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If you’ve been thinking more seriously about getting some passive income streams going, you’ve come to the right place. We’re going to cover all the trending and traditional ways to make passive income in 2023.
2023 might be flying by—like every year seems to do—but that doesn’t mean you have to throw up your hands and wait for next year to pursue your dreams. There’s no better time than now to start building up passive income streams from investments. And there’s a lot of opportunities out there!
If you’ve been thinking more seriously about getting some passive income streams going, you’ve come to the right place. We’re going to cover all the trending and traditional ways to make passive income in 2023.
Let’s go!
Before we jump in, you might be wondering, “What exactly is passive income?” Maybe you’ve heard of it, but you’re not super clear on what it is. We’ve got you covered!
Passive income is one of the biggest secrets of wealthy and successful people. It’s really the key to financial independence.
Ever seen those people lounging at the pool on a Tuesday afternoon? They seem to have all the time in the world. You wonder, “Wow. What do they do for a living? How are they able to take so much time off work?”
Well, they probably have a few passive income streams built up.
Passive income is money you earn while you’re passively watching TV, suntanning or sleeping. You don’t have to trade your time for it. It comes from assets like books, digital courses, a T-shirt company or rental properties. Once you set up your asset, it starts producing money by itself. Kind of magical when you think about it!
Then there’s active income. This is money you get from working a 9-5 traditional job. A company pays you an hourly wage (or salary) and you give them your time. With active income, you have to go out and work every time you want money. You can’t really afford to take a day off or a week unless it’s approved vacation time. It might pay the bills, but it gets old fast.
There’s nothing necessarily wrong with active income. But it’s not as good as passive income since you’re constantly having to trade your precious time to earn it.
Here’s the best analogy to understand the difference between passive and active income.
Passive income is like planting an apple tree in your backyard. Yes, it’s going to take some effort to take care of it, help it grow, make sure it’s getting enough water, etc. And it’s going to take time for it to get big enough to start producing apples. But eventually, the apples will come. You’ll blink and suddenly you’ll have more apples you know what to do with. You’ll be eating apple pie for breakfast, apple sauce for lunch and hard apple cider for dinner!
Active income is like having to go to the grocery store every time you want an apple. Exhausting! You can’t just go to your backyard and pick five of them. You have to drive to the store, get a shopping cart, pick out apples that seem decent enough and buy them. This is a very different experience from having an apple tree in your backyard.
This is the perfect analogy (but we’re biased because we came up with it). It shows the main difference between passive and active income. And passive income is definitely the way to go.
Ready?
Here are some of the best ways in 2023 you can start earning passive income.
Buying or investing in residential or commercial properties and renting them out can be a great source of passive income.
Just keep in mind that this type of investment requires careful management, including property maintenance, tenant screening and handling rental agreements. A lot of that you can delegate to other people to help you with, but just know that there can be some headaches involved with rental properties. Lots of them.
Opening up an AirBnb or Vrbo is also an option. You probably know someone who has an AirBnb and makes a nice chunk of money every month on it.
When it comes to AirBnb’s, there are a couple things you can do. You can buy an apartment, condo or house and turn it into a full-time rental, which has the potential to make you significant amounts of money in the short and long term. Or you can simply rent out a room in your existing house or wherever you’re living. Millions of people are doing this and finding it’s a simple way to generate passive income. And it comes with the added bonus of being able to meet lots of cool people as they’re traveling through your city!
If you think you might be into real estate, you should also check out real estate investment trusts (REITs). These are companies that own, operate or finance income-generating real estate properties. By investing in REITs, you earn passive income through dividends from the rental income generated by these properties.
Even though some of this is getting technical, stick with us. We’ll try to break everything down into plain English for you.
High-yield savings accounts also provide some passive income. Basically, this is just like a normal savings account you would open at your bank, but they offer higher interest rates. This allows your savings to grow over time and gives you a place to put your money.
It’s not really a traditional investment, but it does generate some passive income. And every little bit helps!
Another popular way to earn passive income is through stocks. You can earn interest, dividends, or capital gains from stocks or bonds.
Investing in stocks of established companies that pay out regular dividends can provide a great stream of passive income. Dividends can be up to 7% (or even 11%) and are typically paid out to shareholders (you) on a regular basis. This gives you more income and long-term growth for your bank account. And it’s all passive. So once you invest in a company that pays dividends, you’ll start earning that extra money plus potentially earning when the stock goes up.
You can also research Index Funds and Exchange-traded Funds (ETFs). These are investment methods that pool money from multiple investors into diversified portfolios of assets, like stocks or bonds.
Peer-to-peer lending platforms are pretty cool, and another one of those things that’s only possible in the Internet age. It’s kind of like when your friend asks to borrow $50. Imagine if they gave you $5 every month in interest until they paid you back. Yes, you wouldn’t have your $50, but you would be getting passive income of $5 each month for a while. At least enough to cover a latte on the way into work.
Peer-to-peer lending is when you lend money to borrowers on the platform and you earn interest on their investments. Peer-to-peer lending platforms connect borrowers with lenders and give you a great opportunity for passive income.
This one might come as a surprise. Self-publishing eBooks on Amazon for passive income? Yep. Seriously.
Self-publishing eBooks and audiobooks on Amazon is actually a great way for people to spin up a quick (and potentially big) passive income stream.
A lot of people don’t realize it but Amazon has built a massive and easy-to-use self-publishing platform called Kindle Direct Publishing, or KDP.
Here are some of the benefits of publishing an eBook on Amazon:
And you won’t need to hire anyone to help with the work. We’re talking about a very lucrative one-person business that you can build up to even replace your main income and quit your day job. Wouldn’t that be nice?
You also don’t have to be an author to do this. We’ve created a free course at Publishing.com that walks you through everything you need to write and publish your first short eBook. We’ve seen hundreds of people tap into the power of self-publishing to generate up to $10,000 a month in passive income.
Maybe you really don’t see yourself as a writer or investor in real estate. You still have options.
Starting an online business is an awesome way to earn passive income. You can monetize your blog, social media platform or YouTube channel through advertising revenue or subscriptions. You can also research dropshipping physical products like hats or t-shirts on online marketplaces to start making passive income.
Creating and selling digital products, such as music, online courses or software can generate a significant amount of passive income once the initial creation and marketing work is done.
Maybe you have a unique skill in photography. It might be time to create a photography course to share your knowledge, teach others how to take compelling and beautiful photos and also make money on the side.
The other benefit of starting an online business is that you can automate it. You can set up logistics, ordering, inventory and email campaigns to operate without needing your constant hands-on involvement.
We’re big believers in the power of action. There is something magical that happens when you decide to just do it and take action. It’s almost like the universe starts rewarding you in little ways to give you encouragement to keep going. That doesn’t mean you’re not going to meet resistance or run into roadblocks. But if you choose to take action today, you’ll be glad you did. Otherwise, this stuff just keeps getting pushed off until tomorrow and then tomorrow never comes… And you’re stuck in that vicious active income cycle.
Maybe it’s time you planted one of those apple trees in your backyard and at least started the process. You might not see returns right away, but imagine what you might see a year from now after focusing your efforts and being patient.
Pick one of the ideas on this list that would be a good fit for your situation and do it. Something you’re interested in or curious about.
Don’t wait for someone to give you permission or for your parents to help you start. It’s time to change the direction of your life. We know you can do it!
