In this article, we will explore 8 ways to reach financial freedom through passive income.
For each of these passive income ideas we will answer the following 4 questions:
Number 1: How hard is it to get started?
Number 2: How much effort/investment does it take to get started?
Number 3: How hard is it to generate $500 dollars?
Number 4: How hard is it to maintain?
For each of these questions, we will give you a rating between 1 to 5 stars.
With one being super easy while a 5 is extremely difficult.
Is Passive Income “Passive”?
Now, what do we mean when we use the term, “Passive Income”?
The reason I am using quotes is that… there is no such thing as passive income.
No one will throw money at your feet without lifting a finger.
Personally, when I use the phrase passive income, it refers to the money that is generated through many different avenues;
Without the daily commitment of a full-time job.
Building a passive income is not about the money, as bizarre as it may sound.
It’s all about buying your freedom.
It’s about investing in your future, so you don’t HAVE to work a typical 9 to 5 trapped in a cubicle in a soulless company.
Building a passive income gives you the freedom to pursue your passions, be it altruism, traveling the world, or simply chilling at your beach house.
It doesn’t matter what you choose to do.
All that matters is that YOU get to make that choice.
I know that the internet is filled with get-rich-quick scammers preying on people with false hopes, and beautiful lies.
But, in reality, there’s no way you can become wealthy overnight.
It takes work, and you will need to invest your time and money to get started on the path to financial freedom.
Always keep in the back of your mind that no matter what you’re pursuing, or which of these ideas you found helpful, at the end of the day it’s all about bringing value to others.
That’s the secret to making money.
It’s really as simple as that.
The more effective you are at bringing value to others the more money you make, you don’t have to go out there and scam people out of some abstract Knowledge you claim to have.
With that out of the way, here are 8 passive income ideas that could put you on the path to financial freedom.
And stay tuned until the end because the last few of these could make you a TON of money.
Passive Income Idea #1: Investing
I think we all know how investing works intuitively.
You use your hard-earned dollars to purchase a share or a tiny percentage of a company.
If it does well, congrats you made some money!
But if it goes the other way….
Investing can be risky by its very nature, but there are ways to mitigate that risk.
Index Fund
With something like an index fund.
When you put money on an index fund, that money is distributed equally across all the companies in that trust.
That way if a company does poorly, it doesn’t really matter because there could be dozens or hundreds of companies inside the fund that could mitigate those losses.
Most famous of all, at least here in the U.S. is the S&P 500.
This is an index where the top 500 companies are pulled together inside a fund.
Companies like Google, Facebook, Apple, Microsoft, Amazon… you know small start-ups.
How hard is it to get started investing in an index?
I’d say this one is a 1 out of 5 stars.
Investing your first dollar in an index is relatively easy, especially if you’re using a trading app or simply investing in an ETF.
How much effort and/or investment does it take to get started?
Well, this is also a 1 out of 5 stars.
All you gotta do is go to your local bank, open a brokerage account and you’re done.
How long would it take you to make your first 500 bucks?
Well, that depends on your situation, but in general, I think it’s fair to say this is 2 out 5 stars.
If you put 5,000 dollars today in the S&P 500, you would have 500 dollars in a year’s time.
Now that’s easier said than done.
Perhaps you don’t have an extra 5K lying around in some hidden bank accounts.
Let’s say you are on a tight budget, and the absolute max you could put aside a month towards the S&P 500 is just 100 bucks.
If you do the math, it would take you almost 3 years to make a 500-dollar profit.
Now that sounds like a long time.
But the beauty of investing comes from compound interests, the more money you put into your account the more you make.
If you were to put 200 dollars instead, it would take you only 2 years to make 500 dollars.
You might think this money-making machine might be a little too slow, and I agree with you.
But what you need to consider is that if you were to put all your savings into a savings account, over a year, it will grow by 0.01 percent.
But, adjusting for inflation, you would lose around 2-5% of your yearly savings just by putting your money in a regular savings account.
That is why it’s important to put some of that money on an index fund, so that it actually appreciates over time, instead of you know… be literally watered down by the feds at the white house.
How hard is it to maintain?
Well, I would say this is an easy 1 out of 5 stars.
Unless there’s a catastrophic event, your money is relatively safe there.
You just gotta put that money there and forget about it.
#2: Online Business.
The next idea to start a passive income stream is starting an online business.
This is when things start to get interesting.
There’s so much money floating around on the internet, that no one really can say how high you could get with your online business.
Now, there are two ways you could make some money online through two different types of products.
Digital Items
The first one, digital, could be anything you could think of that could be done 100% with just a computer.
Things like creating courses, music, a piece of software, some apps, or a website.
How easy is it to get started?
I’d say a 1 out of 5 stars.
Even if you don’t know a thing about building websites or programming there is plenty of software out there that makes it as easy as possible.
Most of them like Shopify and Squarespace, simply let you drag and drop and boom!
You’re done.
How much effort/investment does it take?
This is definitely 2 out of 5 stars.
You might need to learn the basics of website-building sites, and might need to invest a few dollars a month depending on which service you decide to use.
But all in all, it shouldn’t be too difficult at all.
How long would it take you to make 500 dollars?
Well, no one can truly say.
It could be as little as a few months or as long as 10 years.
Plenty of studies have shown that the average startup, takes 2 to 3 years to see any profits at all.
This is why I am giving this a 4 out of 5 stars.
You could make profits sooner than that, all you gotta keeping mind always is that you need to fix someone else’s problem.
If you can make that solution as easy and clear as possible for your buyers, I don’t think you will have any trouble at all making some money out of this.
How hard is it to maintain?
I’d say this is 2 stars out of 5.
It’s relatively passive, but you must keep up with trends, keep an eye out for the competitors and adapt to the market.
It’s not too difficult but it’s something to watch out for.
Physical Items
Now, selling physical items is a completely different beast.
You might sell some homemade trinkets on sites like Etsy, or maybe invest in a 3d printer and make some cool gadgets you could sell on eBay.
How easy is it to get started?
I am giving this a 3 out of 5 stars.
You might need some equipment to get things running, maybe some specialized machinery.
How much effort/investment does it take?
I am giving this 3 stars out of 5.
If you’re making personalized items, they might take dozens of hours to make.
Or if you’re selling generic items in bulk, you might need to have a more complex system akin to an assembly line to maximize productivity.
Not to mention the costs of shipping and packaging.
How long would it take you to make 500 dollars?
If you’re selling through a site like Etsy or eBay you might need to build a good reputation on the site.
This could take months.
Plus after all the initial investment you would need to make in materials, machinery, etc.
It might take you a bit longer to see some profits in comparison with digital products.
For instance, let’s say you went on Etsy and sold a handcrafted beanie and If you could sell 25 of these for 20 bucks a pop, that’s 500 dollars on your wallet (minus material and shipping).
But that might take too long.
What if instead you invested in higher quality materials, and charged 50 for each of these?
You would only need to make 10 of these.
Now would people actually buy these beanies?
Who knows.
It’s a real risk.
I am giving this a 4 out of 5 stars.
Just because it might take a little while longer to get things in production.
How hard is it to maintain?
It's almost the same as digital products.
But you need to account for problems that may arise from shipping, or some materials might fluctuate in price, and some tools might need to be replaced every once in a while.
That’s why I am giving this a solid 2 out of 5 star.
#3 Youtube.
How hard is it to get started?
Well, I am gonna have to give this 1 star out of 5.
It's extremely easy.
I think this is the reason why youtube is so successful.
Anyone can just make an account in a matter of minutes, and start uploading content directly from their phone without any sort of limitations or barriers.
How much effort/investment does it take?
If you have a phone with a camera, you could start making videos today.
But if you want to make quality content, you will need to invest in all sorts of expensive gear like cameras, lighting equipment, microphones, etc.
That’s easily a few thousand dollars.
Not to mention the time that you need to invest if you want to be picked up by the almighty algorithm.
This is why I am giving this 4 stars out of 5.
How long would it take you to make 500 dollars?
A few years ago, youtube implemented a new policy, if you want to be monetized you need to have 1 thousand subscribers and 4 thousand hours of watch time.
The average youtube channel takes about 15 months and about 160 videos to reach 1 thousand subscribers.
If you put in the effort and reach those two benchmarks, now you can start earning money through Google Adsense.
Now, how much you earn per thousand views varies A LOT depending on the niche, the audience demographics, and dozens of other factors.
This can range from a few cents to dozens of dollars. Let’s say, for the sake of simplicity that you earn 1 dollar per thousand views.
So, to make 500 dollars, you would need 500 thousand views.
If you published 2 videos a week, for a month, or around 8 total, each of them would have around 60,000 views.
That’s not too bad, but the great thing about youtube is that the more videos you publish, the more aggregate views you get.
And over time those views add up to your monthly totals, making it easier and easier to make more money over time.
This is why I am giving this a solid 3 out of 5 stars.
How hard is it to maintain?
I’d say this is fairly difficult as well, this is definitely a 3 out of 5 stars.
You need to keep uploading if you want to grow over time.
There can be problems with the copyright system, competition might be stringer as the years go by, and you could have your account hacked at any moment.
It’s a nightmare.
But if you are gutsy, this is a great passive income!
#4 Royalties.
The 4th way to make passive income is through royalties.
With royalties, you can literally earn money from work you published years ago.
Now, this has been famously used by the music and entertainment industry for years.
Basically, every time a song or movie/tv show is played, the artists get a tiny percentage.
But now thanks to the internet there are many ways in which you can be paid royalties for work you create and publish on the web.
Some of these could be courses, ebooks, articles, and even blogs.
How hard it to get started?
I’d say like most of these things, this is also a 1 out of 5 magic stars.
If you got an internet connection, a computer, and a brain, that’s all you need to get started.
How much effort/investment does it take to get started?
Well, it depends.
If you’re doing a course or writing an ebook, it might take longer to research and write than a simple blog post.
But the great thing about this passive income stream it’s that is a one-and-done deal.
Once it’s out there, you could collect a percentage of each sale, read, or download.
That’s why I am giving this a 2 out of 5 stars.
How hard is it to generate $500 dollars?
You could sell a course to one person for 500 dollars and that would be it.
Or you could sell that same course to 10 people for 50 dollars and that would also make you 500 bucks.
Now let’s say that you are able to land a publisher, and they buy the rights to your ebook.
On average, authors earn about 16% in royalties for each book sold.
If you get 16% of that, the average cost of an ebook is about 4 dollars.
The publisher would need to sell around 3 thousand books for you to get 500 bucks.
But if you published it yourself, and sold it for the same price, and 3000 people bought your ebook, you would make about 12,000 dollars.
Talk about scams am I right?
This is why I am giving this category 3 out of 5 stars.
How hard is it to maintain?
Well, this is relatively simple.
You might need to find ways to promote your creations.
But all in all, it’s a very chill way to earn more passive income.
So I give this, a 1 star out of 5.
#5 Affiliate Marketing.
The 5th passive income stream on the list is Affiliate Marketing.
If you become an affiliate marketer, all it means is that you’re helping others sell a product that they made.
A lot of brands have a strategy where they reach out to “Micro-influencers”.
As the name suggests, it’s someone who has a pretty small audience, somewhere between 1 to 10 thousand followers.
You might be asking yourself, why do these brands reach out to these smaller influencers where they can approach a big Kardashian-type celebrity?
That’s because the engagement rate for influencers is at its peak around 1000 followers.
This actually makes a lot of sense.
Once an influencer starts becoming more famous, it’s a lot harder to interact with their followers.
This is why the engagement rate of a micro-influencer is about 8% while the engagement rate of a big celebrity is around 1.6%.
How hard is it to get started?
All you need is a phone, some charisma, and a few interesting photos to share and you’re on your way to becoming a micro-influencer!
This is why I am giving this a 1 star out of 5.
How much effort/investment does it take to get started?
I will give this 3 stars out of 5.
You will have to spend a lot of time to get those first few hundred followers.
It could take you around 3 months, or a quarter of a year of constant engagement, activities, etc.
Be ready to spend dozens of hours a day on your phone.
How hard is it to generate $500 dollars?
On Instagram, the rates for a micro-influencer are somewhere between 100 to 500 dollars per post.
This is why I am giving this a 1 out of 5 magic lamps.
How hard is it to maintain?
Now maintaining those followers will be a bit more difficult.
You would have to spend a lot of hours engaging with them, replying to their comments, looking at trends, negotiating with marketing agencies.
This is why this is a solid 3 out of 5 stars.
#6: Merch
The 6th passive income idea is making and selling merch using a third party like Printify.
How hard is it to get started?
They make it as easy as possible to get started.
Essentially all you really gotta do is create an account, and choose what type of merch you’d like to sell, like clothing, accessories, mugs, etc.
Upload a design and that’s it.
They will take care of manufacturing and delivery.
This is why it’s an easy 1 star out of 5.
How much effort/investment does it take to get started?
If you’re a great artist and can come up with cool and unique designs then you might not need to invest much to get started.
But perhaps you’re like me, I can’t even draw a stick person properly.
This is why there are sites like Fiverr where you can pay someone around 50-100 dollars to make a cool and unique design for you.
I am giving this 1 star out of 5.
How long would it take you to make your first 500 dollars?
Well, according to these numbers provided on Printify’s site.
You would make around a profit of 40% per item sold.
So, if you sell let’s say a hoodie at around 20 bucks, that means that you would make around 8 dollars.
Meaning that you would have to sell around 63 of the hoodies to make 500 bucks.
This doesn’t sound too difficult in my opinion, so I am giving this 2 out of 5 stars.
How hard is it to maintain?
Maintaining a passive income like this should be relatively easy.
I think this might be a 1 out of 5 stars.
You might have to keep an eye out for what’s trending and make designs around those trends, but overall, after the initial investment, you don’t have to do much.
It’s easy money.
Most of these sites have a great algorithm to discover your products so you might not have to do much marketing either.
#7 Cryptocurrency Staking
The last one on our list here is none other than crypto.
Now, you probably know how this all works already.
You make a wallet, purchase some crypto your crazy uncle keeps blabbering about, and much like stocks, you hodl until you make more than Jeff Bezos in a decade or two.
But I bet not a lot of you have staked your coins.
We don’t need to go into a lot of details.
This is all fairly technical but all you need to know is that there are some coins out there, like Ethereum 2.0 and Cardano, that use a method of called proof of stake to operate the entire network.
Where you would need to put a certain amount of coins as collateral.
These are locked for a period of time, and at the end of that time period, you can withdraw those coins plus any rewards on top.
How easy is it to get started?
It’s all relatively simple.
If you know how to make a wallet and purchase crypto, then staking should be any trouble at all.’
With an app like Binance, all you gotta do is go to your homepage, select a coin you’re holding, and click the button that says “stake” and you’re all done.
I’ll give this a 1 out of 5 stars.
How much effort/investment does it take to get started?
Well, it depends every single coin has different minimums required.
For example, with Cardano, you could stake a single coin for 30 days for just one 1 ADA.
Right now Cardano is at around half a dollar, so literally could get started with 2 quarters.
This is why this earns 1 star out of 5.
How hard is it to generate $500 dollars?
If you wanted to make 500 dollars with your staked coins it would depend on which one you chose to stake.
To keep things simpler, let’s say you put staked 500 coins i.e. 500 dollars on Cardano.
Right now, it has a 7.75% return.
Meaning that if you staked 500 ADA, it would take almost 9 years to make 500 dollars on its own.
Of course, if you staked more, let’s say 5000 ADA, it would take just a little over a year.
So depending on your situation, this might be a 3 out of 5 stars.
How hard is it to maintain?
Now to maintain, just like any regular type of investment, doesn’t require much maintenance.
You might want to be on the lookout for trending coins, or exciting new projects but other than that, it’s not much of a hassle.
1 out of 5 magic stars.
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