Best Passive Income Ideas 2021

Let’s talk passive income. What is it? And what are the best passive income ideas 2021 for you? 

So, what is passive income? While the phrase ‘passive income’ suggests that you can earn money while ‘doing nothing’, this is, however, really not the case at the beginning. 

You’ll need to invest some kind of effort, have a skill or invest some money to get into these ways of making passive income. 

It’s not hard, it’s just challenging especially if you’re thinking of having multiple income streams simultaneously.

But, the good thing about this is that you’ll spread your risks in such a way that you’ll recover quickly if one of your ways to make passive income doesn’t take root.

The main thing to remember is that building your streams of passive income is a long game where you’ll need to make some sacrifices now to start earning comfortably in the future.

What is Passive Income? 

The definition of passive income is the money or value you earn while you’re not actively engaged in working. It is money you earn while you’re doing other things – like your day job for instance. 

Some good examples of passive income ideas 2021 include earning money from your real estate investment, the stock market, or running an online business.

You can also turn your hobbies into ways to make passive income.


What Will It Take You To Start Earning From Passive Income Ideas in 2021?

Passive income is generated from the assets you already have – time and/or money. So there are 2 broad types of passive income streams.

Approach #1: Invest Money

If you’re currently sitting on some idle cash, you can channel it directly into passive income investments.

These ways of making passive income don’t normally require a lot of effort.

Just think of these smart passive income ideas as “putting your money to work” to generate more money in the process.

Examples Of Passive Income Ideas 2021 like these: 

  • Buying an already profitable blog.
  • Getting cash back for shopping.
  • Opening and high-yield savings account.
  • Invest in crowdfunded real estate.
  • Investing in dividend-paying stocks.

Approach #2: Invest Your Time and Effort

You can still earn passive income even if you don’t have extra cash to invest. And if this is the case, you’ll need to physically exert yourself to build your passive income assets.

These ways of making passive income may involve some monetary cost, but the lion’s share of your investment will be time and effort.

Examples Passive Income Ideas 2021 like these: 

  • Affiliate marketing 
  • Starting a YouTube channel
  • Creating and selling online courses
  • Starting an advertising agency
  • Build an e-commerce website
  • Write an e-book

What’s the Difference Between Active and Passive Income? 

Active income involves earning money directly in exchange for a service. It could be an hourly wage, a salary, tips or commissions. Essentially, it is exchanging your time for a fixed dollar amount.

A majority of people choose to make their living this way. There’s nothing inherently wrong with this but, there will always be a limit to how much you can reasonably earn.

I’m not saying that you should quit your job right now but, if you’re looking to create real wealth, this option is a no-go. 

If instead, you’re looking forward to becoming financially independent one day, then here are some of the best passive income ideas 2021.

Approach #1 Passive Income Ideas 2021

1. Invest in crowdfunded real estate

Investing in real estate is considered by many people to be the ultimate passive income investment. But the only problem is that this form of investment requires lots of upfront capital to start. 

Fortunately, nowadays there is a way you can invest in real estate without having to part with thousands of dollars on one property.

For example, a real estate investment trust (REIT) is a pool of money from many investors. This pool is managed by professional real estate investors.

The REIT acquires properties and all the returns accrued are shared among the investors.

Most REITs require still need a huge investment to get in. However, with Fundrise, you require as little as $500 to get access to dozens of solid, lucrative assets.

It’s an easy way of diversifying your investments and get maximum exposure to the real estate market.

2. Getting cash back for shopping online.

If you do a bit of online shopping, you could be missing out on passive income if you don’t already take advantage of cashback rewards.

There are two main ways to do this. First is by taking advantage of cashback credit cards. These typically offer 1 – 5% cash back for every purchase you make. Most cashback credit cards also offer sign up bonuses.

A second way to earn cashback is through cashback shopping portals. A good example of this is Rakuten that allows you to earn up to 40% cashback. It is completely free to join.

You can also download their browser extension to ensure you don’t miss out on good deals. 

Other examples of cashback portals include Dosh and Mypoints. These are great alternatives to Rakuten.

3. Buy an already profitable blog

If you’d like to skip the startup phase of getting an online business off the ground altogether, you might want to consider this option. 

And it’s actually pretty easy since lots of people start blogs, and get rid of them when they get bored. Why? Starting a blog is a labor-intensive process and that’s why this is not unheard of. 

There are 2 popular marketplaces where you can browse for blogs up for sale. These are Flippa and  Empire Flippers. 

The latter is the more prestigious inventory of the two. It’s not uncommon to see prices ranging from $20,000 to more than $1 million! 

Flippa, on the other hand, is less prestigious than its counterpart, but you might find some hidden gems on here too.

Bidding on this site starts as low as $1, so you may end up getting a pre-built blog for anything less than $1000!

4. Open a high-yield savings account

If you have your money in a traditional savings account, it’s high time you move it into a high-paying online savings account.

Traditional savings accounts have meager interest rates compared to online banks which have some really convincing interest rates. 

5. Rent out your space

This is one of the best passive income opportunities for you if you have some extra space on your property. You can turn your attic, basement, or garage into a passive income investment. is an app that will help you do this. With Neighbor, you can rent pretty much any space you own like your shed, office space, empty lot, or even your bedroom.

6. Peer to Peer Lending

P2P Lending, in short, is when you loan money to individuals or a business. They’ll then pay your money back with interest.

Here is how it works. For instance, if someone needs a $5K loan to start a business, they can borrow this amount from you through services like Lending Club, or Worthy

They first have to create an account and are assigned an interest rate on the loan depending on their income, credit history, and other factors.

You, the investor, also need to create an account and ‘buy’ the debt. You’ll earn your money back when the borrower makes monthly payments directly into your investment account. 

Depending on which platform you’re using, and the loan type, you can expect to get a 5% return. 

7. Invest in a CD Ladder

A CD Ladder is one of the best ways to make passive income. It’s very simple to grasp. Let’s say that you have a certain amount of money ‘X’. 

If you want to invest your money in a CD Ladder, you’ll first divide your money into equal amounts and invest each sum into individual CDs or Certificates of Deposit for different periods. 

Each CD has its own maturity date. Normally, you can invest your money in a CD for three, six, twelve, forty-eight, or sixty (five years) months. The longer you’re willing to commit your money, the higher the interest rate gets applied to it.

So, when investing in a CD ladder, you’ll be taking advantage of the interest rates offered for the various time periods.

This low-risk passive income investment strategy guarantees a steady cash flow since the CDs mature at different times. You also get FDIC insurance for your CD by default (in case your bank goes bankrupt).

Another reason this is one of the best passive income ideas is that you’re able to get a much higher interest rate compared to when you get an individual CD. 

Also, it’s much harder to miss out on short-term spikes in interest rates when you reinvest profits from matured CDs into newer ones with higher interest rates.

Passive Income Ideas 2021 That Need an Investment In Time & Effort

If you’re ready for some more work, this section can inspire you to start earning that steady stream of passive income. 

Here are some examples of passive income opportunities for you:

8. Affiliate Marketing 

This is the real definition of passive income. It is one of the best passive income opportunities online.

It involves promoting different brands’ products or services and in exchange, you get some commission out of each successful transaction.

The best way to make passive income through affiliate marketing is via any kind of online content like blog posts, podcasts, YouTube videos, and the like.

So, one of the best ways to launch your affiliate marketing career is by launching your very own blog or buying one. 

To maximize earnings from affiliate links, you’ll need to focus on a niche market. The best affiliate marketing strategy is one that has the best product-audience fit.

Also, having a blog will open you up to different kinds of passive income streams. You can not only make money through affiliate marketing but through advertising too. 

9. Start a YouTube Channel

Youtube is also one of the best passive income ideas 2021. And just like a blog, there is so much you can do with your very own YouTube channel. 

First, you can make videos for almost any niche market you identify.

For instance, your channel can be about any of the popular topics like travel guides, makeup tutorials, or anything else you can think of. 

Another great thing about YouTube channels is that they can be monetized in so many different ways.

Your view count on each video can make you money, you can have ads and even do some affiliate marketing. 

One popular way of making money on YouTube is through sponsored posts. You’ll get opportunities like these when your channel reaches a certain number of subscribers.

10. Build and Sell Online Courses

Building and selling online courses is another great example of passive income.

If you have knowledge or skills in a particular topic, you can create an online course to teach it online. With online courses, you can teach about almost any topic you fancy.

Most learning these days takes place online through online course platforms. Most people prefer this method of learning because it is way more convenient than conventional ways of learning. 

You can launch your very own online course on any of these online course platforms today. It’s easy and most of them have excellent features to help you do your best work.

Some great examples of what all online course platforms should be include, Thinkific, and MemberVault.

11. Build an eCommerce Site

This is one of the most appealing ways of making passive income because it allows you to make money even when you’re asleep.

However, most, if not all, e-commerce sites take a lot of work to get them up and running properly. 

But once you find a system that works, running and maintaining it will turn out to be passive.

Here are some examples of passive income through eCommerce sites today:

Sell your own product: this involves sourcing or manufacturing your own product(s)

Sell other people’s products: involves getting goods from one or various companies.

Dropship: when customers order from your site, the manufacturer ships.

12. Sell Photos online

This is another great example of how to make passive income.

It’s pretty simple to get paid to take pictures. And one of the best sites to sell your pictures Shutterstock. 

All you have to do is set up an account, and upload your photos. You’ll get paid every time a customer downloads your photos.

The amount you’ll get depends on the type of customer who buys your photo.

For instance, if a customer on a monthly subscription downloads your image, you’ll get less for the image as opposed to when a buyer specifically pays for your image. 

13. Let Your Car Work For You

How often does your car sit around not being used? If this occurs too often, then you have 2 options.

Let your car continue sitting around and depreciate or use it to generate passive income. 

Rent out your car with Getaround

You can potentially earn thousands of bucks per year with Getaround. It costs an annual average of almost $9000 to own a car.

By renting your car, you can, at least, save on some of this cost.

This is an app that pays you to advertise different brands or businesses on your car. According to their website, drivers stand to make at least $400/ month on Wrapify.

To get started, you’ll need to download the app, track your driving and once you meet the minimum requirements, you’ll get notified when an opportunity arises in your area.

Rent out your RV with RVShare

If you own an RV you don’t use often, you can use RVShare to rent it out to travelers and turn your vehicle into one of the most profitable ways of making passive income for you. 

To get started, all you need to do is register on their website, create a listing for your vehicle, and wait for booking inquiries.

The amount you stand to earn depends on the type of RV you are listing, the season and how long each rental lasts.

14. Write an eBook

Writing a book is one of the best ideas for passive income.

Have you ever considered self-publishing your own book? Now you can. Online platforms like Amazon Kindle Direct Publishing will help you start generating passive income writing eBooks. 

eBooks are usually much easier to write and sell since they are much shorter than the conventional book. 

You can write whichever genre you prefer, but the most successful one is non-fiction.

For example, you can write how-to guides and explanatory pieces on different topics like graphic design or fitness.

Publishing a book with Amazon KDP takes just a few minutes. And, most books appear on Kindle stores worldwide in less than 2 days.

Plus, this platform allows you to earn up to 70% royalties on each sale you make. You can also set your own prices and make revisions to your books anytime. 

15. Freelance work

If you’re willing to put the work in, freelance work can be one of the best streams of passive income.

The beauty of freelancing is that you can sell pretty much any skill you have. Whether it’s writing, transcription, proofreading, or graphic design. 

You can thousands of freelance opportunities on job boards like Fiverr, 99designs, Neon writer and DesignCrowd.

16. Start a Blog

This is one of the best passive income ideas 2021 you should try. Blogs are one of the best passive income streams there are.

You should consider starting a blog if you’re looking for a cheap and extremely scaleable way of generating passive income. 

The main idea behind blogging is to create value for your readers through content around your niche. This is how to make passive income from blogging.

Once your blog has grown over several months, you’ll start getting consistent traffic and this is the point where your blog will truly be a passive income stream.

The first step to starting your very own profitable blog is to get a registered domain and choosing a hosting plan. I went for Bluehost when I was a beginner.

17. Flip Products Online

This is a pretty simple concept that makes for one of the best passive income ideas in 2021.

You can do this on online retail platforms like Amazon or eBay. And you can flip pretty much anything people might be interested in. 

But first, get some background knowledge on the items you’d like to start selling. 

Find out how much the product costs, a reasonable price you can sell it for, or any other gap in the market like good after-sale services like shipping and/or packaging. 

This is one of the best examples of passive income if you can find someone who sells your products at a discounted price.

You could also look into valuable merch few others can get their hands on.

Once you start selling, it’s easy to build a following of people who interested in your products.

How Many Passive Income Streams are Enough For Me?

Truth be told, there is no golden number of passive income streams one should have. But the number of passive income opportunities you utilize depends on your current financial situation. 

It also depends on how your financial goals look like. 

You should have at least a few of these ways to make passive income locked in. This way, you’ll be able to generate more passive income in the long run.

Why & Where To Outsource Freelance Work For Your Passive Income Ideas in 2021

It might be a good idea to outsource tasks you need done for your business to skilled freelancers online. 

This way, you can focus on more important of your business. Or, start a new one. This is the best way to make your smart passive income ideas work for you in 2021. 

You can and should outsource most of the crucial aspects of your business like content creation, marketing, and so on. Running a business can be stressful.

Here are some of the sites you should consider when you’ll be looking for freelance experts. – This freelance site has it all. You can get all kinds of freelance work on Fiverr. Plus their rates are friendly to small business owners.

Upwork – This site also has world-class freelancers you can hire to complete any task for your business.  

Guru is also another great site to get freelance services for your business.

How To Pick Smart Passive Income Ideas in 2021 For You

So, there you go. We’ve gone through passive income definition and some examples of smart passive income ideas 2021. Don’t let this information go to waste. Act on it!

Remember, it’s never too late to start making money from these examples of passive income ideas 2021.

In the end, you’ll have to try a combination of these passive income ideas 2021, or heck, try them all. There are still innumerable ideas out there, some obscure than others.

These are some of the best passive income ideas in 2021. And they are guaranteed to start making you some money on the side. 

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