7 Proven Passive Income Streams

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I make money in my sleep. Literally. And you can too. 

Here’s how. 

It’s called passive income, and I found it purely by accident. 

When I first graduated with my master’s degree and entered into the workforce as a biotechnology engineer, I was getting paid well but was feeling very uninspired. I was hungry for a career change and overwhelmed with where to start. 

I’ve always been passionate about food and cooking. I toyed with the idea of quitting my job to go to culinary school. But after some self-reflection, I realized that the last thing I wanted was to go from one grueling career to another. So I started a food blog and figured it could become a creative outlet for me. Ironically enough, I got laid off from my job six months later.

This was when I dedicated my efforts to a new passion project – learning how to make money online. I was drawn to the idea of having the freedom to live and work anywhere and not reliant on staying in one place to earn a paycheck. 

What I have now are passive income streams. And with multiple passive income streams, I finally have financial stability and protection from layoffs.

Sound too good to be true? My food blog Delish D’Lites earns over $7,000 in passive income each month.  

Here are seven ways I’ve successfully earned passive income. 

  1. Blogging
  2. Digital Courses
  3. E-Books
  4. Digital Downloads
  5. Affiliate Marketing
  6. Real Estate Investing
  7. Investing in the Stock Market

What Is Passive Income?

Passive income is earned through investments or work already completed and continues to make money without any additional effort. 

By contrast, active income is money earned in exchange for performing a service.​ Passive income, by its definition, doesn’t require active work after a certain point. 

Most passive income sources will require time, energy, and effort up-front. But if done right, you will reach a point where your passive income streams earn income on their own, without little to no effort on your part. 

My 7 Best Passive Income Ideas

Many types of passive income can be made online, so if you want to have income that is location independent, passive income may be for you. All you typically need to earn is a computer and an internet connection.

1. Blogging

Blogs are the perfect passive income source for writers or hobby enthusiasts. 

A blog (shortening of “weblog”) is an online journal or informational website displaying information in reverse chronological order, with the latest posts appearing first. It’s a platform where writers share their views on a subject.

Your blog becomes a passive income stream through display ads, affiliate marketing, and/or digital product sales. To earn passive income through display ads, you’ll want to focus on SEO (search engine optimization). SEO the science behind getting traffic to your website. Once your blog is consistently getting traffic, companies may even reach out to partner on projects. 

To start your blog:

  1. Select the perfect niche for your blog
  2. Choose a blogging platform (Example: WordPress)
  3. Pick a domain name (Example: www.myamazingblog.com)
  4. Get a web hosting account (Example: SiteGround)
  5. Design your blog, write content, and promote through social media

2. Digital Courses

We all have expertise in something that someone is willing to pay for. You can turn your skills into dollar bills through a digital course

A digital course is a source of passive income that continues to sell itself without you having to do much work after the initial creation. 

You may already be sharing your expertise and not even realizing it. Maybe it was a Facebook post, YouTube channel, or blog sharing advice on a particular topic. Instead of giving all your knowledge away for free, you can turn it into passive income by collating your ideas, skills, and knowledge into a digital course. Platforms like Teachable, Podia, and Kajabi make it easy to package, market, and sell your digital course.

3. E-Books

Similar to the digital course, writing an e-book (electronic book) is another avenue to sell a particular skill set or expertise. The main difference is the way this information is packaged. 

An e-book uses a computer, mobile device, or e-book reader (such as Kindle) to view long-form text in a book form with text, images, or both. These don’t have to be the length of full novels (though they can be). 

Keep in mind that your price will determine your customer’s expectations.  An average e-book can be between 2,500 and 10,000 words, depending on your niche. You can design your e-book on sites like Canva, Beacon, or even Microsoft Word.

4. Digital Downloads

Digital downloads are tools that provide your customer with a quick win to an issue they have. 

Instead of producing a full e-book, with digital downloads you produce single downloadable products. These are products that can stand on their own and still add value to your clients. Printable checklists, craft and hobby guides, downloadable spreadsheets, and social media templates are all viable options for digital downloads. 

You’ll want to perform market research to learn what your potential customer base is looking for. The best place to start is by researching competitors in your space. Search for related keywords on Google and see what comes up. That’s your competition. Study what they’re offering, and see how you can make your unique version of a similar offering. 

Canva is good for creating digital downloads, while platforms like Etsy and SendOwl are great for selling them.

5. Affiliate Marketing

Affiliate marketing consists of you teaming up with retailers to promote their products. You can get paid a commission for each sale in exchange for promoting products or services.  This is an easy form of passive income because you simply promote someone else’s product and get paid. 

Some places to promote your affiliate links are through social media, email marketing, a YouTube channel, podcast, or blog. Some well-known affiliate marketing platforms are Amazon Associates & ShareASale. But there are a host of platforms to choose from.  

The key here is authenticity. The moment you promote bad products is the moment your audience loses trust in you. Make sure you only promote products you know and love.

6. Real Estate Investing

Real estate investing is the costliest passive income option. It requires a significant initial investment, especially if you are new to the world of real estate. 

But before you jump into the real estate world, it’s important to ask yourself these questions to help you decide what kind of real estate investor you’d like to become. 

Depending on your financial goals and the amount of energy you want to put in, you have numerous options for real estate investments to choose from. Passive income from real estate can come through short-term rentals (think Airbnb) or long-term rentals, where you’re a full-on landlord.

7. Investing In the Stock Market

Becoming a stock market investor is arguably the easiest way to earn passive income. This type of passive income is driven by capital gains or dividends.

As the value of your stocks grows and as you continue to reinvest any dividends you gain, you can watch your investments grow through the power of compound interest. 

The key to earning passive income through the stock market is using the buy-and-hold strategy. If you use a retirement account, like a Roth IRA, this income stream isn’t really a source of income to live off of right now.  It’s more of a savings and investment vehicle to earn money to live off of when you retire. But you are still earning through compound interest, and that requires little to no work on your part. 

How Many Streams of Income Should You Have?

This study, published by the IRS, shows the common types of income streams of high-income earners: 

  1. Dividend income from stocks owned.
  2. Earned income from a paycheck.
  3. Rental income from rental real estate.
  4. Royalties from selling rights to use something they’ve written or invented.
  5. Capital gains from selling appreciated assets.
  6. Profits from businesses they own.
  7. Interest from savings, CDs, or bonds

So, how many should you have? 

It all depends on your financial goals and your current situation.

Are you in a stable career with an opportunity for growth? Maybe you only need two income streams, such as your regular paycheck and dividends from stock investments. 

If your employment is more precarious or irregular you may want to boost your income streams so you have several income streams to fall back on. 

But if you’re an aspiring millionaire like me, you may want to diversify your income and incorporate all of these. 

In Summary

Passive income streams can provide a boost to your savings, investing goals, and an unexpected job loss. Who wouldn’t want to earn money without having to clock in for an eight-hour workday?  

The good news is that there are many options to start building out a passive income stream beyond what I’ve already outlined above. Most will require upfront time and energy devoted to building them out before you start to see returns. 

Explore these ideas, and you could be well on your way to make money while you sleep in no time.

This story has been edited and revised. Its original version contained portions that did not meet our editorial standards.

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