How to work without working? Everyone wants to earn passive income, i.e. not working and earning money. But how to do it?
Passive income means exactly what you think it means: financial gain without having to work. By earning a passive income, you can gain more financial freedom and more free time. Passive income sources work even when you are sleeping, travelling or pursuing other hobbies. But you can also feel free to go to work and double your income.
Unlike active income, which is typically working for a wage, for example, but also includes many businesses, passive income requires only a small amount of daily work. Instead of sitting in an office for eight hours a day or producing a product, maybe you only deal with tenant requests a few times a year or offer another digital product for sale at will.
However, passive income often requires a significant initial investment and doesn't bring immediate big profits. As a result, they often function more as a tool for long-term monetary appreciation than as a livelihood to replace your day job, or as a means of earning extra income. However, it is certainly possible to build up so many different sources of finance over time that eventually passive income will replace your active work altogether. And you should definitely have more sources of finance, because many passive incomes are not without risk. In particular, investing in shares or selling digital products, for example, depends closely on the current market and customer interests.
Traditional passive income
- Dividend stocks
When you hear the word investment, you're bound to think of shares. And dividend-paying shares are one of the most classic passive income options. A stock is actually a share in a company and a dividend is a cash payment from the profits of such a company. The dividend is usually expressed as a fixed amount, which is also reflected in the value (price) of those shares. The form of the dividend shares is decided by the general meeting of the joint stock company. Dividends are usually paid quarterly.
However, dividend shares often require a really large initial investment. For example, Coca-Cola pays about $1.76 per share per year in 2024. But a share of Coca-Cola is worth less than two dollars. If it were, say, $60, you can easily calculate that you would have to buy hundreds of thousands of dollars worth of stock to make a meaningful annual income.
- Bonds
Another traditional investment option is to buy bonds. They also require an initial sum to invest, but their returns can be more sympathetic. At the same time, they are limited in time by their maturity. The way they work is that by buying them, you are actually lending money to the issuer. The issuer then pays you back gradually - but of course with interest, which is what you earn on the bonds. Bonds can be government bonds, which are among the least risky investments ever, and corporate bonds. But these, in turn, can have much higher yields, as the state is usually, shall we say, conservative in terms of interest.
- Real estate
Renting out property is another typical and very popular way to earn a passive income. However, you don't necessarily have to buy an investment apartment in a big city for tens of millions, you can also rent out smaller things. And it doesn't even have to be entire apartments or even living spaces. For example, you can rent out a single room to tourists on a short-term basis through popular online services. Students who always need somewhere to stay are also a sure thing. Many of them will prefer a hostel to student halls. However, you can also rent a garage, a garden, a storage space, a parking space and much more. Look around your real estate assets to see if you can't somehow monetize them smartly by renting.
Online passive income
If traditional investment products aren't your cup of tea, there are also plenty of options these days for passive income using the internet. And for many of them, you don't even need a large initial investment. Or rather, they may not cost you money, but they will cost you time to prepare.
- Affiliate marketing
Underneath these words is a simple principle - the reward of customer leads. You are actually helping a business with advertising and then getting paid for someone to buy from them or become a client. Typically as a percentage of the amount spent, but it can also be a fixed amount. In practice, it looks like you put a special affiliate link to the e-shop you are working with on your blog or social networks. When someone makes a purchase through this link, you get a percentage of the price of their purchase to yourself.
However, profits from affiliate marketing can be very variable and attracting people to your social networks or website can require so much work that it actually becomes an active income. However, if you already have a website or a popular social media profile, for example, affiliate marketing is an interesting way to make money.
- Selling products online
Digital goods have the advantage that once you make them, they can be endlessly reproduced and don't cost a penny extra. Selling it is thus a potential source of passive income, but the fickleness of the market must be taken into account.
You can sell many things: educational courses, mobile apps, programs, document templates, photos, videos, learning materials, e-books, etc. For example, you can use your professional skills and knowledge to create products that generate a secondary passive income in addition to your active employment.
Rental of movable assets
The last big group of passive income is income from renting out anything other than real estate. This is basically renting for money and can be anything - a car, a lawnmower, a drill, a projector, a professional camera, clothes and accessories, and more. However, it is always important to have such renting properly regulated so that you do not get into a crossfire with the law. Therefore, we recommend using existing online services for car sharing or renting things.
And as a last tip, we have an advertising space for rent. For example, if you have a fence or house facade in an attractive location, you can try offering it as an advertising medium. How much you potentially earn depends mainly on the location and the size of the area. And your car can also serve as an advertising carrier. If you drive a lot among people (e.g. around town), this can be attractive to advertising agencies.
