20 Passive Income Ideas to Help You Retire Earlier

Woman Earning Passive Income

Passive income can help you earn successfully for your lifetime. It also means that it gives you the flexibility to be independent even when you are retired and can not work anymore.

To make sure that you are not burdened by family obligation at a later stage, you must start putting effort when you are young. The sooner you start, the easier will it be to hit the passive income milestone. Not only will you be self-sufficient by doing this, but you can also take early retirement from work if you wish.

What is Passive Income?

Income that is earned regularly from other than an employer or contractor is term as a passive income. It can come from two sources: either a rental property or business in which one does not participate actively, such as writing a book or investing in a bond. Also, one needs to remember that in addition to income from these resources, there come expenses to maintain these resources as well to keep the income streams flowing.

Why Build a Passive Income?

Building an extra income while you are doing your regular work is not a bad idea. Passive income allows you to do so and comes along with several other benefits, listed here are some reasons why you need to build a passive income:

  • Helps you build your wealth
  • Gives you an option to retire from the work early
  • Regular income is ongoing even if you are jobless
  • An additional source of income in case you outlive your retirement fund.

20 Passive Income Ideas to Help You Retire Earlier

1. High-Yield Checking & Savings Accounts:

If all your money is lying in a traditional saving account, there are high chances that the rate of interest for your earned money practically doesn’t exist. Keeping all your money in a high-yield checking and Savings account is the easiest way to build a passive income for the long term. It increases the money as the interest mounts up.

There are a lot of such saving account options available in the market where you can make additional money from your existing cash while you sit back on your couch and relax.

2. Crowdfunded Rental Properties:

Real estate investment was used to be known as something for the Richy-rich but crowdfunded real estates has made it possible to bring it for the public at large. With an investment of as low as $500, you can start building a passive stream of income.

Some companies do not even charge a fee when you invest in a rental property with them. This investment allows you to earn both value appreciation and ongoing income (passive).

3. Robo-Investing:

Technology has advanced in a lot of sectors, and the same is in this sector of investment. Unlike in the previous era, an overpriced financial professional is not the only option to get your investment started.

Robo-advisors are sophisticated computer programs that take care of your investment and help you to enhance your yield, even when your investment is low. The process is simple, where you need to share information about yourself, your objective for investing and fund your account. They will take care of everything else. You can check for companies like Betterment and M1 finance to gather any further information around these.

4. Certificates of Deposit (CDs):

To get one of the highest interest rates in the country, certificate of deposit is a great opportunity. It is an investment where you don’t even have to leave your house to make money.

It is advisable to look for the best rates online as you can compare the options and choose the best yielding option. Remember that for a certificate of deposit, you need to invest for a fixed duration of time and a minimum one year.

5. Start and monetize a Blog:

This is the most popular passive income idea to begin. Affiliate links, sponsored posts, book deals, products and much more have helped countless people earn a passive income.
It is indeed difficult to build an online blog and make it successful.

It requires a lot of upfront work too. But, it is also a great way to generate an audience by building an Email list or through social and organic traffic. It allows you to make multiple blogs, and also there are a lot of streams to build an income through a blog.

6. Real Estate Investment Trusts (REITs):

A REIT is a company that manages and owns real estate. They have a legal authority that they pay little or zero income tax if they give most of their income to their shareholders.

You can purchase a REIT just like any company or dividend from the stock market. Your earning will be in the form of dividends paid out by the REITs. Best REITs have a proven record of increasing the dividends yearly, so you will always have a growing number of dividends every time.

7. Peer to Peer (P2P) Lending

A P2P loan is a personal loan between you and the borrower. Usually, it is taken care of by a third-party intermediary such as LendingClub.

You earn the income as interest paid by the borrower for the loan. Since the loan is unsecured, you might face the risk of default. To be safe, you can diversify your lending portfolio by providing the investment in a smaller amount in the form of multiple loans.

8. Private Equity Funds:

Equity funds are typically only available for wealthier investors. These funds are managed by a group or an individual that looks into the investment of the funds. This pooled fund on a later stage is invested in a big project or some investing venture.

Private equity fund generally requires investment in years from medium to long term. Though this is not a feasible option to earn passive income for most of us, it might be helpful to most of the wealthy people to make money.

9. Write a Book:

It is yet another option to start making passive money. Writing a book or an E-Book could take you. It is not necessary to write a novel or some great stories to earn money, but simple non-fiction how-to books can also do well.

They don’t have to be lengthy as well. Various places are there on the internet where you can publish a book that includes amazon’s Kindle, Booktango, Lulu, etc. Regular services on these sites are free, but you will have to pay extra in case you need services like editing or marketing.

10. Try out index funds:

These are a kind of mutual funds that are associated with a specific market. To get started with generating income (passive), these funds offer certain advantages over other passive income ideas. A few of them being, the funds are managed passively, including the securities, and comparatively, they have a lower management cost.

In addition to it, the turnover rate of this fund is also low, which makes it an effective option for many investors.

Making Personal Income

11. Buy Royalties:

Do you know that you can even buy other artists royalties and it is already famous as one of the passive income ideas? Having the rights or ownership of music means that the holder makes money when that music earns money.

These royalty rights do not get impacted by the financial market and provide a steady income stream. Royalty Exchange is an example of such a site where you can place a bid.

12. Build An Affiliate Marketing Niche Site:

To make passive income affiliate marketing is considered to be one of the most popular ideas. Almost all the big brands have an affiliate program which allows you to sell products and make money.

Some affiliate programs like that of Spotify, allows you to earn up to $2,000 per referral that is huge. Other retailers might give you as low as 10% referral bonus.

You will have to make sure that you research in advance to get started with affiliate marketing. It is one of the most effective ways in which you can earn income without spending on advertisements.

13. Start a Podcast:

Not everyone can be interested in writing, hence one of the different income streams can be talking. Podcasts tend to be a great passive income idea. You can speak about anything useful like for education purposes or maybe for entertainment.

Similar to a blog, you earn money from advertisements, affiliates or by selling services and products. The good part about a blog is that you don’t need much investment to get started. By doing a quick Amazon search, you can easily find a headset for under $50.

14. Create an Online Course:

In 2020, selling online courses has been one of the best ideas to generate passive income. Platforms like Udemy give you a ready customer base, where you can start making an income soon, or you can even begin by setting up your website.

In case you chose a platform like Udemy, sometimes they provide a big discount that may affect your passive income but building your customer base by making a website for yourself is also not an easy task.

15. Sublease to Housemates:

If you are single and have a huge house just for yourself, subleasing house can be a great idea to generate per month income. The rent from this can help you repay the house loan that you might find a big amount otherwise.

Not only an income will be generated, but it also allows you to make new friends, and you might cherish those moments with them for a lifetime. You might even do household stuff together like cooking and cleaning, ultimately making your life easier.

16. Earn in multi-level-marketing programs:

Multi-level program or MLM is a new trend in the market. One can earn passive income by simply adding people underneath them or by building a team. With every member that they or their team adds and every product the people underneath them sell, they get a commission.

After a certain duration, the team becomes large enough when you don’t have to do much work and make huge money from the commissions off their sales.

17. Invest in dividend-paying stocks:

This passive income idea brings research along. To make an income stream with dividends, people will have to make sure that they invest in the right company. As the company earns money, they pay back the investors in the form of dividends. Later, You can again invest this money to purchase more shares, or you can take them out in the form of cash.

18. Invest in Bond Ladder:

Bonds are a traditional way to generate passive income. The working mechanism is that you invest a certain amount in an organization for a fixed time duration, and for this duration, the company pays you an interest rate. Upon maturity, you get your original money back.

A good idea to make use of the bond is, invest in a bond that yields 5% annually and on maturity invest the amount in a small business. In this way, you can generate income for yourself for a longer duration.

19. Check Out Money Market Options:

This is a short-term investment that allows you to make an income from the interest. It has a low risk, and though the investment is highly stable, there is a fee associated with it that leads to a relatively low income.

20. Earn in Online Arbitrage:

The motto of this investment is to buy low and sell high. The earning is made from the price difference between purchase and sell made. Though this is not simultaneous, it is defined so.

For example, keep an eye on eCommerce websites like eBay, Amazon or Etsy, and when they have the best deals available on wholesale rates, you can buy them and then sell them as a profit. It can be a great idea to earn money.

Conclusion

Following a few or even any of passive incomes ideas given above can help you earn for a long-term. Not only will this help you retire at an early stage but also you can use the money to fulfill your dreams that might not have been possible with a 9 to 5 job. You can go to your dream destination or buy a luxurious plan by doing a small and smart investment to earn more.

If you do not want to put a lot of effort, some of these ideas even give you an option to earn profits with relatively low effort. When you plan your finance at a younger age properly, it will definitely help you live your life in an easier and stress-free way.

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