Passive Income: Ideas, Definition, & Examples

What is passive income and how can you create passive income streams that improve your quality of life?

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Passive income is awesome. Firstly, it helps us generate income beyond traditional employment, allowing us to diversify our revenue streams and reduce dependency on a single source of income. Second, it can create a sense of security and stability, two hugely impactful factors in our well-being. Third, it also offers flexibility and the potential for a better work-life balance, as passive income streams often require less time and effort to maintain once established.

Additionally, passive income can lead to easier wealth accumulation which can help us achieve long-term financial well-being. Overall, passive income is a great resource to help us achieve many life goals and as a result, experience greater quality of life.

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What Is Passive Income? (A Definition)

Passive income refers to the earnings generated from assets, ventures, or projects in which an individual has limited active involvement or requires minimal effort to maintain. It is income that continues to be generated even when you are not actively working or exchanging your time for money. However, it’s important to keep in mind that creating passive income sources can often take a lot of time and effort to get started.

Passive Income vs Active Income
What is often referred to as passive income often still involves some, often a very small, amount of work. So we might look at the types of income we can earn on a scale from:
Very Passive to Very Active.

Very Active Income
Very active income refers to earnings that are generated through direct effort, time, or skills exchanged for money. It is the most common form of income for individuals who work traditional jobs. It’s the “day-job” or any job in which time is exchanged for money. It’s what most of us think of as “work” or a “a job”. Salaries, wages, and commissions are all active income. Active income also requires an ongoing effort from the individual to generate income.

Many entrepreneurial activities and businesses are actually extremely active—they involve day-to-day running of a business which might include selling products, delivering services, or doing tasks, often for more than 40 hours per week. The key thing to remember is that with active income, Time = Money. If you stop working, your income stops or decreases.

Very Passive Income
Very passive income, on the other hand, refers to earnings generated with no ongoing effort. When most people talk about passive income, they are referring to moderately passive income, which still requires some effort (maybe a lot of effort in the beginning) and some ongoing maintenance.

One example of very passive income includes investing in dividend stocks—once you invest the money, you’ll get paid some amount without any other effort. Examples of moderately passive income include real estate investing, websites that focus on affiliate marketing, or royalty payments, for example from writing a book. The key thing to remember is that with passive income, Initial Investment = Money. Initial investment can be of time or money, but if you stop working (or reduce working significantly), your income continues. Passive income can continue to be generated while you’re using your time for other more enjoyable things like sleep, travel, or pursuing other activities.

The Continuum Between Active & Passive Income
It's important to note that there is a continuum between passive and active income. For example, a rental property can involve passive income in terms of rental payments but may require occasional active involvement for property management or maintenance. Similarly, creating and launching an online course may involve initial active effort but can generate passive income once it's established and automated. Check out our Private Label Rights Courses to launch your passive income course today.

Benefits of Passive Income

Passive income can be a life-altering, world-view-changing thing. With practice, you’ll stop thinking about how much money you can earn per hour; instead, you’ll start to think about how much money you’ll earn from that initial investment of an hour or a dollar.

For example, the investment of 4 hours I spent to write this article will likely earn me 0 dollars this month, maybe a few hundred dollars in the first year, and likely thousands of dollars over the next decade. By mentally disconnecting “Time” from “Money” in your mind, you begin to look at your efforts in a totally new way.

To get yourself thinking in this new way, let’s review some of the key benefits of passive income:

Diversification of income sources: By establishing passive income streams, you can diversify your sources of income. This diversification reduces the risk of relying solely on a single job or active income source. If one income stream decreases (from layoff, firing, or economic downturns), you can still rely on your passive income to help support your financial needs. Although passive income may also dip during financial downturns, it’s less likely that it’ll end entirely.
Time flexibility: Passive income allows you to have more freedom and flexibility with your time. Since passive income streams require less active involvement over time, you have the opportunity to pursue other interests, spend time with loved ones, travel, or engage in activities you enjoy without compromising your income.
Scalability and potential for growth: Many passive income streams have the potential for scalability, meaning they can generate more income over time with limited additional effort. For example, rental properties can generate increasing cash flow as you acquire more properties, and online courses can reach a larger audience without significant additional effort. For example, you can get the Private Label Rights to our PLR courses and sell them as your own to begin earning passive income today. This scalability allows for exponential growth of your income potential.
Wealth creation and asset accumulation: Passive income can be a powerful tool for building wealth and accumulating assets. By consistently generating income from passive sources, you can reinvest the profits into further income-generating assets or investments, compounding your wealth over time.
Retirement planning: Passive income streams are often considered valuable for retirement planning. They can serve as a source of ongoing income during retirement, supplementing any retirement savings or pension plans you may have.
Entrepreneurial opportunities: Passive income most often comes from entrepreneurial projects or starting your own business (but be careful, because not all businesses are passive). Creating and monetizing PLR products or investing in income-generating assets can serve as a foundation for an ongoing passive income business.

Passive income typically requires upfront effort or investment with a decreasing amount of ongoing management over time. With proper planning and dedication, the rewards can be significant in terms of financial stability, freedom, and well-being.

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Passive Income Examples:

Below are some of the more common types of passive income:

Digital products or online courses: Income derived from selling digital products, such as e-books, online courses, or webinars, which can be created and sold repeatedly without significant ongoing effort. You can even use PLR content to reduce the amount of up-front work needed to create this passive income source.
Rental properties: Income generated from rental properties, where the property owner receives regular rental payments from tenants. Hiring a property manager can make this income very passive.
Dividend-paying stocks: Earnings are received in the form of dividends from stocks or shares of companies in which an individual has invested.
Royalties: Income generated from creative works, such as books, music, or patents, where the owner receives a percentage of the sales or usage.
Affiliate marketing: Earnings generated by promoting and selling other people's products or services online, often through a website or blog.
Peer-to-peer lending: Earnings obtained by lending money to individuals or businesses through online platforms, earning interest on the loaned amount.

While passive income streams often require initial effort, such as creating products or acquiring knowledge, our science-based content collection does all this initial work for you so you can start your passive income venture fast and grow it exponentially. Once set up, these income streams can provide ongoing returns with reduced active involvement.

Passive Income Ideas

Here's a list of passive income ideas and how you can get started quickly and easily:

Try Affiliate Marketing: Promote products or services of other companies through your website or blog and earn commissions on the sales generated. To get started, create a blog (and optimize content for Google search) and promote affiliate products within the blog. Here is an example of one of our pages with affiliate marketing.
Create an Online Course: Develop and sell an online course on a topic you're passionate about, leveraging platforms like Udemy or Teachable. Our Done-For-You courses can help you get started quickly.
Create and Sell Digital Products: Create and sell digital products like e-books, worksheets, or affirmation cards through online marketplaces. Our PLR article packages can even give you content to make these products fast.
Create a Mobile App: Develop a mobile app and generate revenue through in-app purchases, advertisements, or subscriptions. Our PLR content is a great base for creating a well-being-focused app.
Get a High-Yield Savings Account: Open a savings account or money market account with a high-interest rate to earn passive income from the interest accrued. This only works when interest rates are high (like in Q1 2023).
Create a YouTube Channel: Produce video content on a specific niche or topic using PLR content, grow your subscriber base, and monetize your channel through ads, sponsorships, or merchandise sales.
Create a Membership Site: Offer exclusive content or services through a membership site, charging a recurring fee for access.
Automate an Online Business: Build an online business that operates on automated systems, such as dropshipping, print-on-demand, or e-commerce.
Create a Podcast: Produce a podcast on a specific topic, attract sponsors, and earn revenue from advertising or sponsorships.
Rent Out Assets: Rent out assets you own, such as vehicles, equipment, or storage space, through platforms like Airbnb, Turo, or Neighbor.
Create a Niche Website or Blog: Build a website or blog focused on a specific niche, attract traffic, and monetize it through ads, sponsored content, or affiliate marketing.
Try Vending Machines: Install vending machines in strategic locations and earn passive income from the sales of snacks, beverages, or other products.
Buy and Sell Websites: Purchase existing websites, improve them, and sell them for a profit.

Remember that each passive income idea has its own unique requirements, challenges, and potential returns. It's important to conduct thorough research, assess your skills and resources, and choose the ideas that align with your interests and long-term goals.

Video: 7 Passive Income Ideas - How I Make $67k per Week

Passive Income Online or at Home

Passive income is often made online or at home. Although many passive income ideas were discussed in the previous section that can be done online or at home, here are a few more details about how to ensure your online venture produces passive income:

Publish Sponsored Content: Once your website gains traction and even a small following, you can attract sponsors who are willing to pay for sponsored content. This could involve writing articles or reviews promoting their products or services. Just be sure that sponsored content aligns with your website's niche and audience.
Start A Subscription: Offer premium content or exclusive access to a membership area of your website. Charge a recurring fee for members to access valuable resources, in-depth content, or a community forum.
Sponsor Reviews or Giveaways: Approach companies in your niche and offer to write sponsored reviews or host giveaways on your website. They may provide products or services for you to review or give away in exchange for exposure and promotion.
Seek Donations or Crowdfunding: If you provide valuable content or resources on your website, you can ask your audience for donations or set up a crowdfunding campaign. Platforms like Patreon can facilitate this process.
Join Referral Programs: Participate in referral programs where you earn a commission for referring customers to certain products, services, or platforms. Many companies offer referral programs (or affiliate links), so find ones that align with your website's niche.
Get Display Ads: Sign up for ad networks like Google AdSense or Media.net to display advertisements on your website. You earn money whenever visitors click on the ads or view them (impressions). However, growing your website's traffic is key to maximizing ad revenue and this income depends on a large number of viewers.

Passive Income with a Blog

We’ve talked generally about some ways to make passive income with a blog or website. But using a blog to make passive income requires strategic planning and consistent effort. Here's a step-by-step approach to monetizing your blog for passive income:

Choose a Profitable Niche: Select a niche for your blog that has a target audience and potential for monetization. Research and identify niches that have a demand for products or services related to the niche. Note that there are tons of untouched niches in the health & well-being space.
Build a High-Quality Blog: Create a professional-looking blog with a user-friendly design and high-quality content (get our PLR content, which is written by experts and includes scientific references). Publish valuable and engaging articles that cater to your target audience's needs and interests.
Drive Traffic to Your Blog: Implement effective strategies to drive traffic to your blog. This includes utilizing SEO techniques, promoting your blog on social media, guest posting on other relevant blogs, participating in online communities, and leveraging email marketing.
Optimize Conversion and Engagement: Continuously optimize your blog for higher conversions and user engagement. Use compelling calls-to-action, clear navigation, and persuasive copywriting to encourage readers to take action, such as clicking on affiliate links or subscribing to your email list.
Build an Email List: Encourage visitors to subscribe to your email list by offering valuable freebies (we have some good ones you can use in our PLR starter kit), exclusive content, or newsletters. Nurture your email list by providing relevant information and occasional promotions to drive passive income through affiliate sales or product launches.
Regularly Update and Promote Your Blog: Consistently create new content and update your blog to keep it fresh and relevant. Promote your blog through various channels to reach a wider audience and attract more visitors.

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More Examples of Passive Income

Passive Income with Investments
Passive income from investments may include investments in assets such as stocks, bonds, real estate, or mutual funds, where the investor receives regular income without actively participating in day-to-day operations. It allows individuals to grow their wealth, generate consistent cash flow, and potentially achieve financial goals while relying on the performance of their investment portfolio.

Passive Income Etsy
Passive income from Etsy involves creating and selling handmade or digital products on the Etsy platform, allowing individuals to earn money without continuous involvement once the products are listed. By leveraging Etsy's marketplace and customer base, sellers can generate passive income through product sales while focusing on other aspects of their business or pursuing other endeavors.

Passive Income on Amazon
Passive income from Amazon refers to earning money through various channels on the Amazon platform, such as selling products through Amazon FBA (Fulfillment by Amazon), publishing e-books on Kindle Direct Publishing, or participating in the Amazon Associates affiliate program.

Passive Income With Real Estate
Passive income from real estate refers to earning money through property ownership, such as rental properties or real estate investment trusts (REITs), where individuals receive regular income from tenants or property investments without active involvement in day-to-day operations.

Passive Income Airbnb
Passive income from Airbnb involves renting out properties or spare rooms on the Airbnb platform, allowing individuals to earn money from guests' bookings without continuous involvement once the listing is set up. By leveraging Airbnb's global reach and booking system, hosts can generate passive income through short-term rentals while managing their property and guest interactions efficiently.

How To Build Passive Income

Building passive income requires a strategic approach and consistent effort. But the effort is worth it. I personally earn about $400 per month from a rental house, $300 per month from a blog, and $250 per month from royalties. That is all mostly passive income that helps support me while I build this website, which is currently somewhere between passive and active (I still work on it every day, but it becomes more and more passive over time as I am able to hire people to support the work).

Here are steps to help you get yourself set up to build your own passive income streams:

Set Clear Goals: Define your financial goals and the amount of passive income you aim to generate. Having specific goals will guide your actions and help you stay motivated.
Identify Potential Income Streams: Research and explore various passive income opportunities that align with your interests, skills, and resources. Consider options that resonate with your life goals and values.
Develop a Plan: Create a detailed plan outlining the steps you need to take to establish your chosen passive income streams. Determine the necessary investments, timelines, and strategies required for each income stream.
Invest & Save: While the goal is to build passive income, it often requires upfront time, money, or both. If you don’t have much money, it’s often easier to start by investing time (in things like a blog or website). Once you’ve accumulated enough savings, you can begin to invest in even more passive things, like real estate or stocks. I first started generating passive income by investing a ton of time to get projects running. After a few years, I could finally buy an investment property, which took less time but more money.
Research and Educate Yourself: Gain knowledge and expertise in the chosen passive income streams. Read books, attend courses or workshops, and connect with experts in those fields. Understanding the market, trends, and best practices will increase your chances of success.
Take Action: Start implementing your plan by taking concrete steps towards establishing your passive income streams. This may involve creating a small side hustle, or doing small things with whatever extra time you have. You could write 1 blog post. During the next time chunk you have, acquire one affiliate partnership to begin promoting in your next blog post, and so on. It can take time (especially if you have a day job like I did) to begin growing your passive income. But once your figure it out, it snowballs. So strap in for the long hall with all your determination and stick-to-itiveness.
Diversify Your Income Streams: To mitigate risk and increase income potential, diversify your passive income streams. Explore multiple avenues and invest in a few different assets or ventures. This diversification can help create stability and resilience in your passive income portfolio. But don’t forget the 80-20 rule—if you find something that works, don’t waste your time on things that aren't working.
Monitor and Adjust: Regularly review the performance of your passive income streams and make necessary adjustments. Monitor market trends, track income, and assess the effectiveness of your strategies. Adapt your approach as needed to optimize returns and address any challenges.
Reinvest and Scale: As your passive income grows, consider reinvesting the profits into expanding your existing income streams or exploring new opportunities. For example, I currently reinvest most of this website's earrings into creating new content. This reinvestment can accelerate the growth of your passive income project and help you grow your income faster.

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Books Related to Passive Income

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Final Thoughts on Passive Income

Passive income is pretty amazing when you’ve grown up with the idea that time is the only thing you can exchange for money. We truly can earn passive income by leveraging our time (at first), skills, and resources to create scalable income streams that generate revenue even when we’re not actively working. With initial effort, strategic planning, consistent maintenance, and continuous learning, we can optimize returns and ensure long-term financial well-being and a greater quality of life.

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