Looking for passive income ideas? Good plan. Generating passive income can help you reclaim your time and achieve financial benefits.
I mean, why get paid for the time you work, when you can get paid for the value you create over and over again?
As the famous cartoonist Carl Barks said, “Work smarter, not harder.”
But what is passive income exactly? And how could you earn passive income while you sleep? Keep reading to find out.
(Psst! While we feature certain third party brands in this article, we are not affiliated with them, other than those related to Shopify and Oberlo.)
In This Article
- 1 What is Passive Income?
- 2 Possible Ways to Create Passive Income
- 3 4 Passive Ideas That Could Boost Your Income
- 4 Summary: Best Passive Income Ideas in 2020
What is Passive Income?
Passive income is a recurring source of money that doesn’t require much time or effort to maintain.
When you earn money from a job or a business, it’s called “active income” because you have to continue working to keep earning money.
As the writer Mokokoma Mokhonoana said, “He who makes $25,000 annually through passive income is more enviable than he who earns $100,000 annually through a salary.”
Possible Ways to Create Passive Income
Let’s get one thing straight: Passive income strategies are not get-rich-quick schemes.
You need to work hard to create passive income sources – you just do this work upfront. Then, if everything goes to plan, you can reap the rewards later with minimal effort.
The author H.W. Charles explains: “The key is to work extremely hard for a short period of time, create abundant wealth, and then make money work hard for you through wise investments that yield a passive income for life.”
Once you’ve done the initial work and are earning money regularly, you need to automate the money-making process. This way, you can extract yourself from the work and turn your active income into a passive income stream.
This may involve hiring employees to manage your business or the use of automated marketing methods such as Facebook automated ads.
Keep in mind, once you’ve found ways to make passive income, you can’t quit working entirely.
Your passive income investments will always require some upkeep and maintenance to keep the money steadily flowing. For example, you would need to manage your finances or work to re-invigorate your business model to stay ahead of new competitors.
4 Passive Ideas That Could Boost Your Income
If you’re looking for ways to earn passive income, here are four passive income ideas to explore in 2020.
Passive Income Idea #1. Affiliate Marketing
Affiliate marketing is a business model in which companies pay you a commission for every sale you generate through your marketing efforts.
Take Shopify for example.
This ecommerce platform runs an affiliate program that pays affiliate marketers an average of U.S.$58 for each user who signs up for a paid plan using their referral link.
To get started, sign up to affiliate marketing programs and start marketing the business using your referral links. Consider using marketing methods such as Facebook advertising or SEO blogging to maintain your business.
Passive Income Idea #2. Dropshipping
Dropshipping is the process of selling physical products online while your supplier manages, packages, and ships products directly to your customers, on your behalf.
Let’s run through how it works step-by-step.
First, you would find dropshipping products from suppliers on a platform like Oberlo. This service allows you to add these products to your store in one-click!
Next, you would “markup” the products – in other words, you would set a price to sell the products for more than you buy them for. Then you would promote your store to a target audience to sell your products!
When your customers buy from your online store, your supplier will be notified of the sale, and paid the price of the product, minus the markup. Finally your supplier will ship the product to your customer for you.
Passive Income Idea #3. Print on Demand
Print on demand is a business model similar to dropshipping. But instead of selling generic products from suppliers, you sell products that feature your brand’s unique designs.
When a customer places an order on your store, your print on demand supplier will print your design and send it to your customer on your behalf.
A good example is The Happy Givers. This brand sells merchandise through its online store. Whenever they receive an order, their store will automatically notify and pay their print on demand supplier, who will then fulfill the order.
Passive Income Idea #4. Influencer Marketing
The term “influencer” typically refers to anyone who can influence a relatively large number of people.
Influencers can earn passive income through brand endorsements and sponsorships. For example, basketball player Lebron James makes money promoting Nike and Coca-Cola.
However, you don’t need to be a world-famous celebrity to earn passive income from influencer marketing.
As Sidibe continues to grow his online following, he’ll be able to earn more money promoting brands to his followers on social media.
To start, work to grow an online following by creating and publishing content on platforms such as YouTube, Instagram, and Pinterest. Then find ways to partner with relevant brands to earn money from your content.
Summary: Best Passive Income Ideas in 2020
Passive income is a recurring source of income that doesn’t require much effort or time to maintain.
In summary, here are four of the best ways you could possibly make passive income online in 2020:
- Affiliate marketing
- Print on demand
- Influencer marketing
Remember, the best passive income ideas require a lot of work before you’re able to sit back and watch the money flow in – but don’t let this put you off. As the ancient Chinese proverb says, “The best time to plant a tree was 20 years ago. The second best time is today.”