15 Investments (Under $1,000) That Produce Passive Income While You Sleep
You’ve got a steady job that pays the bills and keeps you comfortable — great! However, have you ever found yourself wanting more?
Inflation is rising all around the globe, and as a result, your purchasing power may be suffering, causing you to take less time away on vacation or spend less time on your hobbies. Whether you’re running a side hustle or just trying to make a little extra money in addition to your paycheck each month, passive income can be a great way to help you generate more cash flow.
Not only can passive income make the good times even brighter, but it can also keep you afloat if you suddenly lose your primary job or are in the middle of finding a new one. The amount of time you spend in between jobs can be stressful, so it can put your mind at ease to have cash flowing in even when your standard paychecks stop.
It’s also important to note that you may just be ready to slow down and relax a little after working so hard for so long or even add a little boost to your retirement fund. Passive income is a great way to accomplish all of these things, but what exactly is passive income?
What Is Passive Income?
Passive income is any additional source of income that is not from your employer or contractor. More specifically, the IRS states that passive income can come from two sources: rental property or a business that you do not actively participate in, like being paid book royalties or stock dividends.
Many people become interested in passive income under the presupposition that it’s easy money for not a lot of work. While the general idea may hold true — it is passive income, after all — there is still a certain degree of effort you will have to put in.
Passive income is an excellent way of maintaining financial security in your life, just don’t start out thinking you won’t have to put in any work. Even though the bulk of the work you must put in is usually done upfront, there will likely be a certain amount of labor you’ll have to put in along the way as well.
And one thing equally as important as understanding exactly what passive income is, is understanding what passive income is not.
Passive Income Is Not Your Job
Your primary source of income is your job, for which your employer pays you regularly, and you show up to each day to perform your duties. Passive income is not your job, and it is not income that comes from something you’ve been materially involved in.
Passive income Is Not a Second Job
A secondary job cannot be passive income because you still have to show up to work, and you’re getting paid for the amount of time you perform your duties. Passive income is about creating a consistent stream of income that you don’t have to regularly work for.
Passive Income Is Not Non-Income Producing Assets
While investing in stocks can be a great way to generate passive income, it can only do so if the assets you own pay dividends or interest. That doesn’t mean you should forgo any non-dividend paying stocks as they can still be beneficial, they just won’t qualify as passive income.
15 Ideas to Generate Passive Income While You Sleep
If you’re still on board, we’ve compiled the top 15 ways we’ve found to help you generate wealth with passive income. Keep in mind that with every investment, not only is it important to understand the keys to successfully utilizing them, but it’s also important to understand the risks associated with each.
1. Create a Course
One of the most popular strategies for generating passive income is to create an audio or video course. This can include a variety of things, but it’s critical that you spend an ample amount of time creating an appealing product. In order to make passive income from an online course, it has to stand out amongst the rest.
You should also anticipate creating more than one course and not just relying on one. One product is not a business unless you are astronomically lucky, so it takes a great deal of effort to perfect your business model before you start bringing in the money. You may consider implementing a “freemium” model, which means you build a strong following by providing free content, and then offer more detailed courses that those interested can pay for.
There are many platforms to distribute and sell online learning, including sites like Udemy, Skillshare, and Coursera.
2. Flip Domain Names
Imagine you’re building a website for your new company or brand, only to find out the domain name that fits your company or product perfectly is already taken. Domain names cannot be replicated, so if someone has already taken the name you need, you can’t make another one. Therefore, the only option for you would be to approach the owner of the domain name and offer to buy it from them. This presents an opportunity for passive income.
Many people will seek out domain names with a name they think might be needed or used in the future and purchase those domain names in the hopes of selling them somewhere down the road. Depending on who needs the domain name, you could be looking at a hefty markup. One great resource to search for domain availability is GoDaddy.com.
3. Create and Monetize a Blog
Another popular way many people earn passive income is by creating and monetizing a blog. This can be an opportunity to explore some of your creative passions, as you can dictate the content of your blog. Blogging has created opportunities for entrepreneurs everywhere through affiliate links, sponsored posts, products, and book deals.
Though it is one of the most efficient and sustainable means of generating an audience, creating a successful blog that you can monetize takes a tremendous amount of work. One of the biggest benefits of building a successful blog is that you can turn just one asset into several different streams of income. If you think of yourself as a creative entrepreneur with enough drive, blogging might be the perfect fit for you.
4. Dividend Stocks
Companies with dividend-paying stocks make payments on a recurring basis to their shareholders. And all you need to do to receive cash dividends from a company is own the stock. Shares generally pay dividends out quarterly from their profits, and the more shares you own, the bigger your payout will be because dividends are paid per share of stock.
Owning dividend-paying stocks can be one of the most passive ways to make money because the income from the stocks is unrelated to any action other than the initial financial investment. Simply put, the funds will be deposited into your brokerage account without the need to buy or sell stock.
The tricky part, however, lies in knowing which stocks to invest in. Experts agree that you should spend at least two to three weeks investigating a company before investing in its stocks.
5. Sell Photography Online
Are you an avid photographer? Although selling photography online might not seem like the most apparent way to start a passive income stream, you can grow your efforts exponentially if you can sell the same images repeatedly.
You may collaborate with a company like Getty Images, Shutterstock, or Alamy to license your photos as stock images. Keep in mind that you must first receive platform approval before you can start licensing your images for usage by anyone who downloads them. When someone uses your photo on the platform, you get paid.
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6. Crowdfunded Real Estate
A crowdfunding site is an alternative if you want to invest in real estate but don’t want to spend enough to own a property or handle a lot of the labor-intensive tasks (maintenance, repairs, dealing with tenants). Real estate is chosen by a skilled investing team, after which you can decide whether to invest in it and how much you feel comfortable investing.
It’s important to note that when you invest in crowdfunded real estate, you’re generally on your own to determine whether or not a property is worth investing in. Make sure you conduct an ample amount of research into each real estate property you are considering investing in.
7. Peer-to-Peer Lending
A P2P loan is a personal loan made between you and a borrower through a third party like LendingClub or Prosper. When you lend someone a P2P loan, you earn money through interest payments made on the loan.
However, since the loan is unsecured, you can end up with nothing should a default occur. To reduce this risk, you must diversify your lending portfolio by investing smaller amounts over multiple loans as well as analyze the data of the borrower to make informed decisions on whom to loan to.
8. Flip Retail Products
Use internet marketplaces like eBay or Amazon to your advantage and resell items you find elsewhere for a discount.
To make money through reselling, start by finding discounted products at a large retail store like Walmart or Amazon, and resell them online at a higher price. If this doesn’t sound like a good way to earn income, remember that these cost differences quickly add up.
Sure, the margins on an already-cheap product might not be huge, but they can go a long way over time. If you’re dedicated enough, you can bring in a decent amount of income each month by consistently reselling these discounted items. Keep in mind, this is one passive income strategy that requires a fair amount of work.
9. Rent Out a Spare Room
Have you ever wondered about renting out this spare room instead of letting dust accumulate on all the boxes you’ve left in there? Many people overlook any spare room they have in their residence as simply a storage place.
One effective rental strategy without making a significant investment is to rent out your spare rooms via Airbnb or Vrbo. Since hotels are typically more expensive than Airbnbs, offering your spare room on Airbnb will result in a bigger passive income.
10. Bond Ladders
A bond ladder is a well-known passive investment that has long been popular among retirees and those who are approaching retirement. A bond ladder is a series of bonds that mature at different times over a period of years.
When the bond matures, you “stretch the ladder” by rolling the principle into a new set of bonds. Then, you can sit back and enjoy your interest payments. There are a variety of bond ladder term options, including one year, three years, five years, and seven years.
11. Sponsored Social Media Posts
If you have a strong following on social media platforms like Instagram or TikTok, you may consider getting consumer brands to pay you to post about their product. Sounds easy enough, right?
The catch is that brands are only going to be interested in you if you have a substantial following, so this strategy is only possible if your social media presence is already strong. While still being a passive income strategy, it can be time-consuming to create posts consistently and keep your audience interested and engaged.
12. Invest in a CD or Savings Account
You can earn a passive income and receive one of the highest interest rates in the nation by opening a high-yield certificate of deposit (CD) or savings account at an online bank.
Even better, earning money won’t even require you to leave your home. You should conduct a quick search for the best savings accounts or CD rates in the country in order to get the most out of your CD. Going with an online bank rather than your local bank is typically more advantageous because you’ll be able to choose the best rate on offers across the country.
And CD investment is a historically safe investment, a guaranteed return of principal up to $250,000 is still available to you if your financial institution is FDIC-insured should the market crash.
13. Car Advertisements
You might be able to make some extra income by merely driving your car around town. Get in touch with a professional advertising firm, and they will assess your driving patterns, including where you go and how far you travel, to see if you’re a good fit for car advertising.
If your driving patterns match what they’re looking for, the agency will “wrap” your automobile with the advertisements at no expense to you. Keep in mind that many agencies like modern vehicles and drivers have to have a spotless driving record.
14. Write an E-Book
Writing an e-book can be a good way to benefit from the low cost of publishing, and you can even use Amazon’s global distribution to bring your book in front of possibly millions of potential customers. Since they rely on your own skills, e-books can be created for relatively little money and for lengths of 30 to 50 pages.
It’s worth noting that you can’t simply write an e-book on something you aren’t an expert on, and the topic you choose should be somewhat niche and require a skill that not everyone possesses.
15. Start a YouTube Channel
YouTube is a potential stream of passive income that can continue bringing in money for long periods of time via sponsored posts or ad revenue. The key to building a successful YouTube channel is to consistently put out engaging and well-made content.
YouTube has been around for a while, so make sure you’re making content that is fresh and unique that isn’t already oversaturated on the internet. This strategy can take time as you have to build a following, but it can prove to be a solid source of passive income if you stick with it.
Keep Living and Keep Earning (In Your Sleep)
Successfully building a stream of passive income is no easy task, and despite its name, it usually requires a certain amount of work either upfront or along the way.
These strategies are meant to help you create a source of income to supplement your primary source of income, so it may be possible that you simply don’t have enough spare time to dedicate to some of the ideas on this list that require more effort. However, if you’re willing to put in the time, you are on your way to living your best life and pursuing your dreams while also bringing in passive income.
Take advantage of this list and start earning more money today!