If you want to generate a steady stream of money with little effort, passive income is the way to go. While getting started with passive income — money not derived from active involvement such as a salary — can initially be time consuming, once it’s in place, you can just sit back and relax.
“Remember, building passive income takes time and effort, especially in the initial stages. Stay consistent, continuously improve your strategies, and diversify your income sources to create a stable and sustainable passive income stream,” said Blake Whitten, financial advisor at Whitten Retirement Solutions. “Always do your research and seek guidance from experienced individuals or resources to make well-informed decisions.”
To get those interested started, Dave Ramsey made a list — “15 Passive Income Ideas to Build Wealth in 2023” — in which he explained profitable ways to derive passive income in 2023:
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1. Buy real estate.
If you’re debt-free and have enough cash on hand, buying a rental property is a great way to derive passive income. However, as Ramsey noted, don’t ever go into debt to buy rental property.
2. Rent out your house.
If you have a guest house or an extra room, you can rent it or list it on Airbnb, for example.
As Ramsey noted, this might entail you having to take extra coverage to your existing homeowners insurance policy or get a new type of coverage.
3. Store people’s stuff.
Again, if you have extra space, you can offer it for storage. Ramsey recommended checking out sites such as Neighbor, iStoreit or Store At My House to get started.
4. Rent out useful items.
If you have sports gear — such as bikes, kayaks or skis — you can rent it out. You can even rent out your pool or backyard, said Ramsey. Rental sites such as Spinlister and Fat Llama will enable you to list your item.
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5. Rent out your vehicles.
According to Ramsey, if you have a boat, you can rent it on Boatsetter to make some extra passive income.
Another way to generate some cash is by renting out your car via several platforms. For instance, HyreCar stated on its website that owners can become “autopreneurs” by turning their car into a passive income stream.
“List your car within minutes. Set your own rates. Keep your cars safe with our protection plans,” the website advertised.
6. Start a blog or YouTube channel.
According to Ramsey, if you have a great idea geared toward a specific audience, you could create an educational blog or a YouTube teaching series that doesn’t require constant new material to generate online traffic.
“This is like building a town square. You create content that attracts people, and then businesses pay you to advertise in your ‘town square.’ It takes time to build an audience, but once you do, the ad revenue can be a steady stream of income,” said James Allen, founder of Billpin.
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7. Write an e-book or digital guide.
Ramsey said that if you’ve figured out how to create content that gets enough traffic to host ads, you can turn that into a product, such as a e-book, an online course or an app.
8. Create an online course.
Certain websites, such asUdemy, enable you to create a course on their platform.
“Once it’s published, it doesn’t require any additional maintenance from you, and you get paid when people take your class. It’s a low-output way of making some extra cash and helping people. That’s like a win-win… win,” Ramsey said.
9. Sell stock photos or music.
If you’re creative, use your skills to generate easy money. For instance, if you’re a photographer, you can sell stock photos on sites such as Foap.
10. Design custom products.
If you have original designs or artwork you can upload them on print-on-demand websites such as Redbubble, Spring and Zazzle. Added bonus: Most of these services are free to join and make it easy to showcase all your original designs.
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11. Use affiliate marketing.
Another way to generate passive income streams is to partner with companies and promote their products or services through affiliate links on your blog, website, or social media platforms.
“Now this doesn’t mean you can just hashtag your favorite running shoes on Twitter and expect to get paid. The companies you know and love have to have an affiliate marketing program for you to get paid for it, and you’d need to apply to become part of it,” Ramsey Solutions detailed.
Certain websites, such as Rakuten LinkShare, can help you find and connect with those affiliate marketing programs.
12. Advertise on your car.
An extra easy way to generate passive income is to use your car as a billboard for ads. You can use sites such as Wrapify to do it.
The average person who does a full wrap on their car makes about $260-450 a month, added Ramsey.
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13. Invest in low-turnover funds.
Ramsey noted that if you’re on track with your retirement savings, you can think about investing in low-turnover mutual funds, such as index funds, through a taxable brokerage account.
Low-turnover funds hold on to the stocks for longer so there are less taxes for you to worry about, while using a brokerage account enables you to access your money at any point without an early withdrawal penalty, he added.
14. Invest in real estate investment trusts (REITs).
A different way to invest in real estate is with real estate investment trust (REIT) — a mutual fund that buys real estate instead of stocks.
But Ramsey also recommended proceeding with caution — as while there are many good REITs, “there are still a lot of bad ones that use debt to purchase properties — which means more risk for you as an investor.”
15. Take advantage of high-yield savings accounts.
According to Ramsey, high-yield savings accounts and money market accounts are one of the easiest ways to create a passive income stream.
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Many banks offer online savings accounts and money market accounts with annual percentage yields (APYs) between 3-4%, which ishigher than the national average for savings accounts, which is only about 0.37%.
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