Retirement or financial independence may seem like a faraway concept for you. But it’s actually easier than ever before to reach FIRE and build wealth. To do this though, you’ll likely want to focus on the top sources of passive income.
If you want to save all of your money in retirement accounts until you quit your job, that’s perfectly fine! But what if I told you there was an easier way to build wealth?
Here are the top sources of passive income and how they can help you reach financial independence faster.
First, let’s talk about what passive income is.
Passive income is income that doesn’t require much labor to earn or maintain. In other words, you put in a little effort in the beginning and continue to roll in the dough long after you’ve completed the work.
Examples of passive income include:
- dividends from investments,
- rental properties (if low management),
- and business ventures like…
- creating an app,
- YouTube channel, etc.
There are quite a few other ways to earn passive income. But there are some important questions to ask yourself before you dive headlong into a new venture.
What are good sources of passive income? What are the best sources of passive income? What makes the most passive income?
Let’s keep the conversation going! Read on to learn and discover more about passive income.
Will I be able to reach financial independence faster with passive income?
If you earn income, then invest it, you effectively turned your one income stream into two. Do it again and you’ll have three. Again and you’ll have four. Etc. etc.
So will you be able to reach financial independence faster with passive income?
For the most part, yes.
But the key is to make sure your income sources are bringing in enough money to fit your lifestyle.
As an example, if you need $5,000 each month, you’ll want your passive income to be around $8,000 a month. This will help account for extra taxes (just in case), as well as other expenses that your job usually pays for or gets at a discount (like health insurance).
But, by building up your passive income, you’ll be able to make money month to month, without having to touch your retirement accounts.
And with passive income, you won’t have to worry about working hard. So technically, you can be “retired” without actually retiring and spending your retirement money!
How can I make passive income in 2021?
Passive income streams continue to grow in 2021, and I don’t see online work or opportunities going away any time soon.
There are many ways to earn passive income this year and next year, and I’ll talk more about them later on in this article!
How can I make passive income online?
Are you willing to put yourself out there and start an online business to build passive income? If so, keep reading and I’ll share a few ways that you can make passive income online.
Now, it’s important to try to mix and match your sources of income. For example, if Instagram went away forever tomorrow, and your business was solely on Instagram, you’d be in trouble.
But if you had multiple sources of passive income, it wouldn’t be as big of a deal!
So keep that in mind when reading over the different ways to build wealth via passive income.
Top Sources of Passive Income For Wealth
Okay, now let’s talk about the actual ways to earn passive income. Below are some of my absolute favorites (and some are passive income jobs from home too!).
These passive income ideas are broken up into three groups:
- How to generate passive income with no initial funds
- How to turn $1000 into passive income
- And, how to make $1000 a month in passive income!
Check it out and take action on these! And, if you have more ideas, be sure to add them in the comments below this post!
Want to generate passive income but don’t have any money? You’re definitely not the only one. Here’s the best passive income ideas for you!
Rent Out Part Of Your Home
If you’re okay with being a landlord or want to make some passive income money while you live in your home, try Airbnb or renting out a space.
For example, if you have a finished basement that you don’t use, why not turn it into a suite or studio apartment and rent it out? Or, if you’ve got an old RV that you don’t travel in anymore, spruce it up and rent it out as a getaway spot.
In all honesty, you can rent out just about anything. I’ve even seen people rent out their garage as a parking space. This helps you earn passive income, without investing in other homes or properties.
And, if mortgage payoff is your goal, house hacking like this can get you there faster.
Start a Blog
Now, what if you DO like writing and want to get into blogging? It’s still possible!
For one, blogs are extremely cheap to start. In fact, you can start a blog for less than $50 and start writing in the same day.
Now, blogging takes time to get rolling. It’s not a get-rich-quick scheme. However, the sooner you start and learn how it works to make money, the sooner you can earn passive (and active!) income.
There are many blog owners who still make money from blog posts that they wrote months or even years ago, so it’s possible!
The key is to start a blog that offers a lot of value for your audience, so they trust you and keep coming back. From there, you can add in…
- affiliate links,
- sponsored posts,
- and even a YouTube channel (which can also make you passive income!).
Related: Start Your Own Blog Guide (FREE!)
How Can I Turn $1000 Into Passive Income?
Do you have a little bit of money, but not a ton? Wondering how you can turn $1000 into passive income? That’s a GREAT question!
While some may say it’s not possible, or that $1000 is too little money to start with, they’re wrong. Sure, you’re not going to make millions from a $1,000 investment, but it’s a place to start, and it CAN DEFINITELY earn you passive income!
Check out the great options below!
Yes, a savings account is boring. And yes, it won’t make you a millionaire overnight.
But, a high savings account earns free money when you let your savings sit there. And since many of us are building or have emergency funds, why not earn money on your money?
Of course, it’s important to look for a high-yield savings account that offers the highest percentage possible. And remember that these percentages can fluctuate, so you may have to move money around from time to time.
But for the most part, you won’t need to do anything else after you add your money to savings. Just watch the funds grow.
Invest in REITs
Being a homeowner isn’t for everyone. But, investing in real estate can provide a high ROI and bring in passive income for years. So, if you don’t want to be a landlord, what can you do instead?
Let me introduce you to… REITs.
Real estate investment trusts allow you to invest in real estate like commercial buildings, apartments, and even storage facilities.
When these businesses or properties make money, so do you. And it’s really that simple!
Now, there are a few things to keep in mind. For one, most REITs pay dividends quarterly. So this won’t make you passive income every single month unless you invest in REITs that do that.
However, the more you own, theoretically the more you make. And, it’s likely less risky than buying a home and renting it out short or long term.
How Can I Make $1000 a Month in Passive Income?
If you want to make $1000 a month in passive income, you have to be willing to invest either a lot of money or a lot of time. Earning $1,000 a month means that you’d like to bring in $12,000 a year. That’s no pocket change! That’s a pretty hefty sum of money!
So how can you do it? How can you make $1000 a month in passive income?
In my opinion, there are three great options.
Did you know that you can invest in real estate outside of residential and commercial properties?
Investing in farmland is yet another way to earn passive income.
Crowdfunding platforms like FarmTogether, allow you to invest in farmland for steady passive income.
For example, farmland has consistently yielded returns of at least 7% over the years. Why? Because people will always need to eat, which means farming isn’t going anywhere. So if you’re looking for a safe real estate type of investment, this is it.
This also makes farmland real estate particularly well-suited to appreciate over time. In fact, over the past ten years, American farmland has risen in value by more than 4.5% each year.
Buy a Blog
Did you know that you can purchase money-making blogs? If you’re not a fan of blogging, but want to earn monthly income, buying an existing blog that makes money can offer a great source of passive income.
Hundreds of blogs are abandoned or lack updating every single month. But, these blogs may get web traffic, sponsored post opportunities, and even affiliate sales. If you can buy a blog that already makes money for a reasonable amount, you could turn this into passive income.
However, don’t just buy a blog before doing your research on it. Using an app like Flippa will help you make a better investment.
Invest in Rental Properties
If you buy a rental property right, you should be able to earn 1% of your purchase price in rents each month. So, if you buy a rental house for $100,000, you should be able to charge $1,000 a month.
But then of course you have mortgage payments, property taxes, home insurance, and general repair costs, so your net earnings are probably more like $300 a month.
If you want to make $1000 a month in passive income, you’ll probably need about $3,000 a month in top-line revenues to clear $1,000 a month in profits!
Top Sources of Passive Income: It’s Time to Get Started!
As you can see, there are quite a few top sources of passive income to choose from. And, many of these aren’t as high risk as investing in individual stocks. While they may not make you a millionaire overnight, they can certainly offer you income month to month — without extra work on your part.
What is your favorite source of passive income? Tell us in the comments below!
AUTHOR Kimberly Studdard
Kim Studdard is a strategy consultant and course launching expert. When she isn't spending time with her daughter and husband, or crying over This Is Us, you'll find her teaching other mompreneurs how to scale their business without scaling their workload.