WHAT IS PASSIVE INCOME: Top 31 Ideas To Earn Passively

What is Passive Income
Image Source: Corporate Finance Institute
Table of Contents Hide
  1. What is Passive Income?
  2. Is Passive Income Taxed?
    1. Short-term Capital Gains Tax and Passive Income
    2. Long-term Capital Gains Tax and Passive Income
  3. Is rent considered a passive Income?
  4. Is Passive Income the Same as Self-Employed?
  5. Passive Income Ideas For Students
    1. #1. Develop a Mobile App
    2. #2. Offer to Sell Stock Photos and Videos
    3. #3. In-House Babysitting Service
    4. #4. Housesit
    5. #5. Rent Your Car
    6. #6. Advertise With Your Car
    7. #7. Room Rental
    8. #8. Rent a Bicycle
    9. #9. House Sit Pets
    10. #10. Selling of Notes
    11. #11. Sell Worksheets and Other Templates
    12. Other Students’ Passive Income Ideas Include
    13. Passive Income Online Ideas
    14. #1. Blogging
    15. #2. Vlog
    16. Vlogging as Students Online Passive Income Ideas: How Do I Start One?
    17. #3. Make a Podcast
    18. #4. Domain Names
    19. #5. Amazon KDP
    20. #6. Buy a Blog
    21. #7. Start an Online Course
    22. #8. Market Digital Products
    23. #9. Participate in an Affiliate Program
  6. Other Passive Income Ideas
    1. #1. Invest in High-Yield Dividend Stocks
    2. #2. Invest in Real Estate Crowdfunding
    3. #3. Rental Property
    4. #4. Invest in a Billboard
    5. #5. Royalties
    6. #6. Rent a Storage Unit
    7. #7. Rent Your Tools
    8. #8. Start Up a Vending Machine
    9. #9. Rent Out Your Parking Spot
    10. #10. Set Up a Retirement Account
  7. Dropshipping Passive Income
  8. How Does Dropshipping Work?
    1. Earning Passive Income With Dropshipping
    2. Steps to Starting Your First Passive Income Dropshipping Business
  9. What Are The 7 Sources Of Income?
  10. What is a good passive income?
  11. What are 3 forms of passive income?
  12. What does the IRS consider passive income?
  13. Is passive income taxed?
  14. What is not considered passive income?
  15. Why don’t you pay taxes on passive income?
  16. Conclusion
  17. Passive Income Ideas FAQs
  18. What are the the top 5 passive income ideas
  19. What can I do to avoid paying taxes on passive income?
  20. Related Articles

The fastest route to reaching your financial goal is through passive income. Irrespective of how much you make from your current job, financial freedom comes with having multiple income streams and, of course, a good investment. The first question is, what’s your financial goal? How many streams of income do you have? Do you plan on doing a 9-5 job all you life? If your answer is no, then, check out these top 31 ideas on how to earn passively. There are several passive income ideas that students, 9-5 workers and even retirees can do online and offline. You’d jump on this if your want financial freedom. Dropshipping, blogging, vlogging, affiliate marketing, and selling stock some of the ways that anyone can make passive income.

What is Passive Income?

If you build a house or buy a property you aren’t occupying, chances are that you’ll put it up for rent. Depending on the agreement you have with the occupant, you’ll be receiving money for the rental property from time to time without having to do much work. That’s a typical example of what passive income is about.

When we talk about passive income, we refer to the money you realize from your side business. It’s a side business because it doesn’t take as much time as a full-time business or job will. When it comes to earning passively, you’re going to first identify the business idea or investment opportunity. In all, passive income simply means making money off an idea without being actively involved in it or being partly involved without giving it all of your time, or being an employee only to give less attention as time goes on, even with increased earning.

According to the Internal Revenue Service (IRS), there are two sources of a passive business idea. The first is a business in which one is not actively involved, such as receiving book royalties or stock dividends and the second is rental properties.

“If you don’t find a way to make money while you sleep, you will work untill you die”

Warren Buffet

Is Passive Income Taxed?

Passive income is taxed by the U.S. Internal Revenue Service (IRS). You’ll find the taxation of passive income under the capital gains taxes category. This type of income is usually taxed at the same rate as salary, though deductions can sometimes be used to reduce the liability. This simply means that you can get tax deductions from your passive earnings if you record losses rather than profit from your side business. When it comes to how passive earnings are taxed on properties, it depends on the duration of the income in question. In all, passive earnings are either taxed as long-term or short-term.

Short-term Capital Gains Tax and Passive Income

Under the Internal Revenue Service (IRS) guidelines for capital gains tax, the taxation of short-term passive earnings is usually taxed at the marginal income rate.

Long-term Capital Gains Tax and Passive Income

The long-term capital gain tax only applies to assets held for more than a year. Long-term gains are taxed at rates ranging from 0% to 20%, depending on your taxable income, marital status, and filing status.

Is rent considered a passive Income?

Rent is a passive income. It’s actually one of the oldest or traditional means of earning passively. Anyone who has a rental property that he isn’t currently using will mostly rent it to tenants in exchange for money.

Is Passive Income the Same as Self-Employed?

There are two sides to this question. From the definition of what a passive income is, it’s anything that gives you money without taking most of your time. It requires little or no participation. This will help us answer this question. If being self-employed doesn’t require most of your time, then we can say it’s a passive income, but if it does require most of your time, it isn’t.

Passive Income Ideas For Students

Passive income isn’t just for people who are out of school. Thanks to the dynamic, booming economy, students can currently get involved in activities that won’t affect their academics and also enable them to earn money passively. If you’re a student looking out for passive income ideas, search no further, the answer is below;

#1. Develop a Mobile App

Students can make passive income with mobile app ideas, even without creating the apps themselves. If you’re into tech, particularly programming, great. That means you’ll be able to create the app yourself. But if you aren’t, you can still hire professionals to bring your ideas into reality. All you have to do is come up with an amazing app that people will love. You can buy a code, modify it and launch your app. You’ll definitely make money from ads.

#2. Offer to Sell Stock Photos and Videos

If you’re creative with cameras, chances are that you do have magical images in your gallery. Why waste them? You can offer to monetize your photography creativity and expertise by selling photos. You can also go a step further by learning simple video editing hacks to make and sell astounding videos on iStock, Adobe, Shutterstock, or others. This is one of the simplest ways for students to earn passive income.

Interestingly, you don’t need a camera set to start off. Once you have access to a phone with a good camera, you are good to go. Brands and social media experts buy tons of images daily for their content and to increase their visibility objectives. They do require images and videos and have to outsource them from sites like iStock. These sites are always willing to buy good images and videos, so it’s a great opportunity for students to start up their passive earnings.

How Do I Start Stock Images or Videos For Students’ Passive Income Ideas?

To earn passively with stock images or videos, simply log on to their website, sign up and upload your images. You’ll get a commission as soon as someone buys your creative idea (images or videos).

#3. In-House Babysitting Service

Before you disagree with babysitting being one of the students’ passive income ideas, hope you know it wouldn’t take all your day. It’s only within the timeframe of your services and you’re good to go.  A parent may need to attend to something and need help with babysitting their kids, you can opt to do this and get your money as soon as your time limit is up.

#4. Housesit

What’s the major difference between babysitting and housesitting? Babysitting connotes looking after kids, while housesitting refers to keeping watch on a house as well as keeping it clean while the owner is out for a while. Imagine having time for your school work, while being paid to stay in a house that isn’t yours? It’s such a winning situation.

#5. Rent Your Car

Students who have cars can also turn their cars into a side-hustle idea to earn passively. If you want to enlist your car for rent, simply go to Getaround or Turo, sign up, and upload pictures and other relevant information about your car online.

#6. Advertise With Your Car

If you’re comfortable with other mobile billboards, you can get paid for them. All you have to do is meet the businesses that want to advertise their product or service, present your car, get the branding done, and get paid for it. 

#7. Room Rental

When it comes to renting, it doesn’t have to be your personal property. You can sublease a portion of the property you rented, but then, it must be with your landlord’s permission. You will also be held accountable for anything that happens to the house in question because it was handed over to you. So be careful when renting your room.

#8. Rent a Bicycle

If you have a bicycle, you can put it up for hire. People who love cycling or want to get to a place quickly can always come to you. You can also get people who cycle for fun or exercise to come. Just sign up with Spinlisters to begin.

#9. House Sit Pets

Do you know you can earn money from housesitting pets? Yeah, you heard correctly. Aside from babysitting and housesitting, you can make a passive income from sitting people’s pets in your home while their owners are out. Getting clients shouldn’t be difficult, but then you can check out Rover, which is a good place to get clients. But then, do ensure you love pets before agreeing to this, you don’t want to be arrested for maltreating someone’s pets.

#10. Selling of Notes

There are two ways of making passive income with selling notes as students’ ideas. The first is that, aside from selling your notes to your classmates on your own, you can also sign up for a site like Study Soup. Study Soup allows you to become a top notetaker and earn up to $500 per course by selling your notes and study materials.

#11. Sell Worksheets and Other Templates

With websites like Teachers Pay Teachers or Etsy, anyone can sell their printable worksheets. All you have to do is simply upload your worksheets online and get your passive income in a variety of places. It’s just all about using your skills to make passive income online.

Other Students’ Passive Income Ideas Include

  • Blog
  • Transcribing
  • Content Creating
  • Graphics
  • freelance
  • Youtube channels and so on

Passive Income Online Ideas

There are several great online ideas that fetch passive income. It does require consistency but yields great results. The amazing thing about these ideas is that anyone who has an interest in it can easily start up irrespective of their age. Students, graduates, professionals, just name it. Check out the following online passive income ideas;

#1. Blogging

Blogging is an online passive income idea for students. In reality, just about anyone can start a blog. It isn’t limited to students alone. Starting a blog isn’t as easy as it seems though, but you’ll surmount obstacles and overcome challenges if you are resilient enough. Blogging requires time and financial commitment at its initial stage. A blog gives you multiple chances of earning. You can sell your product or service, promote other people’s products or services through affiliate marketing, be a brand influencer, apply for google Adsense, and so on.

#2. Vlog

If you’re like me, you’ll keep wondering why keeping up with the Kardashians is still up after so many years. A few years back, I was really into their vlog. It’s just so real, keeping up with their lifestyles and every point. Back then, it was really amazing. Vlogging about lifestyles is a great idea that yields passive income for students. Vlogging or having a YouTube channel is a great source of passive income for students.

When it comes to getting your videos out, all you need is just your camera. If you have a good camera, it’s perfect. If you do not have one, you can settle for your phone camera. All you need are creative ideas, that are fun, educating, and informational at the same time. As soon as your views get to Youtube’s target, your passive income ideas begin to roll in. You can also double as a brand influencer if you have a good number of followers.

Vlogging as Students Online Passive Income Ideas: How Do I Start One?

The following steps are snippets on how to start a vlog;

  • Discover your niche.
  • Identify your audience.
  • Simply use your Google account and sign in to Youtube. Create your channel with a unique vlog name.
  • Create valuable video content.
  • Maintain quality videos.
  • Optimize and resize your video

#3. Make a Podcast

The two common ways of earning with the podcast. You can make passive income with sponsor ad partners or simply sign up for podcast advertising services. Podcasting is yet another online passive income idea for students. All you have to do is find a niche, discover who your audience is, and feed them with content that they’d love.

#4. Domain Names

Did you know that the initial website to access the Facebook site was formerly TheFacebook.com? When they wanted to upgrade it to Facebook.com, it cost them $200,000. They paid another $8.5 million to redirect FB.com to Facebook.com. That’s how much you can make by buying and selling domain names. You can start an online passive income business with these ideas. All you have to do is identify domain names that have the potential to be in high demand and buy them from hosting companies. Then sell them off to the people who will need them in the future.

#5. Amazon KDP

Students can also make a passive income with Amazon KDP ideas. People who write books are not extraordinary, they are just ordinary people who are knowledgeable about one thing or the other that people need. Rather than going to publishing houses in exchange for royalties, you can simply use Amazon KDP to sell your books. All you have to do is simply to write those fascinating ideas you already have, upload them to your Amazon KDP handle, and viola, Amazon takes it up from there are publish your ebook.

#6. Buy a Blog

Another online passive income business idea is buying an existing blog. This is particularly for anyone who doesn’t have the time to start a blog from scratch. If you see someone who is willing to sell theirs, you can opt to buy and then restructure it to what you want. 

#7. Start an Online Course

If you’re like me, you’ve probably bought tons of courses or taken a dozen free courses on Udemy or other sites that offer some. You too can make passive income with this online idea. Sometime in April this year, I had to pay someone $10 to access his tutorial videos on Facebook ad analytics. If you’ve gathered a wealth of expertise on any particular thing that people will love to learn about, you can create a video course in which you teach people about that topic and charge them a fee to do so.

#8. Market Digital Products

Daily I received an email from Ted McGrath, the CEO of the Ted McGrath Brand, about one digital product or the other. From courses to e-books to webinars and so on. You don’t need a website to sell your digital product. All you need to do is simply sign up with platforms where you can sell your products, create them and sell them. You can also decide to borrow Ted’s email list ideas to increase your product visibility.

#9. Participate in an Affiliate Program

I talked about Ted McGrath and the daily mail I receive on his products and services. If I want to earn passively with Ted’s brand, I will simply sign in to his affiliate program and promote the product from my end. For every sale I make, I most certainly get a percentage commission. First, you’ll sign up as an affiliate, get a unique link, and promote the product using that link. For every sale record on that links, you’ll get a passive income.


Other Passive Income Ideas

Check out the following passive income ideas below;

#1. Invest in High-Yield Dividend Stocks

The stock market is a jumble of upwards and downward movement. You can earn considerably high this season and wonder what happened during the next payout. However, you can still make a considerable amount with a high yield dividend. If you have issues with deciding what to invest in, check out our top high-yield dividend-paying investments. 

#2. Invest in Real Estate Crowdfunding

While it’s not everyone that can own property because of the cost of acquiring one, you can always invest in crowdfunding. There are several real estate crowdfunding companies that you can invest in. Luckily, you don’t need an enormous amount to start off. With as little as $500, anyone can begin their journey to passive income with real estate crowdfunding

#3. Rental Property

Rent is considered one of the traditional means of earning passively. It only requires an initial monetary investment. This depends on whether you want to build the house from scratch or buy an existing property and put it in order. When you won’t occupy your property, you can rent it and earn passively from time to time. If you don’t want long-term tenants on your property, you can also choose to lease your property through sites like Airbnb.

#4. Invest in a Billboard

You’ll see billboards across the cities as you move from one spot to the other. However, there’s hardly a city without a billboard in the United States. Every now and then, you’ll notice the same billboard advertising different brands of products or services at different intervals. Ever wonder how much the owners of those billboards make by placing advertisements for people? Imagine how much you can amass if you own a billboard where businesses can advertise their products and services.

#5. Royalties

One of the fascinating things about royalties is that you don’t have to be the creator of that intellectual product to earn from it. You simply need to sponsor amazing ideas and earn from them.

#6. Rent a Storage Unit

Aside from your tools, or parking space, you can also rent out the extra space in your garage. You’ll definitely find interested clients on Stashii and other similar websites. 

#7. Rent Your Tools

Hey, do you know you can put up some of your tools for hire? Thanks to sites like Sparetoolz, excess items in boxes stored in the garage room can now be used to earn passively.

#8. Start Up a Vending Machine

The vending machine business is another side hustle that can amass cash for you passively. It does require time because someone will have to restock the vending machine every now and then, but it doesn’t mean it will take all your time. If your vending machine is placed at a strategic location, you’ll definitely make a lot from this passive income business idea. 

#9. Rent Out Your Parking Spot

Rather than live with a spacious driveway, do you know you can rent it and make money from doing so? Check out Stow It. You’ll like to find someone who will gladly pay you to use your parking space.

#10. Set Up a Retirement Account

Retirement accounts are usually investment accounts. You don’t just set aside a certain amount of your earnings every month, you invest them in one mutual fund or the other. Retirement accounts give you the freedom to invest in mutual funds. This means you will make passive income while preparing for your retirement. 


Dropshipping Passive Income

Before diving straight into how people make passive income with dropshipping, what’s dropshipping all about?

In dropshipping, there are three active parties. The wholesaler or producer, the seller who advertises the products or services, and the customer. The seller is usually the middleman. However, he doesn’t stock the goods in question. He only promotes the products and then forwards every order received to the wholesaler or producer. The wholesaler, or the producer, will receive the order from the seller and forward the demand to the customer.

How Does Dropshipping Work?

An interested seller will have to research the kind of product he wants to sell, set up an online store, promote the product, and receive orders. The supposed seller forwards orders to the wholesaler or company, which will then ship the products to the customer with the details provided by the seller. Depending on the product or their policy, you may have to sign up as a drop shipper but this doesn’t apply to every product.

Earning Passive Income With Dropshipping

If you are looking for one of the most profitable online passive income ideas for students or anyone, dropshipping is perfect. How do sellers make passive income with dropshipping? Dropshipping makes sellers earn passive income by fixing the prices of their products. If, for instance, a Bunny sport legging is $115, I can fix the price at $135 with free shipping. When I receive orders for the leggings, I will forward the details to the producers, and they will ship the items to my customers while I pay them the initial $115. The extra $20 is the passive income I made for dropshipping the product.

Steps to Starting Your First Passive Income Dropshipping Business

The following are steps to starting a successful dropshipping business that will result in passive income;

  • Select a dropshipping business idea: This is the product in question.
  • Conduct competitive research.
  • Select a supplier.
  • Create your own online store.
  • Choose a business structure.
  • Organize your finances.
  • Promote your dropshipping store.
  • Analyze and improve your product.
  • Promote your offering

What Are The 7 Sources Of Income?

The 7 sources of income are the other approved legal ways of earning money. While it’s true that there are three forms of income, their sources are spread among seven branches. These are as follows;

  • Interest Income
  • Rental Income
  • Earned Income
  • Royalty IncomeProfit Income
  • Dividend Income
  • Capital Gains Income

What is a good passive income?

Investments in mutual funds, real estate, internet retail, the creation of online courses, and other non-active side businesses are all examples of passive income streams.

What are 3 forms of passive income?

One method to diversify your income is by establishing passive income streams, which can aid in your long-term goal of wealth accumulation and financial independence. There are numerous ways to generate passive income, including real estate investing, renting out homes, and collecting royalties.

What does the IRS consider passive income?

Activities in commerce or company that you don’t actively participate in are considered passive. If you take a regular, continuous, and significant part in how an activity is run, you are said to be taking a material part in it.

Is passive income taxed?

Is passive income subject to taxes? Absolutely, the IRS levies taxes on passive income. Although there are situations when deductions can be used to lower the tax obligation, this form of income is frequently taxed at the same rate as wages earned from a job.

What is not considered passive income?

Any earnings or losses that fall outside of the passive category are referred to as nonpassive. Any active income, including wages, business profits, and investment income, is categorized as nonpassive income. Losses incurred when actively managing a firm are considered nonpassive losses.

Why don’t you pay taxes on passive income?

Is Passive Income Subject to Taxes? Income from passive pursuits is taxable, just as income from a full-time work. You are also liable for paying taxes on any income you earn if you sell your stake in a passive income activity or a piece of property that does the same.


The fastest way to realize your financial goals or to become financially free is to have multiple streams of income without having to do much to keep the inflow alive. Millions of people reportedly made huge amounts of dollars from passive income ideas. But then, it may require financial commitment at the initial stage, but once you go past the initial stage, you simply sit back and make your passive income.

Passive Income Ideas FAQs

What are the the top 5 passive income ideas

The first top 5 passive income ideas include dropshipping, rental properties, e-commerce, vlogging, and blogging.

What can I do to avoid paying taxes on passive income?

Simply divert your dividend into your money market investment.

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