Best passive income ideas to invest your money in 2023 – full guide
Haven’t we all dreamed of being somewhere on the beach reading a book and sipping on some cold drink, while we watch the sunset for the rest of our lives without worrying about work or income or money? If you have, then welcome to the club. Although this may seem like a far-fetched dream, let me tell you that it isn’t. You just need to have passive income ideas, pick one (or a few) and begin implementing them.. This comes when you know how to make money online, or in another word, knowing how to make money work for you.
The premise is simple and this article will be your guide to the best passive income ideas.
What is Passive Income?
Let’s first define what a passive income is. Passive income represents a regular income that you generate beside a salary from an employer.
We are living in a digital age and we need everything digitally. To fulfil our dream from earlier, a passive income online is a no question. This article will introduce you to some of the best passive income investments with their pros and cons.
Having a passive income stream is very simple if you know the difference between those two terms: Assets and Liabilities.
- Assets: Things that you own that generate money and add to your wealth. (a rental property, a copy right or a patent right that you lease)
- Liabilities: Things that you own that take out of your income. (Your car loan, house mortgage, the credit card debt).
Pro Tip: Make sure you have enough assets generating enough income before you take up liabilities. (I highly recommend you read a book called Rich Dad Poor Dad. It explains the differences very well).
Note: Your salary, regardless of how much you earn IS NOT a passive income stream.
Other passive income ideas:
- Rental income from a rental property.
- Stock market: dividend stocks.
- Reits: Real Estate Investment Trust.
How to make passive income online?
In this day and age, you can almost get anything online. In fact, you might not even need to speak to anyone. I personally invest in the stock markets and I have never spoken to any representative or customer support.
All the information you need is online, the competition between those companies is so high that they provide tutorials for every single step from creating an investment account all the way to withdrawing your funds.
Do you want to invest in gold? oil? real estate? bonds? stocks? Great, they all have Exchange-Traded Funds (ETFs) that you can buy online.[KL1]
This article will introduce you to the best passive income ideas to stay on top of the game.
Passive income ideas for 2023
Here’s where things get interesting. Let me introduce you to a list of the best passive income ideas online:
- Affiliate Marketing
- Invest in domain names
- Create an Online course
- Media (photos, videos, etc) licensing.
Let’s study them one by one:
Start a dropshipping store.
Have you heard about dropshipping ? It is a very popular passive income idea to make extra money now.
Dropshipping is a business model in which you sell a product to a customer, where the supplier stores, packages, and ships the product to the customers on your behalf as a third party.
You can create your own website using the GoDaddy online store, connect it to your social media account, and focus on the marketing and customer service side of the business. As an example, you can start by selling T-shirts or grow it into something bigger.
What you’ll need:
- A stable Internet connection.
- Reliable partners (suppliers, payment processors, and shipping companies).
- Publish your products on Facebook marketplace, Amazon, ebay, etsy.
- If you sell digital products, you have to focus on your Google ranking for your website.
- No need to have inventory.
- Easy to set up an online store.
- Low overhead/fixed costs
- It can be more expensive than regular retail, because you don’t purchase raw material in bulk from your suppliers.
- Limited control over the quality of the product.
- Complexity with the shipping.
It’s a very simple side hustle. You are a reseller. You share or write about someone else’s product or service and if a reader clicks on the link and purchases it, you make a percentage of the sale.
You can start affiliate marketing from your blog, YouTube channel or your podcast. You tailor your content around a specific brand/product and ask your interested readers/listeners to purchase the product you are promoting. This way, you will have an active income from every buyer.
The problem with many content creators is that most creators are writing blog posts without a plan. You need to know how to write affiliate posts that lead to clicks and sales.
Requirements to start Affiliate Marketing:
- Readers/ listeners/subscribers.
- A platform to promote your affiliate program: YouTube channel, podcast, blog.
- Trust in the brand/product you plan on promoting.
Pros of Affiliate Marketing:
- Low cost business idea: does not require a high financial investment.
- No expertise needed: Unlike other investment options, you do not need a broker or a financial advisor to run your affiliate marketing program. You just need to practice.
- If you are a full-time blogger with high quality content, affiliate marketing makes financial sense and a great way to earn some extra cash.
Cons of Affiliate Marketing:
- No control over the affiliate marketing programs: this means you do not have control over the payout you receive.
- No revenue guarantee: If your site visitors do not buy the product you promote, there’s no payout for you. This means you might experiences months of high or low cash flow, depending on purchases from your site visitors.
- Competition: With a relatively lower barrier to entry, it means there are many who would pursue something similar. This means more competition and you’ll need to put in more effort to gain traffic and visibility.
Start your own blog:
Another passive income strategy is blogging. Whether you’re a pro writer or a beginner blogger, there is potential to earn a lot of money and reach your financial goals. This is especially so if you’ve got great topics and a killer voice. But starting your own blog isn’t a get-rich-quick scheme — it requires strategy and effort.
Requirements to start blogging:
- Commitment and patience: Writing high quality content requires dedication, hard work and a lot of research.
- SEO analysis: you cannot succeed as a blogger without proper SEO support and analysis for your blog.
Pros of becoming a blogger:
- Flexibility: This is probably the main reason bloggers get into blogging. The flexibility of writing whenever you want from wherever you want.
- Revenue: The main passive income source to financial freedom. With high quality content, freelance writers and bloggers have a decent opportunity at earning passive income.
- Learning: you are always learning about new topics and new areas of interest.
- Connectivity: build connections with your readers from around the world.
Disadvantages of blogging:
- Social interactions: Given that you won’t be working from an office with colleagues, it can get lonely sometimes.
- Consistency: This is one of the most challenging parts about blogging. You can’t post an article or two and sit back. You have to write at least one article per week.
- Workload: Blogging is not as easy as it seems. It requires a lot of research, reading, competitor analysis and SEO integration to ensure people find your blog on search engines and read it.
- Time consumption: Depending on how much money you hope to generate from the blog, you can potentially end up spending a lot of time on it. Perhaps even more than a full-time job. I
Invest in Domain names:
Domain investing is buying domain names and then selling them later at a higher price. This can be another idea you can explore and begin building wealth around it.
Learning the value of a domain name is easy with the GoDaddy Domain Valuation tool. All you have to do is look up the domain name and the valuation tool will show you the price and why.
You could stumble on one of those highly valued, highly expensive domain names before others and sell it for a high price later on.
Create an online course:
Creating an online course is another excellent passive income stream. You need to create the course once and update it every once in a while.
There are plenty of platforms to sell your online course on, but the most popular is udemy.
You definitely need to be an expert on the subject you plan on teaching. This could be anything. Here are some examples:
- Graphic design.
- Excel for business.
- Teaching a language.
- Cryptocurrency trading / staking (or anything crypto related).
- Or anything you feel like you are an expert on.
Requirements to creating an online course:
- Being an expert in a subject.
- Test your idea: Do people want to learn what you have to teach?
- Research the topic extensively.
- Write a course outline.
- Create the course content.
- Bring your course online.
- Sell your online course.
- Market your content.
Pros of creating an online course:
- Solid passive income idea: you can create it one time and sit back and watch it yield returns as you get purchases or subscription regularly.
- Very low start-up cost compared to other ideas.
- Generates leads that you can sell other courses to in the future.
Cons of creating an online course:
- Being an expert on a subject: how many subjects can you call yourself an expert on?
- Although the startup cost is low, the time invested in creating the content is high.
- You need to know how and where to publish and promote your online course.
Media (photos, videos, etc) licensing.
Another passive income idea is media licensing. It is a very simple concept: you share images that you own or designed for other parties to use and you get paid for it.
There are plenty of websites that help stock photo creators license their work and get paid for it, such as Shutterstock.
Requirements to sell stock photos:
- Have an eye for images that would sell.
- A professional camera.
- Expertise at photography.
- Expertise at graphic design and video editing.
Pros of selling stock photos:
- Can be a stable source of passive income if your image goes viral.
- It is a fun hobby.
- Can lead to higher paying gigs in the future.
Cons of selling stock photos:
- Getting started is expensive.
- The stock photography business is extremely competitive.
- It is not a lot of money early on.
Passive income ideas: Frequently asked questions (FAQ):
Here’s answers to some the most common and frequently asked questions:
How can a beginner earn passive income?
You can always begin by using your personal finance to start blogging or a dropshipping store or maybe image licensing. Those tend to be some of the easiest and require the lowest capital to start.
What are the 7 sources of income?
Here’s a list of the 7 different sources of income:
- Earned Income:
- Profit Income: Selling a service or a product for profit.
- Interest Income: Putting your money at a high yield savings account
- Dividend Income: Buying shares in companies and getting dividends.
- Rental Income: Owning a property and renting it out
- Capital Gains Income: This is the buying and selling of assets, like lands.
- Royalty Income: Designing, building, or making something unique and charging others to use it.
Image by: Yerlin Matu via Unsplash.