Passive income is the gold standard for a side hustle. It’s a revenue stream that requires most of the work to be done up front, with no or little maintenance required after the initial investment.
If you’re like me, you’re always looking for a new way to make passive income. There are five main categories of side hustles that can generate passive income, all of which we’ll discuss today, along with their pros and cons.
1. Digital Products
If you’re new to side hustles, this is one of the top recommended ways to earn passive income. Digital products require an upfront investment, but are considered passive income because they don’t require much maintenance.
There are a few ways to make digital products. One of the most popular ways is Etsy, because it has an existing user base. However, Etsy is extremely saturated. It’ll take a lot of hard work to stand out among thousands of others creating digital products.
Other ways of marketing are to grow a following elsewhere, such as by social media marketing.
Some digital product ideas include:
- A guide or course on something you know how to do
- Templates (cards, posters, etc.)
- Printables (art)
- Print-on-demand (you create the design, a third party fulfills the order for a fee)
2. Investments
Investing in the stock market is one of the easiest and most accessible ways to earn passive income. Investments will grow in the stock market over time, and some will even pay dividends. Dividends are when a company pays out its stockholders. These can be set to re-invest in the stock market.
Consider where you want to invest. If you’re saving for retirement, look into opening an IRA for tax benefits. If you will need the money sooner, a normal brokerage is fine.
The only disadvantage is that this requires you to have available cash to sit in the investment account while it grows. This isn’t a get rick quick scheme, it requires careful planning and risk tolerance.
3. Ad Revenue
If you have a digital space, you can make ad revenue. This might be a blog, website, or social media account. Depending on what avenue you choose, you may have to meet certain requirements. Social media platforms typically require a certain number of followers and views before the platform pays out. For a website, you may have other expenses, such as purchasing the domain name. Some websites will also make deals directly with an advertiser, charging by time that the ad is up.
This is considered passive income because a piece of digital content can theoretically make money forever, so long as traffic is being driven to it. However, staying consistent in posting is the best way to succeed in an online space.
4. Affiliate Marketing
Affiliate marketing is another way to utilize an existing audience for passive income. This is when you recommend a product or service, and if someone decides to use it, you get a kickback.
Many programs allow you to sign up for affiliate marketing with no existing audience. For example, I was able to sign up for Amazon’s affiliate program before I even launched this blog.
The key here is to recommend products you already love. People can usually tell if your recommendations are genuine.
Aside from general affiliate programs like Amazon, you can also see if brands you use have their own affiliate program. These may have certain requirements.
5. Rentals
I call this passive income with a caveat: there is still some work involved in renting. As a landlord, you will have to be responsible for maintenance of the space you are renting out. However, this is generally considered to be a passive income stream. If desired, you can hire a management company, although that comes with additional cost.
There are more options for renting than ever. You can rent out on AirBnB or VRBO, rent out your car through certain apps, or go the traditional route of renting out to year-long tenants.
Unless you already have a spare room, in-law suite, or car you’re not using, this will typically have a big upfront cost. There are options to crowdfund rentals these days, but I’m cautious to recommend this because I’ve never tried it.
Don’t know how to grow an audience?
Think of something you already do. Maybe you’re a parent. Maybe you own a business. Maybe you have a hobby. Any of these things can become content. The key is to pick something you’re interested in that you could repeat content for at least once a week (once a day if creating for social media). For me, this website is easy to create content for because it involves something I do and think about frequently.
If you’re still not sure how that can become content, look at others who are creating in the same category. For example, my main marketing channel is Pinterest. So, I look up “side hustles” on Pinterest and see what the most popular topics are. Then, I create my own spin on things.
Don’t expect to grow right away, either. Most algorithms want to see consistency before they push out your content. Along the way, you’ll learn what works and what doesn’t.
Another important thing is to stop caring about what people think. Most people consume content, so they’re in no place to judge a person creating content. It definitely feels embarrassing to put yourself out there at first, but you get used to it. The people who matter should be proud of you for trying to create a better life for yourself.