Key takeaways
- Passive income requires an initial investment — either time or money. While passive income generates revenue with minimal ongoing effort, it typically requires substantial upfront investment in the form of either capital (like dividend investing) or time and effort (like creating online courses or building a blog).
- Diversification is important for passive income strategies. This can include combining different types of passive income, such as digital products, investments, and online businesses.
- Success in passive income requires identifying market opportunities and leveraging personal skills. The most effective passive income streams align with market demands while utilising one's existing expertise or resources.
We could all do with a bit of extra cash.
Yet finding more hours in the day to earn the pounds can be tricky.
The answer? Passive income: the art of making money while you sleep.
Here are some of the best (and most accessible) ways to earn passive income over the next twelve months.
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What is passive income?
Passive income is money you earn with minimal effort, typically from sources outside the traditional nine-to-five. In a regular job, you exchange your time for money. Passive income, on the other hand, doesn’t require your time once it’s set up.
Take, for example, owning shares that pay out quarterly dividends. The money arriving in your account is passive—you didn’t have to break a sweat to earn it.
Types of passive income
Just as with nine-to-five jobs, not every passive income stream is the same. There are various approaches and strategies you can use to build your passive income portfolio:
Diversified investments
You might opt for one big business to generate all your passive income, or you could spread the risk across several strategies to see what suits you best.
Short-term vs. long-term strategies
A short-term strategy could be dividend investing, which only requires some initial capital and a few clicks. Long-term strategies might need more time investment—for example, setting up a dropshipping business that eventually runs itself with little effort.
Initial investments
Will you invest your time (by building a business) or your money (by putting capital into passive investments) as your main approach? It depends on what you have available right now.
Opportunities
Spotting the right opportunities is key to the success of your passive income streams.
For example, are you looking at what’s possible when building a website with AI? Are you following shopping trends to identify where a dropshipping business could thrive?
It’s tempting to think all you need is a list of passive income ideas. But the most successful ways to create passive income require some creativity and forethought from your end.
Still, having a few ideas to inspire your next “ways to earn passive income” brainstorm never hurts.
Let’s start with some quick wins.
Quick passive income ideas for beginners
Idea #1: Affiliate marketing
Affiliate marketing is quick to get into for one reason: you can treat it as “online sales”.
You sign up with an established company, work as their affiliate, and earn a commission on each sale. You don’t need to build your own shop; just a blog, a social media presence, or another way to direct traffic.
Once you’ve set up, you can start collecting commissions on every sale you refer to those businesses.
Idea #2: Sell photos online
Shutterstock. Dreamstime. Adobe Stock.
These are sites where you can easily upload your photos and make a quick sale. All you need is a camera, a bit of creativity, and a way to show off your photography skills.
One caveat: there’s plenty of competition, so you’ll need to be at your best to stand out.
Idea #3: Monetise YouTube videos
Already have a YouTube channel? Got enough subscribers to join YouTube’s monetisation programme? If so, the views you’re already getting can become passive income in no time at all.
If your audience isn’t quite there yet, you might be surprised at how quickly you can grow. If you need tips, here’s an in-depth guide to making money on YouTube, with insights from the pros.
Idea #4: Offer consulting services
This one is only semi-passive, but if you have skills and an audience, it’s a rapid way to open up a new income stream.
People are always looking to learn new skills—and they’re willing to pay consultants for their expertise.
Consider creating video or text-based consulting services, or use an online training platform to showcase your skills, attract an audience, and earn from what you know.
Idea #5: Sell digital downloads
With a bit of software know-how, you can start selling digital products quickly. Here are just a few ideas:
- Digital art prints
- Website themes and templates
- Printable planners and journals
- Educational templates and worksheets
- Social media templates, such as ready-made designs for Instagram posts
People will even pay for your PDFs if they offer enough value.
With a bit of ingenuity and the right approach, you could soon be earning pounds in your sleep.
Idea #6: Domain Investing
The concept is simple: invest in domain names and hold onto them until someone wants to buy. This can be surprisingly lucrative—if you know where to spot the opportunities.
Idea #7: Dividend Investing
Shares and funds with high dividend yields can pay out either monthly or quarterly—you won’t need much time, but you’ll need some capital to see a steady return.
A good example is REITs (real estate investment trusts): these are investments that collect rental income and pay it out as dividends to investors.
The Best Ways to Make Passive Income Online from Home
Idea #8: Develop Online Courses
Got a skill? Turn it into a course, upload it to a website or hosted platform, and sell it repeatedly. It’s a bit like being a teacher, but with the benefit of earning passively.
Some course creators even make six-figure incomes every year—over £100,000!
Idea #9: Create and Sell Audiobooks
Two in five Brits now listens to audiobooks, and there’s a wealth of content in the public domain. If you’ve got a pleasant voice and something valuable to share, record yourself and sell that audio for years to come.
Idea #10: Create and Sell Ebooks
People will always need information—be it entertainment, practical advice, or business tips. If you have expertise to share, consider publishing it as an ebook and offering it for download on platforms like Gumroad or your own website.
Idea #11: Dropshipping
Did you know you don’t need to run your own warehouse to sell products online? Dropshipping allows you to partner with a supplier who handles fulfilment, while you manage sales. It’s similar to affiliate marketing—but you get to keep a larger share of the profits.
Idea #12: License Music or Sound Effects
With so much content being created on platforms like YouTube, there’s a growing demand for royalty-free music and sound effects. If you’re musically inclined, you can license your work through sites like PremiumBeat or Artlist.
Ideas to Generate Passive Income with Little or No Upfront Cost
Idea #13: Start a Blog
With enough visitors, your blog can attract affiliate advertising, direct sponsorships, or serve as a platform to sell your own digital products. For a straightforward, managed approach, consider WordPress hosting to get started.
Idea #14: Create a Membership Site
Platforms like Patreon are excellent for hosting your content behind a paywall, or you can create your own website to offer premium memberships and capitalise on your online following.
Idea #15: Self-Publish a Book On Demand
Similar to dropshipping, print-on-demand services—such as Amazon—let you publish your book and have it printed whenever someone places an order. Perfect for fiction writers who want to see their work in print.
Idea #16: Sell Printable Items
Digital downloads like planners and checklists are popular, but you can also have third parties print them as physical products. Platforms like Etsy can help you reach more buyers, though you’ll keep more profit selling directly from your own site. Consider easy-to-print products such as bookmarks, planners, and calendars.
Idea #17: Stock Video Footage
If you own a quality camera, it’s easier than you might think to capture stock video and license it online. Sites like Shutterstock or Adobe Stock are always on the lookout for fresh content, or you can charge royalties directly.
Idea #18: Print-on-Demand Merchandise
If you can dream up catchy slogans or creative designs for posters, mugs, or T-shirts, print-on-demand merchandise can be an effortless way to start a business. Companies like Printful and Printify handle most of the fulfilment, keeping things largely passive.
Idea #19: Create Your Own App
Think it sounds complicated or expensive? With no-code tools like Glide, you can create simple, monetisable apps. The key is to offer something people want to use. Many apps can remain free for users, with you earning from adverts—a low-maintenance route to passive income.
Passive vs. Active Income
Active income is money you earn by working—physically or mentally. Passive income is money that arrives in your bank account with little or no ongoing effort.
For example, if you’re a property manager, you have to collect rent, arrange maintenance, and manage tenants. But invest in a REIT, and all you need to do is buy shares—someone else takes care of the rest. That’s passive income.
How Much Can You Earn from Passive Income?
It varies hugely by method, effort, and investment. For example, if you invest £10,000 in a dividend fund paying 7% a year, you might earn £700 annually—about £58 a month.
If you own a business that generates passive income, the sky’s the limit. Successful affiliate sites with good traffic can earn anywhere from £800 to £4,000 a month or more.
Myths and Misconceptions about Passive Income
Passive income can sound too good to be true, which leads to a few common myths:
Myth 1: Passive income is easy. It can be—once set up! But most streams require significant time, effort, or investment upfront.
Myth 2: Passive income is a get-rich-quick scheme.Not at all. It’s about finding ways to offer value and building systems that generate money with minimal input.
Myth 3: I should quit my job for something passive. It’s usually safer to start as a side hustle. Only consider leaving your job once your passive income reliably covers your expenses.
Overcoming Challenges in Building Passive Income Streams
Passive income is not an overnight fix. It takes creative thinking, planning, and a good understanding of where your skills meet market demand. If you find the right fit, you’re on the path to a genuine passive income stream. If not, you may need to keep refining your approach.
