Extra income is good. Extra income without having to lift a finger is even better.
Passive income is money that goes into your bank account without you having to do much — or any — active work. Residual streams of income can be a great way to accumulate wealth, particularly if your earning potential is stunted at your day job. But the most popular passive income streams, such as dividends, investment interest, and rental income, usually require a lot of money upfront to get started.
Fortunately, it’s also possible to engineer a passive income stream from scratch. If you know you want extra money in a hands-off way, you can reverse-engineer a side hustle or small business idea accordingly to ensure it pays you while you sleep.
Here are 5 passive income ideas to consider in 2023.
5 Passive Income Ideas to Make You Money in 2023
- Publish a book on Kindle.
- Become a creator.
- Leverage affiliate links.
- Build a membership site.
- Create an online course.
No. 1: Publish a Book on Kindle
Writing and publishing an ebook can make you passive income online, and platforms like Amazon’s Kindle Direct Publishing (KDP) and Medium’s Partner Program make it easy for authors and writers to make residual income or royalties from their content.
“It took me 3 days and less than $500 to get everything set up to launch my first e-book on KDP,” says Mark LaCoursiere, who packaged and published his project management expertise into an e-book. LaCoursiere put his e-book up for sale on Amazon in November 2022, and makes an average of $1.50 a day in royalties currently.
No. 2: Become a Creator
If you know how to get attention, or love to produce informational or entertaining content, the creator economy is booming these days. Creating your content won’t be passive, but the money you make on the backend will be residual and require minimal maintenance to sustain.
Monetization tools like the YouTube Partner Program, Google AdSense, and Podbean’s PodAds will give you a cut of the ad revenue they generate once your channel or podcast has achieved traction and built an audience. Nick Loper, the founder of Side Hustle Nation, a podcast that talks about people making money with side hustles, says his YouTube channel has been doing pretty well, earning a steady $500 to $800 a month passively for years.
If you’re concerned about not having enough traffic to draw advertisers, you can strike up a sponsorship with a company that shares your vision. Sponsorships are when a company pays you directly to partner with them and promote their offers, and these partnerships can include videos, podcasts, emails, or social media posts.
Teaming up with brands and companies can help you create content that’ll get seen, and it puts you on the right track to getting bigger brand deals, which create additional opportunities for royalty income.
No. 3: Leverage Affiliate Links
Affiliate marketing allows you to make a commission when someone buys a product or service based on your online recommendation. If you want to promote certain physical products, for example, you can use monetized links from marketplace websites like Amazon, then point your readers or followers toward those products using those links. Many software companies also offer affiliate programs that let users promote the company’s product in exchange for a commission.
Affiliate links require a lot of volume, but if you know how to get in front of the right people, the money can add up. Sal Farzin, a 43-year-old father of four based in Austin, Texas, turned TikTok into a profitable side hustle by making videos of unusual Amazon products, then sharing the affiliate links with his followers.
Affiliate links are a great passive income stream if you want to explore online business, but don’t want to invest the time and effort into creating a product of your own.
No. 4: Build a Membership Site
Getting paid once is great. Getting paid over and over again is even better.
If you have valuable content or resources, you could house them in a membership site, then sell subscriptions to your site for a low monthly fee. In this format, you’re licensing out your content, much like how a software or streaming service charges you each month for access. Your membership site can be small, or scale into something more.
“I wouldn’t call memberships passive, as they involve work — retention especially,” says Desislava Dobreva, creator of the Badass Brand Squad, a business and branding membership now in its sixth year. “I spend about 10 hours a month running it. My time is spent on calls and answering questions, and my team does all the rest.” Dobreva’s team, which she began hiring at the end of her first year, handles payments, tech issues, customer support, and events.
“My advice would be to focus on retention immediately, because with memberships the most important thing is to stay profitable,” she says. “This will allow you to bring a team in as soon as possible, and then you can outsource the majority of tasks related to running the membership. Then, you can focus on doing the things you love doing — for me, this is running calls and providing help and support.”
No. 5: Create an Online Course
Online courses are infinitely scalable, require minimal upkeep, and can produce high profit margins. You likely know things that other people want to learn about. With an online course or other information product, you create the material once, then sell it over and over again. You can also change the course later or add more live components to it if you want.
“We create a strategic learning path,” says Broadus Palmer, founder of Level Up in Tech, an e-learning business that teaches in-demand cloud computing skills. Palmer started teaching and selling the course with pre-recorded videos, but he says he’s moved onto a cohort-based hybrid model that mixes live sessions and pre-recorded videos.
Palmer’s hybrid model isn’t passive anymore, but he has the materials recorded and set up if he ever wants to go back to offering a self-study option..
Set Up Your Next Passive Income Stream Today
None of the experts we talked to said their income was totally hands-off. They all put in a bit of effort every now and then to make sure their cash flow stays steady. But they say it’s worth it.
If passive income has your curiosity piqued, start taking action on one or more of these income streams to move yourself in the direction of financial independence.
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