Passive Income Ideas for Beginners: From Real Estate to Bonds, Blogs to High-Yield Stock Options

Last Updated on June 14, 2021

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Passive income, defined as income that flows in regular intervals from a source other than a contactor or employer, is  not “money for nothing.” Of course, it might be: you might have won the lottery and receive the pay-out in monthly installments.

More often, passive income is, like ordinary income, money in return for effort. For example, rental income is “passive,” although the rental property must be maintained in order to keep the passive income flowing. The point, though, is that (in contrast to a contractor/subcontractor, or a wage/salary employment relationship), the work the beneficiary puts in is not regular and continuous.

Passive investing, as you might already have discerned, is investing with an eye to receiving subsequent passive income. The recipient of the book royalties was at one point investing his labor in writing it.

Here are eight passive income ideas:

PUT MONEY IN BONDS

This is boring but valid.  Indeed, U.S. Savings Bonds have long been considered a good teaching tool for young people, introducing them to the world of investment in a safe way. But there is no need to consign the idea to the juvenile. Heck, you might consider the purchase of a 20-year Treasury bond as an act of patriotism. The U.S. Treasury reintroduced the 20 year instrument only recently (January 2020) to help finance the deepening national debt. And there is no counter-party risk here. Since the days of Alexander Hamilton, the US Treasury has always paid in full and on time.

RENT OUT STORAGE SPACE

You might want to rent out storage space. You may have a spare bedroom. Perhaps a child has left the nest?  At any rate, you have a supply of space, and there is a great demand for storage, and you can use available peer-to-peer platforms to bring supply and demand together. These platforms verify their users, process payments, etc.  to share your space on. It is best to go through these platforms to benefit from the protection offered.

TRY HIGH YIELD STOCKS

From a passive investor’s point of view, the easiest gains from the stock market come from a dividend stream, not from capital gains. You do not have to time your buys and sales for the cap gain. You only have to buy (the right stocks) and hold them to receive the dividends. Remember, you’re looking here not for capital gain but for income, and for that purpose, you want stocks from companies that issue a regular income stream. We will include under this heading, too, real estate investment trusts (REITS) These are simply companies that own, operate, or finance income-generating real estate. They function “very much like stock.”

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From a passive investors’ point of view, the easiest gains from the stock market come from a dividend stream, not from capital gains. Photo credit: Shutterstock.com

CROWDFUND REAL ESTATE

This idea has picking up some steam of late: the crowdfunding of real estate. This happens through investment platforms that pair developers with individual investors who want involvement with real estate — without the stickiness of, say, maintaining the property, and with explicit choice about what project they’re investing in.

OWN A VENDING MACHINE

You can make money as the owner of one or more vending machines that sell desired niche products in high-traffic locations. But whether this constitutes “passive income” may depend on how effectively you outsource stocking, maintenance, and collection.

START A BLOG

Running a blog in its simplest form is the equivalent of keeping a journal but letting the whole world read it. Hence the term, a mashup of “web” and “log”. But it can be leveraged to establish a brand, create and sell a marketable email list, profit from affiliate links, and so forth.

GET YOUR INSTAGRAM POSTS SPONSORED

Instagram has become a powerful force in the marketing world. Of course Instagram users may post about a brand, and they may ask the owners of that brand to sponsor the posts. What they can charge for this has, let us say, a wide range. Where you are on it will depend on how value a user has made herself, whether she is an “influencer” in the eyes of potential sponsors.

CREATE YOUTUBE VIDEOS

If you are passionate about a subject, you can teach it as a digital course. Actual teaching is not passive income. But if you are passionate about, say, bass fishing, and you create a series of monetizable YouTube videos on how to catch bass, then this teaching effort may well pay off as a passive stream of income from would-be bass fishers who come across it for years to come.