back on purchases. But there are often double-cash-back specials and other incentives. You'll get cash back in the form of quarterly checks or PayPal payments.

  • Swagbucks: Earn SB points when you shop online, take surveys, watch videos, and more. You can then trade in your SB points for gift cards or cash back from PayPal.

  • Seated: The Seated app gives you rewards when you dine out. Browse the app's list of restaurants, and then upload a picture of your receipt after you have dined there. You can use your rewards for gift cards for Amazon, Lyft, and Starbucks.

A lot of credit card shopping portals also offer rewards. The website evreward tracks every shopping portals' current offers. Browse to choose the best deal for you.

What you need:
  • Money:
    • Up-front: N/A
    • Ongoing: N/A
  • Time:
    • Up-front: The same as you normally shop online.
    • Ongoing: N/A

Save for Retirement

© CreditDonkey

A retirement fund is the ultimate passive income stream. Every dollar you set aside is money for when you've left the 9-5 grind.

But saving for retirement saves you money now, too. By putting money from your paycheck into a 401k, you are lowering your taxable income. That's right, you're saving on taxes now AND giving future You a steady stream of passive income.

Be sure to invest in your employer's retirement plan. Many employers match 401k contributions (usually up to 3 or 5%). Maximize your profits by contributing the full amount each paycheck.

Also don't be afraid to look at other options like Roth IRAs.

What you need:
  • Money:
    • Up-front: N/A
    • Ongoing: Significant, regular cash investments ($1,000+ yearly)
  • Time:
    • Up-front: Some time to learn about retirement investments.
    • Ongoing: Very little monitoring.

Open a High-Yield Savings Account

© CreditDonkey

If you've got a decent chunk of money lying around, a high-yield Savings or Money Market account is a risk-free, low-effort way to increase your capital.

Online savings accounts in particular offer great interest rates. The more you can deposit, the more your money will grow. Best of all, your funds will be FDIC-insured so you won't lose your money.

Check out our updated list of bank promotions.

What you need:
  • Money:
    • Up-front: $25 or more
    • Ongoing: None though future deposits are welcome
  • Time:
    • Up-front: A little to find the right account
    • Ongoing: None

    CIT Bank

    Open a CIT Bank 2.45% APY Savings Builder High Yield Savings Account

    HSBC Bank

    HSBC Direct Savings - 2.22% APY

    • Earn 2.22% APY on all balance tiers
    • No monthly maintenance fee
    • Minimum balance to earn APY is $1
    • Member FDIC
    Synchrony Bank

    High Yield Savings

    2.25% APY. $0 minimum opening deposit. No minimum balance requirement. No fees to open or maintain account.
    • Great Rates + Safety = Peace of Mind
    • Member FDIC

Reduce your Debt

© CreditDonkey

Crazy as it sounds, NOT losing money is a great way to make money.

The interest you pay on credit cards, car payments, student loans, or mortgages is money you could be saving. Rather than invest in another passive income option, consider paying down your debt instead.

  • For credit card debt, it's smart to transfer the debt to another credit card with an intro APR for balance transfers. Some cards even have no balance transfer fee.

  • If you have student loan debt, refinancing can get you a better interest rate and term. See what kind of rate you can get for free with Credible.

Once you're out from under, you'll see more profit in your pocket.

What you need:
  • Money:
    • Up-front: N/A
    • Ongoing: Regular payments until you're out from under.
  • Time:
    • Up-front: A little to create a money-saving budget.
    • Ongoing: Very little monitoring.

Interested in passive income but short on funds? We've got you covered. Keep reading for ideas that require nothing but time (and some effort).

Top Passive Income Ideas If You Have Time

Just because you don't have money doesn't mean you can't make some. Here's a list of great passive income ideas if time is your investment.

Rent Out Your Home

© CreditDonkey

If you have a spare room, this is one of the easiest and fastest ways to turn that into passive income.

You have more flexibility now ever when renting out your home. Sites like Airbnb allow you to rent the whole place or even just one room for as many days as you like.

While Airbnb makes things easy, renting your home DOES require some work. Think of yourself as a bed and breakfast owner. Your tenants' comfort is your responsibility, especially if you want a great review.

You determine availability and price, then post a listing with pictures on the site. Travelers book through Airbnb, which handles the payment. You'll be paid within 24 hours of your guests' check-in.

What you need:
  • Money:
    • Up-front: N/A
    • Ongoing: Some upkeep for potential repairs or maintenance issues.
  • Time:
    • Up-front: Some time to prepare property and create online listing.
    • Ongoing: Varies

"One of the easiest ways to start earning passive income is to identify which assets you have that could be making you money. Sometimes that's a spare room you can list on Airbnb, sometimes it's your car you can share through Turo, and sometimes it's your parking space, which you can list on Pavemint.

Pavemint hosts who make the most extra income have parking spaces near airports, beaches, and popular venues. Why not turn that piece of concrete into some extra cash flow?"

Maggie Boles, Pavemint

Rent Our Your Car

© CreditDonkey

If you own a car in a major city, you might be relying on public transportation more than driving. Why not loan your car out when you're not using it?

Turo and Getaround are car rental platforms that allows you to list your car for renting. Both are free to join. Start making some money off your idle ride.

What you need:
  • Money:
    • Up-front: N/A
    • Ongoing: Possible increase in maintenance due to extra usage.
  • Time:
    • Up-front: Initial time to coordinate with Getaround.
    • Ongoing: Minimal monitoring.

Become a Pet-Sitter

© CreditDonkey

Watch TV, take a nap or go for a walk - and get paid for it. Pet-sitting is a great way to make some extra money doing the stuff you'd be doing anyway (and often in a much nicer place!)

Many owners would rather their beloved pets stay at home than in a kennel while they travel. If you're responsible and love animals, this is a great gig. You'll be required to walk, feed, play with them, and that's about it.

Some trustworthy sites to look for pet-sitting gigs include: Rover and DogVacay.

What you need:
  • Money:
    • Up-front: N/A
    • Ongoing: N/A
  • Time:
    • Up-front: Some to establish clients
    • Ongoing: Set dates for when you schedule jobs.

Create an Online Store

© CreditDonkey

A store sounds like a lot of work. But if managing inventory isn't required, it gets a lot easier, right?

Sites like Shopify use drop shipping, which allows anyone to start an online store.

Shopify provides the e-commerce platform for you to sell your stuff. Basically, it works like this: You design a fun product, let's say an "I Hate Coffee" coffee mug (don't overthink it.) Through Shopify, you connect with a manufacturer who agrees to produce your mugs.

You then create an online store through the site. When a customer places an order, Shopify notifies the manufacturer. They ship the product to the customer and everyone receives payment.

All you need to get started is a good idea. But not an "I Hate Coffee" mug, that's already taken (by me).

What you need:
  • Money:
    • Up-front: $500+
    • Ongoing: N/A
  • Time:
    • Up-front: Lots of time to initially develop your store.
    • Ongoing: Moderate marketing and monitoring.

Sell Your Photographs

If you have photographic talents, consider selling your photos on Shutterstock or iStockphoto. One picture can earn serious cash if it's downloaded enough.

Upload an entire portfolio to showcase your work. You'll increase your chances of making sales AND build a brand customers can recognize. With any luck, you'll also sharpen your artistic eye.

Keep in mind, though, that each company offers a different payment structure. Read the fine print and choose the one offering the biggest profits for your masterpieces.

What you need:
  • Money:
    • Up-front: N/A
    • Ongoing: N/A
  • Time:
    • Up-front: Time to develop your photographs and upload.
    • Ongoing: Some monitoring.

Hawk Your Designs Online

© CreditDonkey

You don't need your own website to put your artistic flair to work. Some options are:

  • Etsy: Etsy offers a user-friendly platform to sell digital files of your designs, such as invitations or cards. No physical products means no inventory or shipping hassles. Buyers simply purchase your design and download it to their computer.

  • CafePress: If you have a really cool design, you can turn it into merchandise and sell on CafePress. All you have to do is upload your design, and CafePress can put it on anything, from mugs to notebooks to apparel. They will handle the payment and shipping.

  • Merch by Amazon: Similarly, Merch by Amazon allows you to upload your artwork to be put on products. When someone buys it, they will make the product and handle the shipping.

What you need:
  • Money:
    • Up-front: N/A
    • Ongoing: N/A
  • Time:
    • Up-front: Time to develop your design and upload.
    • Ongoing: Some marketing and monitoring.

Since you probably drive anyway, why not make some money as you drive. No, we're not talking about Uber.

Many companies pay people to advertise using their ride. Check out sites like Carvertise or Wrapify.

You'll need to get approved before you begin. Don't worry--your driving record doesn't matter. What matters is the area you live and where you drive. Companies want as many eyes on their ads as possible.

What you need:
  • Money:
    • Up-front: N/A
    • Ongoing: N/A
  • Time:
    • Up-front: Very little time to apply.
    • Ongoing: N/A

Make YouTube Videos

Billions of people watch YouTube. In fact, there are billions of views a day. This built-in audience is always ripe for new content.

You can create videos about anything. Ask yourself:

  • What are some interesting subjects people AREN'T talking about.
  • What kind of videos do I find entertaining?
  • What do I know that others don't?

The goal is to find something unique, whether it be funny, educational or just plain weird. Give it time and hopefully, the viewers will find you.

Content creators are constantly adding new videos to Youtube so you'll need to find a way to standout. Use social media sites like Twitter and Instagram to boost your Youtube channel.

We recommend steering clear from controversial topics (like politics) but strive to find cool ways to "go viral."

If you're successful, you can begin to pursue advertising revenue, which can lead to substantial passive income.

What you need:
  • Money:
    • Up-front: N/A
    • Ongoing: N/A
  • Time:
    • Up-front: Lots of time to create your videos
    • Ongoing: Lots of ongoing effort to keep on making videos

Become an Affiliate Marketer

If you have a website or blog, you can use affiliate marketing to make referral commissions with partner stores.

When you mention a company's product on your site, you'll make a commission whenever your readers purchase it using your link. The Amazon Associates is one of the most popular affiliate programs.

However, it takes a lot of time and hard work to build a large readership and trust. You'll need to provide consistent, high quality content. So this method is not completely passive. But once you have built a large following, affiliate marketing can provide a nice stream of income.

An easier way is to buy an existing site with a built-in following. Flippa is a marketplace where you can look for existing websites to buy.

Another option is using ads, such as with Google AdSense. You'll earn money when your readers click on an advertisement. There's less money to be made but also a lot less work.

What you need:
  • Money:
    • Up-front: $100 if developing your own site; $1,000+ if buying an existing site
    • Ongoing: $100+/year
  • Time:
    • Up-front: Lots of time to develop your own site; moderate time if searching for an existing site to buy.
    • Ongoing: Lots of ongoing effort to keep on posting content.

Share Your Expertise in an Online Course

Do you have a hobby you know inside and out? Chances are, others don't have the same knowledge. They may even pay for a course on the subject.

That's right, even your intelligence can be used as capital to earn passive income.

Developing an online course takes time but very little maintenance once it's complete. Several websites offer platforms. Udemy and Teachable are among the most popular.

Consider the market before making an online course. You'll need a subject that's obscure enough not to have been covered but interesting enough to find an audience. In other words, Introduction to Paint Drying is probably a bad idea.

Take advantage of their built-in audience. You may also want to sell course packages of varying prices to appeal to the masses.

What you need:
  • Money:
    • Up-front: N/A
    • Ongoing: N/A
  • Time:
    • Up-front: Lots of time to create the course.
    • Ongoing: N/A

Write an E-book

If you've got specialized expertise and a craving to put it on paper (or computer screen), an e-book could bring in some extra cash. Self-published e-books are still the rage. And technology today makes publishing one easier than ever.

Once you finalize your manuscript and design a cover, you can upload the book to a self-publishing platform. We like Amazon Kindle Direct.

Develop a social media presence to market your e-book.

For self-published authors without a following, non-fiction e-books like "how-to's" tend to fare better than fiction novels.

What you need:
  • Money:
    • Up-front: N/A
    • Ongoing: N/A
  • Time:
    • Up-front: Lots of time to write e-book.
    • Ongoing: Regular marketing updates.

Make an App

Okay, maybe you can't quite mimic the success of Candy Crush. But you can use creator Tommy Palm's story as inspiration to build your own app.

Got a developer friend with whom you can split the proceeds on an awesome idea? Maybe you have some tech talent yourself?

Research your idea BEFORE putting in the work. There's an app for almost everything today. Don't waste time on an idea that's already well-represented in the market.

Start brainstorming an addictive new game OR a helpful feature to a common problem.

What you need:
  • Money:
    • Up-front: N/A
    • Ongoing: N/A
  • Time:
    • Up-front: Lots of time to develop your app.
    • Ongoing: Mild to moderate marketing and upkeep efforts to keep users engaged.

Strive for Royalties

Compose some music. Write a great book. Design a T-shirt or other fun product through CafePress.

Make something valuable that people love, and you could collect royalties for a long time. Some writers and content creators receive checks decades after all their hard work ended!

Get creative and be fearless.

What you need:
  • Money:
    • Up-front: N/A
    • Ongoing: N/A
  • Time:
    • Up-front: Lots of time to create a good or service people will pay for in the future.
    • Ongoing: Minimal monitoring.

Buy and Sell Domain Names

If you're really good at coming up with business names, you can give flipping domain names a try.

Selling a domain name can be huge money. The trick, though, is to come up with a domain name that sounds like something a future business would buy. Research what keywords are trending right now. You'll also have better luck if you choose a specific niche.

This is also not a quick buck. It could take months or years for an offer on your domain name.

Use websites like GoDaddy and NameCheap to find unregistered domain names and snatch them up.

What you need:
  • Money:
    • Up-front: $100 or less to purchase a few domain names
    • Ongoing: Money to renew domain names if not purchased
  • Time:
    • Up-front: Lots of time to research and come up with good names
    • Ongoing: N/A

Sell or Rent Your Stuff

Remember yard sales? Like everything else, they've gone online.

If you've got a bunch of stuff to sell, websites like decluttr can help. Decluttr gives you cash for:

  • Old CDs, DVDs and Blu-Rays
  • Video games
  • iPads, cell phones and electronics
  • Assorted other household products

You simply scan the barcode on your phone to get an estimate, then ship your stuff using a pre-paid postage label.

You can also rent out equipment, tools, and other household items using websites like Craigslist, Nextdoor, and the app Peer Renters.

As always, use common sense when letting strangers borrow your stuff.

What you need:
  • Money:
    • Up-front: N/A
    • Ongoing: N/A
  • Time:
    • Up-front: Some to sort and pack up your stuff
    • Ongoing: None

Tips for Offering Your Stuff:

  • Think local: Only carry inventory that people visiting your area will want. For instance, if you live near a popular family hiking destination, stock up on some baby backpacks (and sunscreen, which you can sell).
  • Go with higher-end, quality gear. It will last you longer after multiple borrowings.
  • Look for great gear sales. The less you pay for your gear, the more quickly rentals will hit your bottom line.
  • Upsell. Potential customers tend to be looking for one item—at BabyQuip, a platform for renting baby equipment, they're more often than not looking for a wooden crib. Steer your customers to what else you have to offer. Providers who ask customers about additional rental items are more likely to see larger orders.
  • Request reviews equal rentals. Provide good service and clean, quality gear, and then be sure to ask for a review afterward. Reviews equal more rentals.

Trish McDermott, co-founder, BabyQuip

Found an idea you like?

Now it's time to get that passive income stream flowing. We've got important first steps below.

Passive Income for Doctors

© CreditDonkey

With a mountain of student loan debt and long, tiring hours, it's no wonder that many working in medicine are looking for side hustles.

The ideal passive income gig for doctors should be lower risk with less effort. Doctors are under enough stress and pressure as it is, without having to worry about losing investments or spending a ton of time.

If you're a doctor looking for some extra cash, give these a try:

  • Open a high yield savings account. This is the easiest way to make extra cash. If you have enough to deposit, you can earn a decent amount in interest each month.

  • Try peer-to-peer lending. Lending to fellow borrowers could give you higher returns than a savings account. There may be some risk with borrowers defaulting, but if you invest in many loans with different interest rates, you spread the risk out.

  • Invest in REITs. Invest in real estate without needing the capital to buy an entire property. Use platforms like Fundrise to invest in REITs and earn income from dividends.

  • Refer your friends for student loan refinancing. Med students have a ton of student loan debt. Refinancing is a smart idea to get a lower interest rate and better term.

    If you have refinanced, you can refer your friends to the same company. Many student loan refinancing companies give you cash for referrals (and your friend may even get a bonus too).

  • Participate in medical surveys. This isn't exactly passive, as you do have to take surveys. But anyone can find a few extra spare minutes to answer some questions online. And the best part is that you get paid to do it. Check out sites like ZoomRx and M3 Global Research.

  • Create exam guides. Recently graduated from med school and still have all your notes? You can create guides to help current students with their medical exams.

How to Get Started

© CreditDonkey

Before plunging ahead with your awesome idea, you'll need to review your finances. Make sure you can afford the up-front investment right now.

  • Pay off credit card debt: If you get swept up in a new venture and ignore your debt, the interest rates will eat away your profits.

    Pay your debts down first.

  • Build up your savings: Going broke while develop your passive income source defeats the purpose. Make sure you're saving by setting up automatic withdrawals to your 401(k) and emergency fund.

  • Create a benchmark: Your passive income should exceed a basic investment's rate of return. Look up today's 10-year bond rate or average CD rates.

    That's how much you can make just by depositing your money in a bank account. If your passive income source can surpass this interest rate, you are on the right track.

  • Say Goodbye to Your Free Time: Not all passive income ideas require capital. But you will need to invest time that could be spent relaxing in front of the TV with a bag of chips.

Make sure you're ready to commit to your passive income stream, even when you aren't at the money-making stage yet.

Keep reading to find ways to avoid common mistakes.

Determine Your Risk Level

© CreditDonkey

Many passive income ideas involve some risk.

Real estate investors face deprecating property values. Writers risk spending a lot of time writing a book only to have it make no profit. Almost every opportunity has a chance for failure.

Consider what you can handle in terms of risk. Do you have retirement and emergency savings set aside?

If so, you can risk a little money, which we DO NOT recommend if you're living paycheck-to-paycheck.

What Is Your Why?

© CreditDonkey

Money is an obvious reason for making passive income. But it's what money buys that determines why you should pursue it.

How will you use your profits? Do you have a shopping habit? Are you saving for retirement?

Consider the reasons you need money then create a plan:

  • Short-term: things you will do in the next year
  • Intermediate: things you will do in the next 2 or 3 years
  • Long-term: things you will do in five or more years

Longevity is the key to successful passive income--your money won't start rolling in overnight.

Why It's Important to Have Passive Income

It's not just the satisfaction of making money without working. Here are some reasons passive income is important:

  • Reduces financial risk. Passive income sources mean less stress if you suddenly lose your job. You'll still have a stream of money coming in, which provides a little cushion during emergencies.

  • Frees up time to enjoy "the little things". With passive income, you can spend more time with your family or work on personal goals like travel.

  • Build long-term wealth. Working a regular job means the amount of money you earn is limited to the hours you work.

    But you don't have those limits with passive income. In fact, you can make money from MULTIPLE sources while you're busy doing other things (like napping).

Don't Forget the Tax Man

The government taxes passive income differently than active income (like your salary, wages and tips through a regular job.)

Passive income is money you make from all activities in which you don't actively participate.

So what constitutes actively participating? It can get confusing but here's an example: if you've started a business that you now run, it would be considered active, NOT passive activity.

But if you are a silent partner in a business, that would likely be considered passive activity.

The IRS has two separate categories for passive activity:

  • Trade or business in which you don't actively contribute.

  • Rental Activity (UNLESS you are a licensed real estate agent).

You can find more information on passive activity—and what classifies--here. But consider talking to an accountant or income tax professional BEFORE filing your taxes.

Bottom Line

© CreditDonkey

Pursuing passive income can be lucrative but it requires investment.

Choose an idea you can spend the time –or money--developing. Have fun with it but be patient.

It's going to take a lot effort, some failure and tons of learning along the way.

But every venture could set you up for more passive income profits in the future.

Disclaimer: Opinions expressed here are author's alone. Please support CreditDonkey on our mission to help you make savvy decisions. Our free online service is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content.

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved or otherwise endorsed by any card issuer. This site may be compensated through the Advertiser's affiliate programs.

Editorial Note: This content is not provided by Chase. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved or otherwise endorsed by Chase. This site may be compensated through the Advertiser's affiliate programs.

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