Passive Income: 10 Ideas to Help Build Your Wealth While You Sleep

What is passive income?

Imagine if you could earn money simply by sitting back and doing nothing. Believe it or not, it’s something successful people do every day. It’s a concept known as passive income, and it’s what allows people like you to accumulate wealth without having to lift a finger. It’s said that in 2019 you need at least 7 different streams of passive income to become a multimillionaire. Here I’ll show you 10 different ideas to earn passive income that actually work.

1. Rental Income: Investing in rental properties is one of the most popular and effective ways to earn passive income. But it often requires more work than people expect.
   If you don’t take the time to learn how to make it a profitable venture, you could lose your investment and then some. To earn passive income from rental properties, you must determine how much you want on the investment, the property’s total cost and expenses, and the financial risk of owning the property. There are a few questions to consider: Is there a market for your property? What if you get a tenant who pays late or damages your property? Any of these factors could put a big dent in your passive income.
2. Affiliate Marketing: With affiliate marketing, website owners, social media “influencers” or bloggers promote a third party’s product by including a link to the product on their site or social media account. Amazon might be the most well-known affiliate partner, but eBay, Awin and ShareASale are among the larger names, too. When a visitor clicks on the link and makes a purchase from the third-party affiliate, the site owner earns a commission.
   Affiliate marketing is considered passive because, in theory, you can earn money just by adding a link to your site or social media account. In reality, you won’t earn anything if you can’t attract readers to your site to click on the link and buy something. If you’re just starting out, you’ll have to take time to create content and build traffic.
3. Savings Account: It doesn’t get any more passive than putting your money in a savings account at the bank or one of the many online financial sites offering high yields. Then sit back and watch the interest mount up. Interest rates have risen to their highest levels in more than a decade. The Fed has said that it doesn’t expect to raise rates anymore in 2019, but if the economy strengthens, rates could rise in the future. So it’s an opportune time to take advantage.
4. Network Marketing: Network marketing, or multi-level marketing, seems to be on the rise. Companies such as Young Living Oils, Avon, Pampered Chef, and AdvoCare are all multi-level marketing companies. You can earn passive income through network marketing by building a team underneath you (often referred to as a down line.) Once you have a large team you can earn commissions off of their sales without having to do much. Just work on building up your downline. Beware of pyramid schemes posing as MLM opportunities.
5. Peer to Peer (P2P) Lending: P2P lending is the practice of loaning money to borrowers who typically don’t qualify for traditional loans. As the lender you have the ability to choose the borrowers and are able to spread your investment amount out to mitigate your risk. The most popular peer to peer lending platform is Lending Club. What’s great about Lending Club is that investors are earning 4-6% returns on average - and that’s all passive income. You simply lend your money, and you get paid back principal and interest on that loan. The median return on cash flow is 4.1% - which is better than any money market fund you’re going to find today.
6. Annuities: An annuity is a financial product that pays out a fixed stream of payments to an individual. These financial products are primarily used as an income stream for retirees. Annuities are created and sold by financial institutions, which accept and invest funds from individuals. Upon annuitization, the holding institution will issue a stream of payments at a later point in time. Annuities can be structured generally as either fixed or variable. Fixed Annuities provide regular periodic payments to the annuitant. Variable Annuities allow the owner to receive greater future cash flows if investments of the annuity fund do well and smaller payments if its investments do poorly. This provides for less stable cash flow than a fixed annuity but allows the annuitant to reap the benefits of strong returns from their fund’s investments.
7. Real Estate Investment Trust: A REIT is a real estate investment trust, which is a fancy name for a company that owns and manages real estate. REITs have a special legal structure so that they pay little or no corporate income tax if they pass along most of their income to shareholders. You can purchase REITs on the stock market just like any other company or dividend stock. You’ll earn whatever the REIT pays out as a dividend, and the best REITs have a record of increasing their dividend on an annual basis, so you could have a growing stream of dividends over time.
8. Business Investments: Another way to generate passive income is to invest and be a silent partner in a business. This is very risky, but with risk comes the potential for high returns. For example, several years ago both Lyft and Uber were looking for private investors to invest in their companies. Today, they are worth billions - but you as an investor would only reap that benefit if they go public via an IPO, or get acquired. So, it’s risky.
   But there are ways to reduce your risk. For example, you can invest small amounts in many companies through lending them money in small bonds.
9. Ebooks: Self Publishing is mainstream today. When you purchase an eBook off of Amazon there’s a pretty good chance you’re buying a self-published book. Self-publishing is also ridiculously easy. I tried this a few years ago and couldn’t believe how simple the process was. To self-publish a book you’ll first need to write and edit it, create a cover, and then upload to a program such as Amazon’s Kindle Direct Publishing. Don’t expect instant success though. There will need to be a lot of upfront marketing before you can turn this into a passive income stream.
10. Dividend Stocks: Dividend stocks are tried and true way to earn passive income. You will have to do plenty of research to find good stocks and invest a significant amount of money to receive large dividend checks. However, if you consistently invest money into dividend stocks you can amass a nice residual income over time.
    For any of these investment opportunities, make sure you open an account at the best online brokerage, and get rewards while doing it. 
    Two of my favorite places to invest are Acorns and M1 Finance. Both are FREE investing platforms that allow you to build a portfolio, and invest in them for free.

Conclusion

Remember, generating truly passive income requires creativity and some initial work to set things up. If you’re someone who is already super busy, that’s even more true for you. But if you can take the time to learn whatever it is you think you’d be good at you can make some extra money. Maybe a lot of extra money. I hope you can find at least one of these ideas intriguing enough to give it a try.