Passive Income Ideas - Finance Persona

Suppose, you are working in a job at an office that pays you well enough to get on with everyday chores of your life and suddenly your manager or HR person freezes you with:

“I’m sorry to say this to you, but you do not need continue with us after two months”

After a brief discussion, you found out that it is no joke after all and the company is actually downsizing their staffs. Your world will not fall apart, but it may send little bit of shivers in your body thinking about the imminent unemployment, unless you have another job waiting for you at another company. This is where the term ‘Passive Income’ comes into the fore and rescues you from your silence.

Passive income is money earned through sources that require little to no active involvement or effort once the initial setup is done. With the changing nature of work and the uncertainty of the job market, having a source of passive income provides much needed financial stability and reliability in our life, specially in situations described above. This also comes handy when you have just finished your studies and it is taking some time to find a suitable job according to your profile.

There are several ways to earn passive income in 2024. Here is a quick look into them:

Online contents: Creating and monetizing contents such as blog posts, videos, podcasts etc. According to a survey by Statista, the global digital content market is projected to reach $432 billion by 2027.
Investing in stocks, bonds: Investing in stocks and bonds for income through dividends and interest. In 2023, the average annual return of the S&P 500 index was around 25%.
Creating and selling online courses or digital products such as ebooks, templates, or printables. Online course platforms witnessed a 70% increase in enrollments in 2023 compared to the previous year.
Renting out a property or a room: Renting out a property or a room on Airbnb or Vrbo. As of 2023, the average Airbnb host earns approximately $10,000 per year.
Peer-to-peer lending: Investing in peer-to-peer lending platforms and earning interest on loans. P2P lending platforms facilitated loans worth $500 billion globally in 2023.
Affiliate marketing: Promote other people’s products and earning a commission on sales. Affiliate marketing is expected to grow by 10% annually, reaching $8.2 billion by 2025.
Network marketing: Building a team of marketers earn commission on sales. Direct selling companies reported a total sales volume of $192 billion globally in 2023.

Details of each are coming next one by one.

Various ideas for generating passive income. — Passive Income Ideas (Source : Unsplash)

Section 1: Online contents

With the rise of digital media and social platforms, it has become easier than ever to create and share contents, specially when there are 4.9 billion social media users in the world at present. There is no rule of thumb on how to start earning from online contents but the steps below are proven to a high extent:

Choose a category or niche on which you want to create contents.
Once you have chosen a niche, create high-quality contents that provide value to your audience.
To generate income from your content, you need to build an audience that engages with your content.
Monetize your online content through advertising, sponsorships, and affiliate marketing.
Post contents in regular intervals.

Creating contents will be valueless if they are not generating interesting from your audience. Here are some proven ideas to create interesting contents:

Know your audience: Try to know your audience and gather their feedback through comments and messages.

Be creative: Don’t be afraid to experiment with different types of content, such as infographics, videos, or quizzes, to keep your audience engaged and interested.

Keep it concise: The world is moving fast and audience prefer contents with short duration or length that get straight to the point. A good online blog contains at most 2000 words and YouTube videos between 7-15 minutes perform better than others. Other than these, audience will not stay with you for long.

Eye-catching visuals: Use high-quality images, videos, and graphics to enhance your content and make it more appealing to your audience. Survey from several individuals found that with a high-quality image, you can achieve 94% more views than those contents without these images.

Be authentic: You can share your personal experiences, opinions, and insights to create content. It resonates the audience with experience of their own and encourages them to engage more.

Optimize for SEO: 68% of online browsing begin with search engines and only 0.63% of them move to second page for results. So, optimizing your content for search engines is highly crucial to reach your audience. Use relevant keywords, meta descriptions, and tags to help your content rank higher in search engine results.

In addition to the above, you should also look at how others are getting the views or hits in their contents and change your strategies as necessary. However, do no expect immediate effect up front and you have to be patient to get the results.

Section 2: Investing in stocks, bonds

If you can save extra cash after the monthly expenses, you should look for opportunities for investment. When the amount accumulates to a large sum, the return from investment will also get bigger.

Different investment options

Different investment options are available. You can pick one or multiple depending on your long term goals and risk tolerance. Here goes a few:

Stocks: One of the most popular investment options is stocks. Through purchasing stocks, you can achieve partial ownership of a company. Dividend-paying stocks can provide regular payments to shareholders from its profit. It’s important to note that their value can increase or decrease based on the performance of the company.

Bonds: Bonds are essentially loans to a company or government, and they pay interest to the bondholder over time. They are generally less risky than stocks. However, bond prices can also fluctuate based on interest rates and other factors.

Real Estate: Rental properties can generate rental income on a monthly basis. Its value will not decrease over time, providing a potential source of capital gains as well. However, real estate requires more upfront capital than the others in this list.

Other Options: Other investment options include mutual funds, exchange-traded funds (ETFs), and real estate investment trusts (REITs). These options allow investors to pool their money with other investors and they are typically paid in the form of dividends or interest payments.

Minimizing risk and maximizing returns

As investing is generally related to a considerable amount of capital, you need to consider the options to maximize the returns of your investment with minimal amount of risk. These tips below may help you plan better in advance:

Diversify your portfolio: By investing in a variety of different assets, such as stocks, bonds, and real estate, you can spread your risk and reduce the impact of any wrong move.

No risk, No gain: Investing means you are betting against something yet to happen. That’s why it is important to know your limit. If you’re uncomfortable with risk, you may consider investing in bonds or real estate. If you’re comfortable, investing in stocks will be your go-to option.

Invest for the long-term: Investing is a long-term game. The longer you hold your investments, the more time they have to grow and compound.

Monitor your investments: While it’s important to invest for the long-term, it’s also important to monitor your investments regularly. Keep track of your investments’ performance and make adjustments as needed.

Remember, investing is a marathon, not a sprint, so focus on your long-term goals and stay disciplined to achieve success.

Section 3: Online course or digital product

Recently, Google have stated that they will no longer be looking for a particular degree for recruitment, rather they will put more emphasis on expertise in specific skills. Apparently, the concept of traditional degrees is getting replaced by specific certifications and online courses are peaking learner’s choice these days. It has become so popular that you can make $1000 – $100,000 per year by selling online courses.

So, if you are specialized or expert in something, you can create online courses from it and below are general steps:

Identify a topic that you are comfortable to teach.
Create a content the form of an online course, ebook, powerpoint templates etc.
Upload your contents for sale on digital platforms, such as Gumroad, Teachable, or Shopify etc.
Set a price for your product

Now, you are all good to earn from your digital products.

Make your product Market ready

Once your product is ready, it’s time to market it. Let’s take a look at how to polish your content according to market needs:

Pick a topic that has a demand among your target audience
Add varieties in your contents with blog post, tutorials, podcasts
Create high quality content using professional tools and resources.
Use social media, email marketing, and other channels to promote your product
Use analytics tools to gather customer insights and feedback from them to continuously improve your content

Producing quality contents and adopting the right strategies will set the tone for attracting the customers into your products.

Section 4: Renting out a property or a room

Renting out a property or a room on platforms like Airbnb or Vrbo can be a great source of passive income. Here’s how it works:

Find a property that you can rent out. This can be a spare room in your apartment or a vacation home that you own.
Set up a listing on a platform like Airbnb or Vrbo with information about the property, photos, and pricing.
Manage the issues of your guests during the period they stay.
Collect your payment

However, it’s important to understand the legal and regulatory requirements involving any necessary permits or licenses, and paying taxes on your rental income in that area.

Satisfied client brings more clients

Creating a welcoming space for guests will satisfy the guest and earn you good review on platforms like Airbnb or Vrbo. Here are some tips for making sure your guests have a great stay:

Make sure your space is thoroughly cleaned before each guest arrives.
Be responsive to guests’ questions and concerns before, during, and after their stay.
Consider providing amenities like Wi-Fi, a fully equipped kitchen, and toiletries to make your guests’ stay more comfortable.
Leave a welcome note and provide a local guidebook with recommendations for restaurants and activities.
Ensure safety with smoke detectors and fire extinguishers for any kind of hazard.
Pay attention to details like lighting, decor, and furniture.

There are currently over 4 million hosts on Airbnb worldwide and 6 million active listings. With this platform, a host earns about $14,000 annually on an average and is very much worth consideration for secondary income source.

Section 5: Peer-to-peer lending

Peer-to-peer (P2P) lending is a new investment option to lend money through an online platform. There are several P2P lending platforms available for this, such as LendingClub, Prosper, and Funding Circle.

In order to get started, you can choose a P2P platform and open an account there. After opening the account and completing your profile with all necessary information, you can choose loans from their listings and invest in them. As the borrowers repay their loans, you will earn interest accordingly. That’s how easy and straightforward it is.

Really? No.

You need to consider the below factors before making the decision to invest:

Review the borrower’s credit history, loan purpose, and other relevant information beforehand.
Be sure to check the minimum investment amount in the platform
These platforms are not as regulated as the traditional financial institutions. So, there are always risks of fraudulent activities.

While you cannot predict things in advance, you can minimize the risks with these below actions:

Look for platforms that have a good review from other investors and a proven track record of successfully connecting borrowers with lenders.
Investing in a variety of loans with different risk levels
Start with investing a small amount of money to get accustomed with the platform and its system.
Monitor your investments regularly and track the performance of your loans
Some platforms offer automated investment services to select and invest in loans on your behalf. You can also consider using them.

The interest rates on P2P loans are often higher than traditional savings accounts or bonds, making them an attractive investment option. While banks are giving 7% on fixed deposits, you can receive more than 10% from these platforms. This is why many people are now investing here, even after learning the risk factor.

Section 6: Affiliate marketing

If you have a website or a personal space on the internet and you are promoting products from someone else, this is called Affiliate Marketing. At present, there are over 11,000 affiliate programs in US alone and 81% of brands have their own affiliate setup. It is very good source of passive income these days and people are preferring it over many other options.

Here are some tips for finding profitable affiliate programs and promoting products effectively:

Look for affiliate programs that align with your niche or area of expertise.
Choose programs that offer high commission rates, but beware of scams.
Choose products that provide value to the audience in your personal space.
Promote products through various channels, such as your website, social media, email list, and paid advertising to increase the likelihood of sales.
Create contents like product reviews, tutorials and include the affiliate links there.

Within six to ten months, you will be earning really good from Affiliate Marketing if you strategize it according to the points covered above.

Section 7: Passive income through network marketing

Network marketing, also known as multi-level marketing (MLM), is a business model to generate income by not only promoting and selling products but also recruiting other individuals to join their team and do the same.

To get started with network marketing, you need to do as below:

Join a reputable MLM company and begin promoting their products or services.
Recruit other individuals to join their team
Earn commissions on the sales generated by their team members.

As the team grows, the potential for passive income increases. You can do it entirely online, without jeopardizing other commitments. It also requires minimal upfront investment.

In order to be successful, you need to focus on building relationships and providing excellent customer service, rather than just trying to recruit as many people as possible. Provide necessary training and support to them and it will translate into sales.

Network marketing industry gathers close to $200 million in sales every year. Among its workforce, 26% people to the age group of 35-44 years and 23% are aged 55 or more, meaning that it is open to anybody.

Conclusion:

20% of American workforce has passive income streams lined up against their existing earning sources in order to deal with necessities of future. So, with the right mindset and dedication, it’s not any way impossible to create sustainable passive income streams. This will also help you better prepare for rainy days when your main job is not going smooth.

Passive Income Ideas in 2024

Section 1: Online contents