The Best TYPES OF PASSIVE INCOME: Best 2023 Practices 

Best Types Of Passive Income
Image Credit: Fresh Books

What are your goals this year? I bet it includes how to increase your earnings. Every year, millions of people have a common resolution when it comes to financing. Most people desire to raise their income, and financial experts like Warren Buffet will always say, “If you don’t find a way to make money while you sleep, you will work until you die.” No one wants to work all their lives or through their retirement, and so millions of Americans and people all across the globe have taken to other means of building wealth passively. If you are looking for passive income ideas, we’ve got you covered with their types as well as ideas.

How Do Rich People Make Passive Income?

Interest and dividends are the two main types of passive income that the rich maximize. Interest comes from two main places: deposit accounts that pay interest, like a savings account; and loans to people (through peer-to-peer lending or private notes) or businesses (through traditional loans) (bonds, notes).

Best Types of Passive Income 

The following are some of the best types of passive income generators that you can check out;

#1. Create a Course

First on our list of passive income types is creating an online course. A course can be a great source of income because, after the initial investment of time, it’s easy to make money. Making an audio or video course, then sitting back and watching the money stream in from the sale of your product, is a common method for generating passive income. All you have to do is simply create valuable courses, and people will buy them while you work on other things. You don’t have to worry about where to sell them as you have various platforms like Udemy, SkillShare, and Coursera. You can also build a mailing list and sell through your website.

I know a friend who sells online courses with tactics. First, he offers you freemium value and then leaves you with the desire for more knowledge. Of course, you’ll be forced to buy his courses because he’s already made you hungry for information.

#2. Investing

Investing over the years has been simplified thanks to advanced business models and technology. Consider forex: today, almost anyone can trade in the foreign exchange market from anywhere in the world, which was not always the case. It’s interesting that it’s one of the oldest and safest ways to make money without doing anything. Investing exists in several forms, let’s highlight some of these below


This is the first of our investment options. Stocks, like other investments, are volatile, which means they can pay out large or small dividends. The return potential of stocks is often higher, but like most investments, that higher return comes with a larger risk.

Bonds or CDs

Investing involves risk, and if you are looking for safer investments, then you need to check out bonds and certificates of deposit. They are safe ways to put your money to work, but you will only make small profits in exchange for the low risk. 

Index Funds

These are a combination of equities and bonds for a certain market. Index funds have a higher risk profile than CDs. They can, however, be liquidated in one to three business days.

Money Market

If you want to play low, you can check out the money market. It offers more stability than most investment options. Despite their minimal risk and low return, they can be quickly and easily liquidated.

Real Estate Investment

Investing in real estate is an alternative investment. There are various ways to invest in real estate. If you can afford to buy a property either with personal cash or through a mortgage, great; if you can’t, you can also switch to REITs.

#3. Publish a Book on Kindle

The second way on our list of ideas for passive income is publishing a book on Kindle. It’s simply writing and publishing, and this is an amazing passive income idea. Think you’ve got an amazing idea that needs to be documented? Write an ebook and publish it on services like Medium’s Partner Program or Amazon’s Kindle Direct Publishing (KDP). These platforms make it simple for content creators to earn royalties or residual income from their work.

#4. Selling products on Amazon

On Amazon, there are many different ways to get passive income. There are millions of Amazon customers that you may reach out to in order to sell things without having to deal with sales, shipping, or customers personally. Yup, you heard me right. You don’t have to go through the rigorous process or financial constraints of building a website; nope, that wouldn’t be necessary.

You only need to spend time and work on building your store or buying an Amazon FBA business that is already up and running.

#5. Build a Membership Site 

I went to a website to read an article, but before I could read it, I had to sign up for its membership program, even though I had already signed up for its mailing list. Of course, it comes at a price and must be renewed annually. This is another great way to generate passive income. 

Membership sites let you charge regular users a regular price for access to important information or resources. With this model, you are basically licensing your work, which is similar to how subscription-based software or streaming services make money. Your membership site might start off modestly and grow from there.

#6. Vending Machines

A vending machine is another way of earning passive income, but it does require little commitment. First, you need to pinpoint a strategic point to set up the vending machine. Then you also need to pay attention to restocking the vending machine every now and then. 

#7. Sell Photography Online

Just about anyone can take a shot using a good camera, but there are people who are extraordinary with pictures. They can make a unique story out of even the most difficult situations. If you are one of those people who take pictures for fun, you can turn your passion into a passive income. You can make money without doing anything if you sell photos online, especially if you can sell the same photos over and over. To accomplish this, you may hire stock photo agencies like Getty Images, Shutterstock, or Alamy.

#8. Build an App

There aren’t too many people who think about apps as a source of passive income. Like other passive income ideas, it requires time and commitment at the initial start-up. If you can create applications, then you can seize this opportunity. Once your app is built, you can publish it in an app store and put it up for sale. Even if the app is free, you can earn money through ad placement. 

#9. Dropshipping

If you decide to start a dropshipping business, it may become a source of income that you don’t have to do much work for. With drop shipping, you can sell products on a platform and have someone else handle the labor-intensive tasks of producing the goods and shipping them out on your behalf.

You must establish the brand, promote it, and increase your clientele. Your dropshipping business will become a passive source of income once everything is set up and you have a steady flow of both new and returning customers.

Another great way to generate passive income is by leveraging affiliate links. If you’re interested in the world of e-commerce but don’t feel like developing your own product, affiliate connections can provide a nice passive revenue stream. Through affiliate marketing, you can get a commission every time someone buys something online that you suggested. All you need is an audience; the larger, the better. Using affiliate links from online marketplaces, you can send your followers to specific physical items you want to sell. For example, earnings from a job are not passive income because they require you to do something. It was one of the tactics that increased the Airbnb market.

How Can I Make $1000 a Month Passively?

Making $1000 a month passively is easy; all you have to do is set up multiple ideas that will generate income.

What are the 7 sources of income?

  • Royalties and Selling Rights
  • Capital Gains From Appreciated Assets
  • Dividend Income
  • Rental Income
  • Interest Payments
  • Earned Income
  • Business Income

How do You Start Passive Income?

Invest in any of the following;

  1. Dividend index funds and exchange-traded funds
  2. Bonds and bond index funds
  3. Dividend stocks
  4. High-yield savings accounts
  5. Rental properties
  6. Private equity
  7. Peer-to-peer lending. …
  8. Content

What Passive Income Is Not

Millions of people mistake passive income o to be side hustles, this is a wrong assumption. Passive income may generate money for you repeatedly over time without much involvement, but a side hustle needs you to be involved each time you’ll be paid from it. Let’s take a close look at what passive income is not;

#1. A Full Job

One of the things a passive income is not is a job. Earnings from a job, for example, are not considered passive income because they require active participation from you.

#2. A Second Job

A side hustle is also not a passive income source. This simply means your second job isn’t a passive income stream because you have to actively participate in the transaction in order to receive payment. A passive income is one that can be made without putting in much work.

#3. Non-Income Producing Assets

Investments that pay dividends or interest are usually a great way to make money without doing anything. Even though stocks and investments that don’t pay dividends, like cryptocurrencies, are appealing, you can’t count on them to give you a steady stream of income.

Different Types of Passive Income

Passive income exists in various forms and types, check out the following;

#1. Build Assets

Building assets is the first type of passive income on our list. One of the best leadership coaches who ever lived, Myles Munroe, will always say, “You have a gift, and you can change the world with it if you refine it.” Making something that can be sold to others and used to produce a passive income includes working once and reaping the benefits of that work over and over again. Create something digital, like an app, an ebook, or a course.

#2. Reverse Passive Income

Next on our list of passive income types is reverse passive income. You aren’t exactly earning passively, but you are reducing your expenses. If, for instance, you took a student loan and were unable to pay it when it was due, you will have to renegotiate the debt by reducing your expenses too. 

#3. Share or Sell Assets

The sharing or sale of assets is the third type of passive income asset. Although this sounds more like ownership in a company, it’s far from it. Have you ever had to travel out of your state and then look up available guest homes on Airbnb or other platforms? Well, that’s what this is about. Earning money without actively doing anything is called passive income, and it can come from things like renting out your home or selling your old car. Anyone can generate passive income from their possessions or what is in their care. Rental properties, Airbnb hosting, garage space, and the option to rent out your car are all examples of assets you can share or sell. 

#4. Cash-Flowing Assets

When it comes to cash-flowing assets, you’ll need an initial investment of time and money. This is one of the types of passive income that requires upfront expenses, but the potential returns on these passive income strategies are high. Examples of cash-flowing assets include real estate, company lending, and so on

How Much Money Can I Earn?

The thought of making passive income is thrilling, and trust me, it’s every person’s financial goal. Most passive income, however, necessitates some level of active participation and time. Building wealth with it requires effort and time. It’s up to you how you go about it, but you could make a few hundred to several hundred thousand dollars more.

How Many Passive Income Ideas Do I Need?

It’s a good idea to diversify your income if you can afford to do so and have the time to do so. Make sure you have a plan in place for passive income so that you aren’t relying too heavily on any one source of income to the detriment of others.


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