Welcome to my post on the top 4 passive income ideas. Most of us trade our time for money but investing in things that produce passive income let’s us make more money without having to work more.
Earning passive income is all about working smarter, not harder and this post will show you the top 4 passive income ideas for beginners.
Please note: As an affiliate of EQ Bank and Questrade, this blog receives a small commission for sign ups.
Why Build Passive Income?
There are 2 sides to the financial freedom equation: eliminating debt and building other sources of income besides your job. There’s a deep sense of satisfaction in knowing that you’re building other sources of income.
Having sources of passive income makes it easier to withstand job loss or other unexpected financial emergencies. Passive income can help pay the monthly bills or maybe a nice vacation.
Whatever the reason is it’s important to realize that there’s never a wrong reason to build alternative sources of income that you don’t really have to work for. The more passive income you earn, the more liberating it is. Maybe you’d like to retire early and explore the world or pursue your passion.
We all have our reasons for wanting to build passive income streams. If you’re looking for ideas on how to earn passive income, here are my top 4 passive income ideas.
Top 4 Passive Income Ideas:
High Interest Savings Account
You don’t need to take a lot of risks to create a source of passive income. In fact, probably the safest source of passive income comes from a High Interest Savings Account. Interest rates are still pretty low, however, you can find interest rates as high as 2.30% on a savings account with EQ Bank.
OPEN AN EQ BANK HIGH INTEREST SAVINGS ACCOUNT
Dividend Stocks, Mutual Funds, ETFs
All it takes to start building passive income from an investment portfolio is to open a discount brokerage account. Every bank has their own discount broker, but they charge high fees (anywhere from $10- to $30 per trade). I prefer the low-cost option so I opened an account with Questrade. They charge $5 to buy or sell stocks and they offer no-fee ETF purchases which really helps keep cost down while building a diversified investment portfolio.
It’s not hard to build a portfolio of dividend paying stocks that will bring in money every month. Take a look at some of my dividend income reports to see some of the stocks that I own and how much money they pay each month. My main form of passive income comes from the money that I get from dividend stocks.
Start an Online Business
It has never been easier to start your own online business. Whether it’s a blog, drop-shipping or some other kind of money making website, these can all provide a form of passive or semi-passive income.
Our blog income has grown a lot over the past few years and is now averaging over $500/month. Some websites earn thousands of dollars each month.
All it takes is buying a domain name and setting up a web host. For an investment of about $200 or less, you can be up and running in about a half hour with your very own website. Most web hosting companies have staff that Can assist you in setting up your site. So don’t worry if you’re not super computer literate.
Check out my step by step guide on How to Start A Blog or Create a Website.
Buy a Rental Property and Become a Landlord
Rental properties can be a tough business and it’s definitely not for the faint of heart. Don’t believe me? Check out my posts on my experience with property managers and out of town rentals. You’ll get problem tenants and sh*tty property managers, not to mention all the maintenance that properties require. That said, when done right, rental properties can provide a steady and reliable source of semi passive income.
Despite the bad experience I had with rentals, I learned a lot and one of the main lessons was that you want to own a rental property that is close to your home and that you can control and manage. This requires work and is not quite the sit-back and cash rent checks lifestyle that it’s portrayed to be. But the reality is that with hundreds of thousands of dollars at stake you really don’t want to take a back seat with this type of investment.
What Is the Best Source of Passive Income?
Building a source of passive income will always involve some upfront work and a financial investment. When I think about sources of passive income, I find the best options for newbies are the ones that require as little investment as possible in both time and money. So I think that it makes sense to start small. Doing something like opening a high interest savings account and / or opening a brokerage account to buy stocks and ETFs are easy ways for people to get started in the game of earning passive income.
I like to think of earning passive income as a game where you start off small, earning a few bucks a month and scale up from there. Set small goals for yourself and strive to reach them. Over time you’ll see your passive income reach thousands of dollars each month.
Starting your own website will require some upfront work creating web pages or blog posts, building an audience etc. So you don’t always see the fruits of your labor right away. It takes time. That’s why I think financial investments are the way to go for beginners because you’ll see an immediate return on your investment in the form of monthly interest payments or dividend payments. These can be powerful motivators to invest more money to build up that income.
Once you’re comfortable with these forms of passive income you can consider creating other sources of passive or semi-passive income from things like real estate. Real estate investments require more time and money to set up so I don’t think that they are a good fit for people who are just beginning their foray into the world of passive income.
Thanks for reading and I hope you enjoyed this post on the top 4 passive income ideas.