Written by Coursera Staff • Updated on
With a passive income stream, you can earn money over time with little to no sustained effort. Here are some ideas to get started.
Passive income is a money stream that requires little or no continuous effort. As a business model, it’s largely self-sustaining; often, passive income involves some kind of upfront investment that generates long-term steady gains.
There are two categories of passive income, with various options and channels under each:
Low investment streams: Require less money to set up and are low risk but have a lower earning potential. Examples include affiliate marketing, drop shipping, and selling digital products.
High investment streams: Require more capital to start and are higher risk but earning potential is greater. Examples include buy-to-let property, stock market trading, and investing in cryptocurrency.
In this article, we’ll go deeper into what qualifies as passive income and offer some ideas you can try to start earning.
What is passive income?
Passive income is the opposite of active income. With active income, you are paid for the work you continuously do. Most careers or side hustles qualify as active income. With passive income, you do the work first, then collect payment over time—no further effort is required.
Earning passive income can be an enticing idea, but it’s important to note that it can take some time to grow your investments. If you are looking for quick cash, you may want to consider starting a side hustle or pursuing a high-paying career path.
However, if you have time to watch your investment grow—and especially if you’re willing to put in some sustained effort into nurturing that growth—building a passive income stream can be lucrative.
How to make passive income
When people talk about “earning money in your sleep,” they’re referring to passive income. Traditionally, you would do this through financial investments. However, today, there are so many more options for starting and maintaining a passive income. For example, many creatives start a passive income stream by creating a digital product that they sell repeatedly.
Here are some things to consider if you want to start earning passive income:
What kind of upfront investments can I make (think in terms of money, time, and effort)?
Do I have any skills or knowledge that other people may find helpful?
How can I automate the process of sharing my skills or knowledge?
Depending on the passive income stream you choose to pursue, there may be things you can do to increase your short-term earnings. For example, some people who sell digital products will use various marketing strategies to enable more people to discover their products, which leads to more sales in a shorter period. Others may scale the scope of their passive income business with new products that further their initial offerings to recapture an established client base.
11 passive income ideas
The first step toward earning a sustained income stream is choosing the passive income source that makes the most sense for you. Whether you want to make a financial investment or start a business centred on passive income, here are 11 ideas to consider:
1. Make financial investments.
Financial investments include a range of options, such as investing in the stock market, investment trusts, mutual funds, bonds, and robo-investing, and they require minor follow-up work as they accrue interest. Work with a financial advisor to figure out the best investment options for you.
Pros
High growth potential over time
Minimal maintenance
Cons
May have limited access to funds in the short-term
Subject to tax requirements
2. Own a rental property.
Income from a buy-to-let property or renting a space such as a garage, parking space, or office, can be a steady way to earn extra money, but this passive income source comes with maintenance and monitoring. Just like your own home, renting out a property or space leaves you with the job of looking for tenants and repairing any damage or wear and tear.
Pros
Can be a lucrative long-term investment
Can begin earning money as soon as first renters move in
Cons
Responsible for property upkeep
Only earn when you have renters
3. Start a print-on-demand shop.
You can sell your original designs on shirts, hats, mugs, posters, and other products without dealing with inventory and fulfilment by opening a print-on-demand shop. All you need to do is select your provider—companies like Printify, Contrado, or Inkthreadable—upload your file, choose the products you want to sell, and advertise them on your online store.
Pros
No inventory or fulfilment needs
Create original products
Cons
May need to engage in self-promotion and marketing
May need to handle customer service issues
4. Self-publishing
If you have a wealth of knowledge or an idea for a story, you can write a book and sell it online. Many people choose to use a service like Kindle Direct Publishing, which enables you to transform your words into an ebook or print edition and sell it on Amazon.
Pros
Write something that you feel proud to share
Retain complete control over your creative process
Cons
Can take a lot of time to prepare a book for publication
May need to engage in self-promotion and marketing
5. Sell worksheets.
There are several places where you can upload and sell worksheets online. Typically, the way this works is you create a printable worksheet and upload it to a website like Etsy or TES, where people can pay to download and use your creation.
Pros
Easy and inexpensive to create
Utilise your specific expertise
Cons
May take time to generate noticeable returns
Host websites may charge sales fees
6. Sell templates.
If you enjoy creating digital organisation systems in programs like Microsoft Excel or Notion, you might be able to sell your templates. Many people monetise their creations on Etsy or other online marketplaces.
Pros
Easy and inexpensive to create
Combine organisation and design skills
Cons
May take time to generate noticeable returns
Host websites may charge sales fees
7. Create content.
If video is your medium of choice, you can earn money by uploading your original creations to YouTube and setting your account up for monetisation with the YouTube Partner Program. There’s no limit to the types of videos you can create—informational, short film, original music, even ambient noise—however, there are a number of requirements to join the YouTube Partner Program, including a minimum number of views and followers.
Pros
Retain creative control over the work you produce
Can continue earning money from the same videos long as you remain in the YouTube Partner Program
Cons
Requires building a following of 1,000 subscribers
Requires publishing new content every six months
8. Create an online course.
Somewhere in between writing a book, selling worksheets and templates, and creating content, you may decide to package the resources you create as an online course. Many people create their content with platforms like Thinkific or Teachable, then host their courses on their own websites.
Pros
Highlight your unique expertise
Package a range of creative offerings
Cons
Labour-intensive start-up process
May need to engage in self-promotion and marketing
9. Sell stock photos.
Whether you’re an amateur or seasoned photographer, you can sell your original photos as stock images using sites like Alamy, Shutterstock, Stocksy, or Adobe Stock.
Pros
Start a photography business without finding clients
Retain creative control over the work you produce
Cons
A lot of legalities to learn and navigate
Host websites may charge sales fees
10. Create an app.
You can passively monetise your creative skills as a developer by creating a mobile app and selling it via the Apple App Store or Google Play.
Pros
Build a tool that can reach many people
Put your developer skills to the test
Cons
May require updates and maintenance over time
App store hosts may take hefty fees
11. Affiliate marketing
Affiliate marketing is an area of digital marketing in which a person promotes products and receives a portion of the sales generated from their unique affiliate links. Many bloggers combine Search Engine Optimisation (SEO) techniques with their affiliate marketing strategy to maximise their income.
Pros
High earning potential
Option to promote a range of products
Cons
May take some time to begin earning
Posts may require maintenance or updates over time
Start your passive income stream.
When it comes to a business model centred around passive income, the more people who know about your product, the more money you stand to make.
Learn how to create effective advertising campaigns and email automation to reach your chosen audience, as well as how to use platforms like Shopify to start your passive income business, with the Google Digital Marketing and E-Commerce Professional Certificate available on Coursera.
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