Best Passive Income Streams of 2023

Looking for the best passive income stream? We ranked 16 ways to make extra cash by the upfront investment they require and how much you can earn.
Best Passive Income Streams

Tired of living paycheck to paycheck?

Passive income can be a game-changer. With the right approach, you can earn money without the grind.

It’s about letting your funds work for you so you don’t always have to.

What Is a Passive Income Stream?

Passive income is money you make without lifting a finger, often from investments (like investments in parking lots or storage facilities, for example).

Imagine you invest in a rental property. After finding renters, the monthly rent they pay becomes your passive income.

While you might have occasional maintenance or tenant concerns, the regular rent payments come in without you doing daily work.

Can we pay you to store vehicles?

List your unused space

People are earning $1,000s per year from their garages and outdoor space.

Approve your renters

You're in control. Approve who rents and the hours of access.

Get paid monthly

Sit back and collect automatic payments each month.

What is Residual Income?

Many people confuse residual with passive income, but they have distinct differences.

Residual income is the money you continue to earn long after you’ve finished the upfront work.

Consider an author: they get paid every time their book sells, regardless of when they wrote it.

Passive vs. Residual Income: Where They Overlap

Some income can be both passive and residual.

Using the author’s example again, the earnings from book sales are passive since the book is already written.

However, the income is also residual because the author gets paid every time the book is sold.

Conversely, receiving a one-time payment for an old pair of shoes is passive — since the work is already done. But it’s not residual, as the shoes are no longer generating revenue.

Main Takeaways

Passive income is more about setting something up, marketing it, and receiving a profit. While residual income keeps coming in after the initial effort.

Whatever route you choose, both offer a great way to supplement your primary income and offer financial freedom.

Why Is It Important to Earn Passive Income?

The benefits of passive income are almost limitless. Here are a few of the main advantages:

  • Safety Net: With more money in the bank, you’re better prepared for unexpected circumstances.
  • Risk Reduction: Diversifying income sources means not all your eggs are in one basket.
  • More Free Time: Earn without being tied to a desk, giving you flexibility for other pursuits.
  • Grow Wealth: Passive sources, especially investments, can boost your overall wealth.
  • Retirement Ready: It’s a cushion for when regular paychecks end.
  • Stay Ahead of Inflation: Passive income helps maintain your lifestyle even as costs rise.

Earn $1,000s per year with your unused space

Examples of Passive Income

Here are some passive income techniques and side hustles to get you started:

Investing in the Stock Market

Investing in the stock market is known to be the best passive income opportunity.

Investments are about placing money in areas, such as real estate, ETFs, or index funds, and waiting for them to grow in value. This is also known as capital gains.

We’ll look deeper into this type of opportunity further down the article.

Building a Website

Launch a website and post advertisements (links) on the site.

You receive a commission for every person who buys something from those links. The more activity on your webpage, the more business you generate and the more commission you get.

Starting a Blog

Beyond just ads on their pages, bloggers can earn big bucks by reviewing products and linking to them.

If you have a large following, you can get commissions from sales and often receive products to review for free.

Capitalizing on the Sharing Economy

Different sharing economy companies offer either passive or active income opportunities.

You could also explore the realm of Airbnb or
peer-to-peer marketplaces like Neighbor.

For instance, if you have some unused space at home, like a garage or attic, why not transform it into an earning opportunity?

By listing your space on peer-to-peer marketplaces, you can connect with people needing storage, offering them a budget-friendly solution while boosting your earnings.

Renting out Your Apartment or Home

You only pay for the occasional cleaning between tenants and the maintenance costs. You could pocket a few hundred to a thousand dollars each month.

Starting in Rental Investing

  • House Hacking: Live in one unit of a multi-unit property and rent out the others.
  • Buy and Hold: Purchase property and rent it out for ongoing property.
  • Crowdfunding: Join others in pooling online money to invest in larger real estate projects.
  • Short-Term Rentals: Rent out properties for short durations, often using platforms like Peerspace.

Building an App

Consider apps like “Candy Crush” or “Evernote.” Once developed and popularized, they generate steady income from ads and in-app purchases. With the right programming and back-end computing experience, building an app of your own can yield big financial gains. 

Here’s a few different ways:

  1. Initial Purchases: Some users pay upfront to download your app.
  2. In-App Purchases: Offer bonus features or items for a price, like ‘Candy Crush’ does with power-ups.
  3. Ads: Display ads in free apps for consistent revenue.
  4. Subscriptions: Think ‘Evernote’. Offer basic features for free but charge for advanced ones.
  5. Affiliate Marketing: Recommend products inside your app and earn commissions.
  6. Updates: Charge for new features or content, keeping user interest alive.

After the development phase, apps can offer a steady income with little day-to-day management.

YouTube channel

If you get enough followers, you can make a lot as a YouTuber.

Here are the channel specialities you can explore:

Gaming

Gaming Channels and podcasts like “PewDiePie” or “Markiplier” have amassed millions of subscribers.

A popular gaming YouTuber can earn anywhere from $1,000 to $300,000+ per month, depending on views and sponsor deals. How they earn from ad revenue, sponsorships, merchandise, and sometimes game releases.

Beauty

Beauty Gurus such as Jeffree Star or NikkieTutorials have turned their channels into lucrative brands.

With makeup collaborations, PR packages, and sponsored content, some top beauty YouTubers can rake in between $10,000 to $200,000+ per month.

Podcasts

Popular podcasters like Joe Rogan have secured deals worth millions, such as his $100 million deal with Spotify.

‘The Daily’ from The New York Times also attracts a massive audience, translating to substantial ad revenue.

Depending on viewer count and sponsorship agreements, a top-tier podcaster can earn from $10,000 to over $1 million per episode.

With the right voice and audience on YouTube, passion can quickly turn into profit.

Passive Income Investments

Investments may be the way to go if you prefer to be behind the scenes.

While they’re a great way to build personal finance, you need an initial investment.

Don’t rush; instead, strategize and plan. Here are the primary investment areas to consider:

Stocks

Stocks are like buying a slice of a company. If the company does well, your slice’s value goes up.

However, consult with a financial advisor, as investing in stocks comes with various risks.

These risks include:

  • Company Issues: If a company faces problems like falling sales, its stock may drop.
  • Selling Troubles: Some lesser-known stocks might be hard to sell at a good price.
  • Currency Changes: Investing in overseas stocks? Currency value changes can affect your returns.

Bonds

There are generally two types of bonds to which lenders focus their attention: corporate bonds and municipal bonds.

Corporate bonds are like lending money to businesses. They can give you around 7% back, but you’ll pay the IRS taxes. However, they’re great for borrowers who need the capital.

Municipal bonds are loans to governments. They’re tax-free but usually give you a bit less, around 5% back.

Dividends

Think of dividend stocks as a bonus just for owning stock in a company. It’s often referred to as the least risky of passive income investing.

Focus on companies that distribute regular dividends when venturing into dividend investing.

Mutual Funds

Mutual funds are like big baskets filled with stocks, bonds, or other assets. Instead of picking individual stocks, you buy a portion of the entire basket.

This spreads your risk, as you’re not betting on just one company.

How to Start?

  • Set a Budget: Decide how much you want to invest.
  • Choose a Fund: Look for those matching your financial goals (like growth or safety).
  • Buy Shares: Use a brokerage account through apps like Robinhood or banks.
  • Watch and Adjust: Over time, see how your fund performs and adjust if needed.

Think of it as group investing; everyone chips in, professionals manage the pot, and you get a slice of the pie!

What are Ways to Create Passive Income Online?

While we’ve covered the “type” of passive income investments, let’s dive into some “specific” passive income ideas to maximize your online profit potential.

Advertising

Monetize Your Website or Blog

Websites with good traffic can make passive income via advertising. Platforms such as Google AdSense showcase ads, and you earn money when visitors engage. This has become a popular passive income source for many.

YouTube Ads

With a decent subscriber count, ads displayed in your videos can generate income, introducing you to the stock market of content creation.

Reviews

Affiliate Marketing

Reviewing products and using affiliate links lets you earn commissions. For example, discussing the benefits of a high-yield savings account or exchange-traded funds (ETFs) can provide interest income from clicks.

Companies might pay for product reviews, especially if the review can influence significant income streams in their favor.

Online Shopping

Cashback Sites

Sites like Rakuten give cash back for shopping, similar to how interest is paid in savings accounts. It’s an easy way to earn money without much effort.

Dropshipping

With this type of investment, you only purchase products when customers place order–allowing you to rake in a profit without actually holding the inventory.

Online Businesses

You design custom products, and a third party manufactures and ships them upon order, providing regular cash flow.

Digital Products

Crafting digital items like e-books can generate a portfolio income without additional effort.

Course Creator

As a course creator, you can turn your skills, like playing the piano, into online classes.

You can use online platforms to teach others what you already know and earn from it.

  1. Choose & Plan: Select a topic you’re skilled in and outline your course.
  2. Create & Host: Use tools like PowerPoint or video and upload to platforms like Teachable or Udemy.
  3. Price & Promote: Set a competitive price and market through social media or ads.

Looking For More Online Passive Income Options?

  • Licensing Content: If you’ve created music, photography, or artwork, you can license them for use in advertising, branding, or other creative projects. Each time someone uses your content, you earn a fee.
  • Trust the experts: A financial institution can handle these markets, ensuring a hassle-free experience for investors.
  • Peer-To-Peer Marketplace: As mentioned before, peer-to-peer marketplaces like Neighbor offer a great opportunity to share your space and earn money with no upfront cost.
  • Index funds or REITs: Consider index funds or real estate investment trusts (REITs) for dividends and a chance at capital growth.
  • Earn passively on your retirement account: By consistently contributing to your retirement account, you’re preparing for the future and earning interest on your contributions.

How You Can Create Multiple Streams of Income to Pay for Retirement?

Your future starts with the choices you make today.

Challenge yourself: Start investing with one income stream this month.

With each step, you’re not just adding financial value but crafting a future where your money works as hard as you do.

Once you’ve found you’re passive income strategy, dive in, experiment, and let your finances grow with time.

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