Sit back and watch your money grow with these clever passive income ideas that will diversify your income without taking up your time.
Passive income is the key to taking back your time and growing your money.
It’s basically another income stream that doesn’t require your time on an ongoing basis. So while you may have to invest both time and money to set it up, eventually it will bring returns without much input at all.
For many, passive income ideas are limited to the ‘property versus shares’ debate. But the word limited is deliberately used here. While both shares and property can definitely be part of your passive income strategy, they are not the only passive income streams available to you. Let’s take a look at each of them, then look further afield for more passive income ideas that might suit you even better. Particularly passive income ideas that you don’t need a lot of money to get started with.
1. Share portfolio
This is our #1 pick of passive income ideas. Over the last 10 years, the S&P/ASX 200 Index (or the Australian Share Exchange top 200 shares) has had an average income return of 4.14 per cent. Based on this, you can bring in extra income that’s meaningful, even from a moderate share portfolio.
No chance of giving up your day job yet, but don’t forget the power of compounding. Keep investing those returns year after year and you’ll soon build up a big enough portfolio to retire on. With a little help from your super, of course.
2. Property portfolio
As your grandparents would tell you, there’s good money in bricks and mortar. Keep in mind that the income you can generate from an investment property is generally lower than from a stock portfolio. That’s because you face a lot of annual fees to keep your rental income ticking along. Fees include the cost of finding tenants (or having no tenants at all), upkeep of the property, insurance, council or strata fees, and management fees.
Those management fees are important. If you plan on doing your own property management, your rental income becomes decidedly less ‘passive’. Being a landlord can be hard work, especially if you have more than one property in your portfolio. Which you will need if you want to earn a significant income.
If the hassle of dealing with tenants and rental obligations hasn’t put you off, you can find out more about getting started here: 5 foundations for building a property portfolio. Other articles to read are here, here and here.
Dropshipping is a business model where the product is bought from one party, but shipped to the customer by other.
- The customer orders from you
- You process the order and forward it to your wholesaler
- Your wholesaler ships the order direct to your customer
- Your customer receives their order from ‘you’.
As a dropshipper you therefore don’t need to hold your own stock, have minimal fulfilment costs, low start up costs and can sell with less risk.
You’ll also have low-to-zero control over fulfilment lead times, a huge reliance on your wholesaler’s stock and fulfilment processes (which you will have no control over), lower profit margins and (perhaps the most important), limited ability to provide good end-to-endcustomer service.
Pros and cons, people, pros and cons.
The biggest pro is that you can set up this passive income stream with relative ease. You may already have a market in your circle of friends or via social channels like Instagram. To get started, many people use existing ecommerce platforms like Shopify or WooCommerce. You can also dropship through Amazon and even Facebook.
There’s a lot of upfront work to set up this side hustle and what you plan to sell will determine whether it’s one of your better passive income ideas. You can find out more about getting started here.
4. Teach an online course
If you’ve got expertise in a subject, there’s a passive income stream for that. You can create an online course using a platform like Skillshare, Udemy or Thinkific (among many others). All of these sites make it easy to outline, set up and create your course content. They also help you market it to potential students.
Done well, your course could potentially provide an income for you for years to come. Keep potential ‘evergreen’ longevity in mind when you’re creating it.
5. Write a ebook
While we’re on the subject of sharing your expertise, don’t rule out writing an ebook. If you can nail the topic and content, an ebook can keep delivering passive income for years.
In 2018 I spent about 20 hours writing a little ebook called ‘Screen Freedom‘ for parents at their wit’s end trying to get their kids off screens. That ebook still brings me monthly passive income to this day. So it’s definitely worth putting the time in if you have information to share.
6. Sell your photos
If you’re handing with a camera, stock photo sites can provide you with a decent passive income. Unlike most photography-based businesses, stock photos can make continual income from a single image. Most stock photo outlets are always open to natural, ‘everyday’ images and there’s a dearth of Australian images on the sites.
Some of the best places to sell your photos online include:
7. Become an Instagram influencer
If you’ve got an especially pretty life, or something unique to say, you might be able to build up a significant Insta audience. After that, there are plenty of ways to monetise your following. Brands pay big bucks per sponsored Instagram post (if you’re Dwayne Johnson or Kylie Jenner, that’s a cool million per post). You can also become an affiliate marketer with any number of brands. Or sell your own or other people’s products (for a commission) direct to your audience.
Neil Patel has a really good summary about making passive income from Instagram here.
8. Rent out a room
Companies likes Airbnb and Stayz means we can all run a boutique hotel. Provided you’ve got a spare room (or spare house), of course. Make it convenient, cosy and comfortable and you should see it regularly rented out, providing you with a nice side income.
The upfront costs are minimal and the ongoing work can be zero if you hire a manager and cleaner to run the show.
Find out how to get started here.
9. Rent your car
It’s not just rooms people regularly need to rent. Renting your car one of the best passive income ideas ever. That’s because there’s really not a lot to it.
- Own a decent, fully-insured car
- Sign up at a site like Car Next Door or Drive My Car
- Ensure you’ve got a full tank of fuel
- Park your car and share the GPS coordinates
- Leave your keys in a designated lockbox or arrange to meet borrower to hand over keys
That’s pretty much it, but full details here.
10. Get into peer-to-peer lending
This is a unique (and growing) way to invest. Peer-to-peer lending matches you (who has money) with someone looking for a loan. Your borrower loans the money from you and pays you back over time with interest. It’s surely one of the most passive of passive income ideas out there.
The easiest peer-to-peer approach is direct with an actual peer. Draw up a contract and make sure you both get it checked by a legal team. It might actually be simpler and better for your friendships to go through a peer-to-peer lending platform. There are a number in Australia, a few are:
A good way to take advantage of all these passive income ideas is to start more than one! The more you diversify your income streams, the higher your earning potential and the lower your risk.
However you decide to do it, just do something. Not getting started is the worst investment decision you can make, whatever the strategy.