Want to make money in your sleep? Don’t we all.
Active income requires you to trade hours of your time for money while passive income doesn’t. Passive income is groundbreaking because it allows you to make money without your direct involvement all the time.
But, passive income often takes time and a lot of work upfront. You have to set up specific systems and processes in order to diversify your income and make some of it passive. The sooner you get started, the sooner you’ll be able to make passive income.
Here are 5 passive income streams you can set up today so you can eliminate at least some of your active working hours in the future.
1. Peer-to-peer Lending
Peer-to-peer lending can be a great way to put your money to work and start earning a return quickly. Sites like Prosper allow you to safely lend your money out borrowers who are in need of personal loans.
Instead of the bank earning interest on loan payments, the return goes straight to you. For borrowers who have a less than average credit score, you can expect to set an even higher interest rate. Prosper has a minimum investment of $25 per loan which allows you to diversify your portfolio. Peer investors typically receive a 7% return on average.
If you have at least the minimum investment requirement, you can get started with peer-to-peer lending today.
2. Real Estate
Investing in real estate is a popular and effective way to establish an additional stream of income that can potentially become passive. If you like the idea of owning properties or becoming a landlord, you should look into real estate resources to help you understand the business better and how to make a profit.
You may have to make some sacrifices if you want to get into real estate and you’ll need plenty of savings to purchase your extra property and be able to afford repairs and maintenance. However, if you find good and loyal tenants, you may not have much work to do on a monthly basis and you can still look forward to collecting money each month after putting a limited amount of effort forward.
If you don’t have enough money to purchase an investment property at this time, don’t put off owning real estate completely. Instead, consider crowdfunded real estate where you can put your money into a pool with other investors to share returns from commercial or residential properties.
Sites like RealtyShares allow investors to own a piece of commercial properties for as little as $1,000 – $5,000. Before you consider crowd-funded investing, be sure to do your research and carefully weigh the pros and cons.
3. Invest With a Robo Advisor
Building a diversified portfolio by investing in stocks and bonds is one of the most efficient ways to generate enough passive income long-term to enable you to retire. While investing in retirement is not a quick road to passive income, you can get started today because of the sooner, the better.
Investment income is one of the best and most passive forms of income. So, it’s definitely worth the wait once you get started. Even if you’re starting with little money, don’t let that hold you back.
You can open an account with Motif Investing or Betterment, for example. These are robo-advisors that will manage your account and help invest your contributions. The great thing about using some of these robo-advisors is that it often doesn’t require much money initially to get started.
I opened a Roth IRA with Motif and just started contributing $100/month. Motif manages my account and invests on my behalf based on my goals which makes it super easy because I had to do was set up automatic transfers then watch my account grow.
4. Affiliate Marketing
Affiliate marketing involves promoting a third party product or service. This can be done through a review, link, or advertisement. Then you’ll earn a commission from any sale that is made as a result. Mostly bloggers or website owners who have a solid following benefit from affiliate income because their platform reaches more people.
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After writing the initial review or establishing and embedding the affiliate links into content or an ad, your active work is pretty much done. Then, you can earn income from any sales that your affiliate links generate in the future.
It takes some time to generate passive income through affiliate marketing. To get started today, you’ll need to start a blog or website and develop your platform.
5. List a Room In Your Home
If you have any spare space in your home, consider listing it to generate some passive income. My husband and I are looking to buy a house next year and we are really interested in purchasing a place that has a little more extra space than we need so we can list a room on Airbnb to help pay the mortgage.
Airbnb allows you to list your entire home or a private room to travelers for extra money. To get started, all you need is the space along with an idea of what you want to include in your listing. You may want to update furniture and linens. Purchasing some basic toiletries will also help your guests have a pleasant stay. It also encourages higher ratings!
If you can consistently host guests, you could create a somewhat passive stream of income. It might even be enough to pay your rent or mortgage each month.
What are your thoughts on passive income? Which one of these ideas is your favorite?