Passive income is the best kind of income. Passive income just means you do some initial upfront work and the income follows after that for the foreseeable future.
Now, there are many different ways to generate passive income. I like to break down passive income into two categories: fixed and variable.
Fixed passive income generates the same amount of income every month or year. In contrast, variable passive income generates income that varies every month based on volume.
Over the past two years, I have been obsessed with generating more passive income. I don’t plan (or want) to work a corporate job forever, so I have been building up my passive income streams as fast as possible.
When starting out, it can seem a little daunting. You might only have a few hundred dollars of passive income rolling in each month and that obviously won’t help you reach financial independence.
That’s why I wanted to talk about ideas and side hustles to generate passive income today. Here are 7 great ways to generate passive income to retire early.
1. Dividend Stocks
This blog was started to discuss investing in dividend stocks (and it still is!), so I’d be remiss for not starting out with this one!
Dividend stocks are great way to generate passive income. Most companies pay quarterly dividends, although some companies (like Realty Income-ticker symbol: “O”) pay monthly dividends.
Dividends are an amazing source of passive income. Best of all? Some companies pay and increase dividends over multiple decades. This means your source of passive income will increase too! Some companies like AT&T have paid and increased dividends for over 20 years!
Want to learn more about investing in dividend stocks? Check out my Ultimate Dividend Investing Bootcamp Course! You’ll learn how to construct a diversified dividend portfolio from scratch to fund your retirement lifestyle!
In general, I would say it takes 5 – 10 hours to thoroughly research a dividend stock to invest in. Once you have done the initial research, the idea is highly scalable based on how much money you put into the stock!
2. Rental real estate
A rental property is the poster child for passive income. And why not? It’s a great source of passive income for many reasons.
First, the income stream is very predictable (you’re getting paid on a monthly basis). Second, you can also make money on price appreciation!
Rental estate isn’t for everyone though. However, it is a great way to diversify your passive income streams. In fact, this year I am planning on buying my first rental real estate property. I’m excited and still doing the initial work into this big project.
I’ll be sure to update you with a blog post about my experience(s).
3. P2P lending
Peer-to-peer lending is another way to diversify your passive income streams. Peer-to-peer lending allows you to lend money to other people for a variety of reasons including:
- To pay medical bills
- Financial hardship
- To start a business
- For a personal loan…and so much more!
P2P lending can be risky, but if you diversify your loans across many people, it is possible to generate a consistent mid-to-high single digit return.
ebooks are a great way to generate passive income for several reasons.
First, the startup cost is very low. Second, they are very high margin. You can sell the ebooks through your website or on Amazon (the largest seller of eBooks on the planet). Finally, eBooks allow you to cross sell other products or promote your websites.
I have two separate eBook businesses. I have my finance eBook business. You can check out my list of books here on Amazon! With this business, I make about $400 – $500 a month in pure passive income.
I also have an erotica publishing business. You can see my blog on that subject here. I won’t go into too much detail here. However, I am able to consistently earn $1,500+ monthly passive income with that business. In fact, this month I’m on track to clear $1,700 in pure passive income!
Blogging is a great way to earn passive income. The hard part is actually getting traffic to your website.
A blog can monetize itself in many ways…including:
- Affiliate programs
- Sponsored posts
- and other creative ideas.
Building a blog is a great way to generate passive income. I created my first blog about two years go. I wrote about 20 posts and have only published sparingly since then. That site consistently generates $50 – $100 a month in income.
The best part is I only spent about 20 hours writing the content!
6. Crowd funding real estate
If you’re not too fond of dealing with tenants, let me introduce you to a new innovation in real estate investing. It’s called real estate crowdfunding.
Developers are basically looking to fund their real estate projects through a crowdfund system. Realtyshares allows you to invest in these opportunities for as low as $2,000.
This is a great way to have someone professional manage a real estate portfolio for you. Not only that, but you can get access to commercial properties, something you wouldn’t be able to do by yourself!
Most of these real estate crowdfunding opportunities pay a decent rate. It is very much possible to get a high single digit to low double digit return (although I am not guaranteeing anything).
7. Create online courses
Creating online courses is another great way to generate monthly passive income. Online courses are very high margin.
There are two ways to go about selling online courses. First, you can host them on sites like Udemy and Skillshare. Those sites will obviously take a cut of the sales. However, they also have millions and millions of people visiting, so there is a built-in audience.
Alternatively, you can sell your courses by hosting them on Teachable. This is a great strategy if you already have a built-in audience. Teachable has low transaction costs and they don’t take a big royalty.
What should you create online courses about? Well, anything you want! I would start with things you are passionate and good at.
Personally, I have created several courses on finance, investing and accounting, You can check them out here.
As you can see, there are many, many different ways to generate passive income. Hopefully this inspires you all to start making that extra side hustle money!
Readers, do any of you have other ideas to generate passive income? Let me know in the comments!