17 Clever Ways To Generate Passive Income (and the best idea of all for hands off passive income)

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Working to keep the bills paid takes valuable time out of your life that could have been spent with your family, learning new skills, or even launching the business of your dreams. Unfortunately, most people are held back by the false assumption that passive income is unattainable or unrealistic. Although passive income streams that yield pipelines of cash can require an extraordinary amount of earned luck, smaller passive income streams are completely attainable for anyone. Traditional channels for generating passive income, such as stocks and real estate, are still effective in the modern world, and the digital era has introduced hundreds of new ways to earn passive income with almost no upfront investment.

If you think that you are stuck in your current job, you should take a step back to evaluate some of the opportunities for generating passive income that are now available. Although building up a reliable passive revenue stream can take time, you can free yourself from the daily grind by taking the first step toward your success. You will first need to conduct extensive research to understand the methods that work, then find opportunities to apply your understanding to actualize value opportunities in the real world. Most passive income methods will require a significant time commitment in the early stages, but you can start to outsource responsibilities once you begin to earn revenue. Overall, passive income can transform your dreams into reality by enabling you to sleep soundly while profits pour in on their own.

1. Real Estate Investing

Since the dawn of civilization, real estate has been the primary source of passive income for individuals with spare capital to invest. Everyone needs a place to live, but many people cannot afford to pay for a home upfront. Although mortgages are more accessible than in the past, there is still a large segment of society that is unable or unwilling to purchase a property. You can, therefore, earn substantial passive income by learning to invest in real estate that yields high annual returns.

When investing in real estate, it is critical to account for a property’s total cost of ownership. You will be responsible for covering all expenses associated with property ownership, including property taxes, insurance, and maintenance. Some rental properties may also require repairs or other modifications before being listed on the market. If you are unwilling to do maintenance yourself, you will need to find someone who can take care of this responsibility for you. Nevertheless, people who succeed at surmounting the obstacles associated with entering the rental market can earn substantial passive income that can lead to a lucrative retirement.

2. Investing in Stocks and Bonds

In the modern age, stocks and bonds are the most reliable and accessible source of passive income available. According to the McKinsey consulting firm, the total value of stocks in public circulation exceeds $118 trillion. Until recently, purchasing stocks and bonds was difficult and expensive because people would have to purchase securities manually with the help of a broker. Today, there are thousands of online trading platforms that you can use to purchase stocks and bonds from the comfort of home.

Taxes and fees are the most important factors to keep in mind when purchasing securities. Many trading platforms charge fees exceeding 1 percent, and these charges can eat away at the value of your portfolio over time. Additionally, some trading platforms charge hidden fees, such as withdrawal fees and inactive account fees. You should carefully review a provider’s terms of service before depositing your money into an online trading platform.

The U.S. government offers several ways to reduce the income taxes that you are required to pay on the compounded growth rate of your stock and bond portfolio. If you are saving for retirement, you should consider opening an account that offers tax advantages, such as a 401(k) or IRA. In most cases, you should buy and hold securities as long-term investments so that you can avoid having to pay high taxes on short-term capital gains. Learning to invest effectively can take time, but doing so will pay off when you know how to make money work for you.

3. Creating an Informative Website

People searching for answers almost exclusively turn to the Internet to find the information that they need. You can create an informative website that offers solutions to common problems, and people who come to trust your information will be eager to become paying customers. You do not, however, have to pack any boxes or manufacture any products when you sell through your website. Instead, you can partner with existing companies that will manage selling, manufacturing, shipping, and other responsibilities on your behalf. You can, then, sit back and rake in the profits while your website automatically generates passive income.

The best part about creating websites is that informative content can yield passive income for many years. Content creators who published high-quality articles more than a decade ago continue to receive passive income on a monthly basis from their former efforts. There is a substantial learning curve associated with making authoritative websites, but there is also plenty of information available online for ambitious individuals who are willing to seek it out. The Internet will only continue to grow in the years ahead, so taking the time to build a great website today can enable you to generate sustainable passive income that can make the retirement of your dreams a feasible reality.

4. Affiliate Marketing

Once you have built a portfolio of digital properties, you can experiment with a broad range of offers to monetize your hard work. Affiliate marketing offers an ideal way of monetizing an online platform by enabling you to receive a commission on sales that are made through a third party. When you sell through affiliate marketing, you do not have to deal with customers, suppliers, or the responsibilities associated with managing a business. Instead, you can focus on simply driving leads to make purchases on external websites by publishing great content that encourages people to buy.

Affiliate marketing is highly flexible because you can choose from millions of available offers. The key to success in affiliate marketing is to split test a broad range of offerings to determine which campaign is most profitable on your websites. Once you have selected the right affiliate offer, however, you can sit back and enjoy passive income for years.

5. Start a YouTube Channel

Over 432,000 hours of new video footage is posted to YouTube every day, but most people are not aware of why so many content creators are eager to make YouTube videos. Once your YouTube channel has received at least 10,000 views, you can apply to monetize your channel using AdSense. Once you have set up your AdSense account, YouTube will start to pay you money every time someone watches one of your videos.

You can only expect to earn about $2 per view on YouTube, but you should not let this low figure deter you from getting started. Although YouTube’s ad revenue figures may appear low, the reality is that high-quality videos can receive millions of views over time. Additionally, you can use your YouTube channel to sell products and services to your followers to generate additional revenue. As with websites, YouTube videos can generate passive income for years.

6. Email Marketing

Email has been around for decades, but it remains one of the most popular modes of communication. Research has shown that only about 2 percent of email addresses get deleted each year, so getting new email subscribers can bring in revenue for decades. Additionally, when people switch their primary email address, they almost always use some form of message forwarding to keep up with their old contacts. Email marketing, therefore, enables you to keep in touch with your customers for decades.

Although you cannot spam your followers, you can send informative messages that establish you as a trustworthy expert in their minds. When your followers trust you, they will be willing to hire you or purchase products from your website. However, earning sales from email marketing requires no active effort because you can queue messages in an autoresponder to reach out to your followers automatically. Building a large base of email subscribers can take time, but your mailing list can become a huge source of passive income once it is established.

7. E-Commerce Website

Shoppers are increasingly turning from retail stores in favor of online platforms that offer a wider selection, better pricing, and more product information. Major e-commerce platforms, such as Amazon and eBay, are backed by hundreds of thousands of vendors who supply the products that shoppers purchase. You can take part in the supply chain of major e-commerce websites by introducing your own products that can be marketed automatically. Additionally, you can create new listings for existing products that will earn you a commission on each sale. Once you have posted your product listings, you can receive passive income for years every time a customer places an order.

You can also launch your own e-commerce website with minimal hassle. There are dozens of platforms available, such as Shopify and BigCommerce, that can help you to build a new online store in under an hour. You can, therefore, focus on creating content that attracts online traffic instead of wasting your time learning advanced website development skills. Once your online store has grown, you can hire writers to create your product descriptions and designers to perfect your website. High-quality e-commerce websites can earn passive income for many years when you focus on marketing products that will always be in demand.

8. Create an Online Course

If you have a valuable skill that you can share with the world, you can leverage your expertise to establish a passive income stream. Advancing in life requires knowledge, so people are happy to pay for online courses that can help them to grow. Some of the most popular topics for online courses include programming, graphic design, and foreign languages. In general, online platforms pay you a fixed amount of money every time someone views your course. Since your courses can remain online forever, you will receive passive monthly income for a substantial period of time when you build up a strong portfolio of online courses.

The best part about creating online courses is that the quality of your content is the most critical factor that drives success. In the ordinary academic world, you would most likely need a doctorate degree and extensive research experience to qualify to teach a course. People who view online courses, however, are generally eager to learn on their own initiative, so they are happy to excuse limited academic qualifications when you have strong practical experience in the workplace. You can even use online courses to generate additional revenue by selling digital products or affiliate offers to your students.

9. Start an App Business

Some of the most successful businesses that have been launched in recent years have used online apps to disrupt entire industries. For example, in the transportation industry that was formerly dominated by taxis, Uber and Lyft have managed to earn 72.5 percent market share in less than a decade. Although the most successful apps have gained the most attention because of their astronomical valuations, ordinary people have created millions of apps in recent years that have managed to succeed. Apps can automate almost any function without human intervention, so they are ideal for generating passive income.

The most obvious use cases for apps have already been filled by existing providers, but you can still identify new value opportunities by working closely with business owners. Entrepreneurs in every industry are challenged by repetitive tasks that can often be automated with an app. An employment agency, for example, might need an app to filter resumes in ways that existing apps cannot provide. The world is constantly evolving, so lucrative opportunities to introduce a new app emerge on an hourly basis in every major field.

Businesses often want to create apps to help their customers make use of their products, and you can offer to design the app that a business needs in exchange for performance-driven compensation. Businesses are often reluctant to pay upfront to develop a new app, but you can often close the deal when you offer to be compensated only when your app gets results. If you lock a business into an agreement to compensate you whenever your app gets downloaded or generates a sale, you can earn considerable passive income for many years.

10. Network Marketing

Network marketing has been a viable way of generating passive income for over a century. Although some people mistakenly assume that network marketing is unethical, the reality is that this approach to selling products can actually add substantial value. For example, Herbalife leverages a network marketing strategy so that vendors who sell products to final customers are able to act as personal nutrition coaches to ensure that the right product recommendations are made. Uninformed buyers often purchase the wrong products for decades, and these mistakes can have serious consequences when a person’s health or finances are at stake.

Some of the most suitable industries for network marketing include insurance, nutrition, and training. With many network marketing companies, you will continue to receive a commission for as long as a customer continues to purchase products. Life insurance salesmen, for example, can receive passive income for decades as their loyal clients continue to pay for their insurance policy. The Internet has made buyers more informed than ever before, but network marketing will remain a viable option for generating passive income in the decades ahead.

11. Buy a Business

If you have spare capital available at your disposal, buying a business can often be one of the most profitable options for generating passive income. Small businesses can require several hours of management oversight each month, and this requirement makes many businesses unattractive to large investment firms. Although some acquisitions can require a bit of management oversight on your end, time requirements will gradually decline over time as you recruit trustworthy staff members and establish a management structure that functions effectively.

Businesses can be very expensive to buy, but you should keep the income potential of an acquisition in mind before assuming that a purchase is unaffordable. Banks can often help you to finance business acquisitions, and you may be able to find partners who can help you to afford the price that a seller demands. There are not many people who are willing to purchase small businesses, so these assets often trade at a substantial discount. Choosing the right acquisition can easily earn passive returns in excess of 25 percent per year.

12. Open a Local Store

As an alternative to buying a business, you can also launch a new business with the goal of transforming it into an autonomous cash cow. Local businesses require minimal capital to start, and you can launch many of these establishments using proven business models that have been around for decades. You can start a bakery, restaurant, or clothing store with minimal initial capital. Once you have succeeded at establishing a profitable customer base in your community, you can hire people to manage your business while you walk away to enjoy the fruits of your entrepreneurial initiative.

You can also choose to start a franchise business in your local area. Although franchises can require more initial capital to start, they can also entail less risk of failure and less management overhead. Many franchisees start with a single location, then expand to dozens of franchises as they learn the secrets to getting results. As long as you choose a franchise model that allows you to outsource management responsibilities, you can easily walk away from a franchise after getting it started. Passive franchise investments can yield steady returns for decades, and they are generally easy to liquidate when you are ready to move on to new opportunities.

13. Start a Service Business

People who possess specialized knowledge in a useful field can normally leverage their skills to start a local service business. When you first start your business, you will want to take an active role in working with customers and fulfilling initial orders. As time goes on, however, you can start to outsource work that comes your way to individuals who you know to be trustworthy and knowledgeable in your area of specialty. Once you are able to delegate your responsibilities, you can step back from an active role in your service business to simply take orders and accept payments.

People who have experience in almost any trade, such as landscaping, roofing, or interior decorating, can usually find plenty of work by simply putting out fliers in their local area. The majority of potential clients will start by looking online, so you can also find some initial clients by putting up a website, purchasing inexpensive pay-per-click advertisements, and staying active on social media. In fields that are highly specialized, such as law, engineering, and accounting, you can usually find jobs online that you can easily outsource. Entrepreneurs who succeed at building up a substantial customer base can often earn a high monthly income without having to work more than a few hours each week.

14. Flip Jobs

When businesses hire employees to manage certain responsibilities, their only goal is to achieve the bottom line of getting the job done. If you have a strong network, you can often find jobs that you can outsource to people who you trust. For instance, many people succeed at flipping contract jobs by finding long-term employment online. Once your work supervisor begins to trust you, you may be able to persuade your employer to let you hire someone to manage some of your responsibilities. Employers are often open to the concept of hiring someone else to do part of your work because you can bring in talent that is more specialized and flexible. Although you may still have to attend company meetings or do some occasional work, most jobs can be converted into semi-passive revenue streams when you take the right approach to employment.

You can also consider starting your own consulting firm to obtain large contract jobs that explicitly require outsourcing all responsibilities. Contract jobs can be a lucrative source of passive income when you find clients who care only about the bottom line. Outsourcing to consulting firms entails less risk and more flexibility than with ordinary employees, so you can add substantial value when you can bring the right talent into a company. In many cases, you can walk away from contract jobs after putting the right people in place when you have a strong network of responsible and skilled contacts who can work effectively without your active oversight.

15. Write a Book

Writing and publishing your own book can boost your pride, improve your resume, and attract new customers to your business. Additionally, you can earn royalties on each sale to earn passive income that can persist throughout the remainder of your life. Many writers are able to retire permanently by building up their name as a respected author and publishing several high-quality books. People often instinctually assume that they do not possess sufficient qualifications to publish a book, but bookstores are flooded with works composed by authors who have never even set foot on a college campus.

When you begin your career as an author, you should start by leveraging what you already know to offer useful insights. Unfortunately, attempting to dive into a field that you do not understand in thorough detail can necessitate an extraordinary amount of research, and your results will probably not be very good. Instead, you should focus on a field in which you have at least some experience so that you will have a base of knowledge that you can draw on to guide your research. You could, for example, write a book about traveling to a foreign country that you have visited in the past. Although you might have only visited the country for a couple of weeks, your knowledge will be sufficient to provide insights that will be useful to people who have never visited the country before. You can, then, use information that you find online to complete a work that is useful and likely to attract paying customers.

16. Record an Audiobook

In today’s world of ubiquitous multimedia, sitting down and reading a long book has become more undesirable than ever before. Especially in younger generations, reading has been replaced with videos and interactive games that make learning highly engaging. Demand for audiobooks, therefore, is at record highs since authors can sell more books by presenting their information in audio formats that are easily digestible. Audiobook sales have also surged in recent years because almost everyone now owns a smartphone. Reading is difficult on a small smartphone screen, and phones can introduce distractions that can prevent readers from focusing on a book. In contrast, audiobooks are ideal for smartphone users because they can be easily listened to using a set of headphones or a car stereo.

You should keep your goal of generating passive income in mind when creating audiobooks because there are many channels that you can use to make money from audiobooks. Some authors seek immediate gains when creating audiobooks, and they will often sell their work on marketplaces to get immediate cash. If you have money to invest, purchasing the rights to audiobooks with high market potential can present lucrative opportunities for generating passive income. You can often find bargains on audio rights by attending local events hosted by organizations for professional authors.

In many cases, you will want to make your own ideas come to life by recording a book that you wrote on your own. ACX offers tools to help authors record and sell audiobooks from home, but you can also use ordinary audio recording software, such as Audacity or Magix, to record and edit your sound files. You might also want to consider hiring a professional voice actor to record your audiobook. Capturing sound with no background noise, voice mistakes, or other errors requires extensive training and professional media equipment. Recording your audiobook in a professional manner will help you to earn good reviews that will boost your sales.

17. Lease Your Assets

People often let their valuable assets depreciate in storage for decades instead of capitalizing on having these belongings by using them to generate passive income. Motorcycles, welders, furniture, pokers tables, sewing machines, and other assets can be rented out at lucrative rates when you know how to take advantage of available marketing channels. Zilok is an app that lets you rent out almost any personal asset for days or weeks at a time. Although you will have to take the time to manage each rental agreement, you will earn passive income for as long as your customers continue to pay their bill.

Airbnb is another popular option for generating passive income when you can afford to rent out a property that you own. Unlike with ordinary rental agreements, the best part about Airbnb is that you can take your property off the market at any time. You can, therefore, keep your vacation home available for your next trip while still earning passive income each month. Managing Airbnb properties can require some work, such as vacuuming floors and cleaning bed sheets, but you can hire a maid service, such as Tidy or GuestPrep, to manage freshening your property before your next guest arrives. Best of all, Airbnb’s fees are only 3 percent, so you can keep almost all of the revenue that your properties generate.

Getting Started With Passive Income

The possibility of earning passive income opens doors to exciting opportunities, but it is important to ensure that you are moving in the right direction to avoid wasting valuable time. The key to earning large streams of passive income is to focus on conducting thorough research before getting started. Passive income assets are essentially miniature businesses, and good decision-making is the main source of success in business. To make profitable decisions, you need to gather high-quality information to avoid common hurdles while identifying opportunities with minimal competition. Initiating your journey to the passive income lifestyle with a strong understanding of the best actions to take will increase your chances of success and enable you to achieve your dreams in less time.

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