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What is Passive Income? (Examples and 9 Ideas) of 2022

Passive income has become more popular during the years. I hate to tell you, there is no really such thing as 100% passive income, that you can just hop into with no effort or money. All of these things require some kind of starting effort, but after you get the ball rolling, it can go by itself or with very little effort.

What is passive income?

The definition of passive income for me is that your income is not tied to your time, and you don’t have to do active work for it. Even though it requires starting efforts to create yourself a source of passive income, it can pay itself back even in a very short time and generate passive income for years to come.

One example I have about passive income is crypto mining. You purchase the miners and assembly them once, after that all you do is sell whatever, your equipment has mined. I will return to cryptos later in this post.

What is active income?

Now that we have gone through, what passive income is, let’s take a look at the opposite. When you understand what active income is, passive income can be a more easily understandable term as well.

Active income means you are trading your physical work for money. This might mean working on an hourly wage, or agreeing to do certain tasks for a certain price, no matter how long it takes.

In both cases, your income is tied to your work. The actual work you perform. It is called active income, because you have to be actively involved in things to get paid. Not like in passive income, where you create a source once.

Passive income ideas

Next up, the passive income ideas you’ve all been waiting for! Most of these are internet-based. Internet has brought so many opportunities to everybody’s hands. There are still some ways that were around even before the internet. Let’s get started.

Start a YouTube channel

Starting a YouTube channel can be somewhat of a passive income source. After you have created your videos, they are there for everybody to watch and you don’t have to do them again, compared to seminars, for example.

Getting your YouTube channel to the point it can generate any money can be a long journey and a lot of work. However, this can be a good option for someone who enjoys creating content for others.

YouTube has limitless opportunities. You can make videos about pretty much anything, and it doesn’t require you to show your face, unless you want to. If you decide to start a YouTube channel, it can help you with the algorithm to do them consistently.

Uploading once or twice a week, will show that you are active for both the YouTube algorithm and your potential new subscribers.

How much do YouTube channels get paid?

I’m glad you asked. I just looked it up yesterday, and the average YouTube earnings per 1000 visitors is somewhere around 3 to 5 dollars. This means you would need a relatively large audience to make significant money out of it.

Making money on YouTube is still very much possible. If you enjoy it, do good content that people want to watch, you can grow your channel even to a point where you make a living from it.

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Write an e-book

Next up is writing an e-book. This might not be the most interesting for all of you, but hear me out. The book can be written about pretty much anything. What ever topic you are interested in, and you have a lot of information about, you could write a book.

The good thing about e-books is that you literally have to only write it once. After that, you upload it to some e-book distribution platform and it generates passive income for you for years, if your book is good and gets sales.

How much e-books can make you money?

After a quick googling session, I found out that you get 70% of the selling price. This means, if you sell your book for 10 dollars per book, 7 dollars is your cut. I would say that is a pretty good trade, since you don’t have to do any of the work other than writing and publishing the book.

Start an online course

Starting an online course is another very passive way to make money online. This again requires some expertise from you, that people want to learn and are willing to pay for it.

If you already have an audience, marketing your course becomes much easier. This way you don’t have to use paid ads to lead people to your course. Having an already existing audience will save you a lot of money.

How much can you make with online courses?

The amount of money you can make from creating an online course depends on a lot of things. First, the platform you publish your course on. That could be a third party or your own website. There are benefits on both of those.

If you use a third party, they will handle pretty much everything. They upkeep the website as well as handle the payments and refunds. The downside is that they take their cut of the sales you get from your course. This could be a better option for new content creators.

Another option is to make your own website where you upload your course and sell it that way. This requires way more work to set up the website, and payment methods, as well as handling all of the customer service yourself. However, if you have a large audience already, this can be a more lucrative way to sell your course.

In the end, it is up to you how much you will charge from your course, and whether people are willing to pay for it or not.

Invest in dividend stocks

Next up is investing in dividend stocks. This can really generate a good stream of passive income regularly. The only downside is that it requires a lot of starting capital to get enough stocks to get enough dividends to make a difference in your financial situation.

This can be a beginner-friendly way to make passive income since you don’t have to create or start anything. All you do is risk your money and you get returns from that. You should still have some basic knowledge about investing and the stock market overall.

How much can you make from investing in dividend stocks?

Different companies pay different amounts in dividends. So in the end, it comes down to how much you have to invest in those companies. The dividends could be anything between 5 to 10% annually.

The prices of the stocks can also fluctuate, so this can be a pretty risky way to earn passive income, if you don’t follow the stock market regularly. Past returns are also not a guarantee of future returns.

Passive income with crypto

Cryptocurrencies, the topic almost everybody loves nowadays. They offer a few different ways to make passive income, but they come with a higher risk than anything else on this list.

The first way to make passive income with cryptocurrencies is by mining them. However, this will take a lot of equipment to make a difference. It will consume a lot of energy and generate a lot of heat.

Mining also requires you some basic knowledge of how to setup and maintain the mining equipment if something happens to break down or have errors.

The second option to make passive income with cryptocurrencies is staking it. This means you lock your cryptos for a certain period of time, and in return you earn interest for that. This can be risky, since the prices of the cryptocurrencies could easily fall twice the amount you earn in interest. This of course, applies the other way around as well.

There are also cryptocurrency accounts that pay interest on your cryptocurrencies. I don’t have experience in those, but if interested, look more into this on your own.

You can also lend your cryptocurrencies and earn interest that way. Cryptocurrencies have a lot of opportunities, but they also come with increased risk. If you are willing to take the risk, you can try some of the methods I mentioned.

How much can you earn in passive income with cryptocurrencies?

The amount you can earn with cryptocurrencies as passive income can vary a lot. The crypto markets can easily have 20% change in a week or even a day. This alone will make it very unpredictable to calculate how much you could earn.

Do your own research and determine if the risk is worth it.

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Other digital products

Other digital products are another option to make passive income. That could be something like an app you sell for mobile devices. If you have the skillset and you can make people something useful, you can create a source of passive income from this.

That could also be a game for mobile devices or computers. Keep in mind that the gaming industry is highly competitive and to make any money, your product should really stand out in some way.

How much can you earn in passive income with digital products?

It all depends on how good your product is and what it is made for. If it’s made for businesses, you can charge a little bit higher compared to consumers.

People are not usually willing to pay 25 dollars for an app, but paying that amount for a new videogame is not a problem for people who are dedicated gamers.

Purchase property and rent it out

Real estate investing offers another way to generate passive income. This requires some work, but in the end, it is not tied to your time and has made its way to this list.

One benefit of real estate investing is that you can get loans to buy the properties and can get started with smaller money than saving up 200 000 dollars to buy the property upfront. This comes with increased risk as well since you are using leverage.

How much can you earn with real estate investing?

This varies a lot depending on where your property is located, as well as the current market situation. I would say you can make anything between 3 to 15% returns annually from your real estate investments.

Another way you can make money through real estate is through the increase in value. If you bought from a good location, your earnings could be much higher.

Start a website or a blog

Starting a website or a blog can also be a good way to earn passive income. This one will take time and effort to setup. Once it’s done, it has the potential to earn you passive income for years to come.

It can take as long as 6 to 12 months before anyone finds your content through Google, and to make money with your website requires a lot of monthly visitors. You can make money with your website through ads and affiliates and by selling your online courses, for example.

How much can you earn with your website or blog?

I’m glad you asked. After some research, I found that smaller websites could earn something around 10 dollars per thousand visitors. There are a lot of things that might affect this amount. One big thing is what niche your website is in and how easily the content is monetized.

A good thing about websites is that the bigger your site grows, the more you can earn with it. Earnings per thousand visitors can increase as high as 30 to 40 dollars with just ads if you are in the right niche and can attract traffic to your site.

Become a partner in a business

Becoming a partner in a new business can be a source of passive income. As long as your role is purely as an investor, and you let someone else do the work, that is passive.

The point where you are supposed to get any income from this, is if the business starts to generate money and they pay dividends to shareholders. Another option is to sell your part of the company after it has grown, but this way you would end up losing your source of passive income.

It goes without saying that the amount of money you can earn by becoming an investor in non-listed businesses depends only on the business you invested in.

Final words

This came out to be a bit longer than my typical post. Even that it is long, it doesn’t have all the answers and the ways you can create a source of passive income. Use your imagination on how you can make money that is not tied to your time.

You might want to start small. I have a post about how to make an extra 100 dollars a month. You can read it here.

I also have a post about how anyone can make a million dollars, if you are interested in that, you can read it here.

Hopefully this was helpful to you, have a nice day.

This is not financial or investing advice. Always do your research before risking your hard-earned money. Past returns are not a guarantee of future returns.