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Making money in your sleep sounds like a dream.
We all know that to earn an income, you have to put in work.
And in some cases, hard work.
But the reality is you can make money while you sleep.
It is called passive income.
You put forth some work now and get the benefit of earning and income without putting in a lot of work in the future.
So what are the best ways to achieve this?
In this post I share with you 21 best passive income ideas.
Some require very work, while others require a lot of initial work.
But in all of these cases, you can earn an extra cash on the side.
Table of Contents
21 Ways To Make Money While You Sleep
What Is Passive Income?
Before we get into the different passive income streams, I want to make sure you fully understand what passive income is.
Passive income is making money when you are not actively involved.
For example, if you get up and go to a job all day and earn an income, this is not passive income.
It is active income.
Aside from getting paid vacation days or sick days, if you don’t show up to work, you don’t earn an income.
But with passive income, you can still earn an income even if you don’t show up to work.
For example, let’s say you own a McDonald’s franchise.
You’ve gotten it to the point where you have managers that take care of the daily business.
As a result, you could go off and travel the world and the McDonald’s you own will still operate and earn you money.
The problem is many people blur the lines between passive and active income.
They classify some active income side hustles as passive even though you are still required to do some work.
I’ll point these ideas out as I’ve included a few in this post.
With that said, let’s take a look at the various ways to earn money in your sleep.
#1. Investing In The Stock Market
When you invest in the stock market, you allow the market to work for you.
As your investments grow, your wealth grows.
And if you invest in stocks that pay a dividend, you earn an income as well.
The best way to do this on your own is to invest in index funds.
- Related: Discover the basics when investing for beginners
- Related: Click here for the ultimate guide to dividend investing
They are mutual funds or ETFs that track the market.
So whatever the market earns, you earn.
Plus many of these invest in companies that pay dividends, so each quarter, you will earn dividend income as well.
Another option is to invest with a robo-advisor like Betterment.
Going this route takes all the guesswork out of investing.
You answer a few simple questions, and Betterment will put you in the best investment for you.
It’s a great option for any new to investing or overwhelmed by the idea of investing.
I list investing in the stock market first because I feel it is the best way to make money while doing nothing.
As long as you don’t allow your emotions to get involved and you stay invested for the long term, you will grow your wealth in the stock market.
#2. High-Yield Savings Account
If the stock market is too risky for you right now, then the next best option is to find ways to earn a monthly income on your savings with a bank account.
Most people opt for online banks since they pay higher interest rates than a traditional bank.
This is a good strategy and one of the best online banks is CIT Bank.
They are always at the top end in terms of interest rates, so you know you will be earning as much as you can.
But are there any other safe options?
There are a couple.
The first is Worthy Bonds.
Worthy invests in small businesses by providing them loans for their inventory.
When you invest your money, you are helping to fund the loans for small businesses and as a result, you earn 5% each month on your money.
It’s a great way to safely grow your money without much risk.
You can read more in this detailed Worthy Bonds review.
Another option is to invest in I bonds.
These are government issued bonds that are a little different than your typical bond.
I bonds have a fixed interest rate as well as a variable interest rate.
The fixed interest rate is the interest you will always earn on the bond.
For example, if the fixed rate is 1%, you will always earn that 1% on your money.
The variable rate is tied to inflation.
So when inflation spikes, the variable rate will go up.
Going back to our example, if the variable rate is 3%, then you will earn a total of 4% on your money.
If the variable rate drops to 1%, then you will earn a total of 2% on your money.
You can buy I bonds directly from the government at TreasuryDirect.gov.
#3. Owning Rental Properties
Here is the first idea that is a blend of active income and passive income.
If have rental properties and are the landlord, collecting rent, responding to tenant issues, etc., then it is active income.
- Related: Discover the ultimate guide to investing in real estate
- Related: Learn what you need to know before becoming a landlord
But if you hire a property manager, then you truly can sit back and just collect rent.
Nonetheless, this is an excellent way to build wealth over the long term.
The biggest hurdle for many is you typically need a lot of money to get started.
After all, you need money for a down payment and make any updates or repairs to get it ready to be rented out.
There are ways you can buy rental property with very little money down, but this is more the exception than the rule.
If you are interested in this side hustle but don’t want to own the real estate yourself, you have a few more options.
First, you can invest in real estate investment trusts, also called REITs.
These are companies that usually invest in commercial real estate, though some now do invest in residential real estate as well.
You buy shares of the REIT stock and earn an income as it pays out distributions to shareholders.
The downside to this option is that the income you are earning is taxed as though it is ordinary income.
So if you go this route, you want to invest in REITs inside retirement accounts.
The other option is to invest with Diversyfund.
This is a crowdfunding real estate option where you and other investors pool your money and buy rentals.
You also earn income from the distributions.
It’s arguably the best option aside from buying rentals directly.
Click the link below to learn more.
#4. Credit Card Rewards
This might seem like an odd way to earn money passively, but it is an excellent idea.
There are 2 key points to maximize the income you earn doing this.
#1. Pay off your balance in full each month
#2. Have a strategy
If you don’t pay your bill off every month, you will be losing money.
Sure you will see your cash back or points balance increase, but it will be far less than the interest you are paying.
If you can do this, then the next step is to have a strategy.
You can’t just pick a credit card and think all is well.
What are your goals?
Do you want to travel for a reduced cost or for free?
Do you want to earn cash back so you can use that money for long term savings goals?
Once you answer these questions, you can start to determine which card or cards make the most sense for you.
For example, we use cards that offer cash back.
We use the cash back we earn to boost our savings every year.
From there, we use 3 different credit cards.
One we use for gas can groceries since we earn 6% and 3% respectively on each of these.
For everything else, we use another card that earns 2% cash back on everything else.
Finally, we have a third card that we use during certain times of the year when it offers 5% cash back in certain categories.
We chose this strategy because it maximized the cash back we earn and is simple to follow.
On average, we make between $1,000 and $1,500 a year in cash back.
It’s not a life changing amount, but over the years it has added up.
To find the best credit cards for your rewards strategy, click the link below.
#5. Cash Back Sites
Here is a bonus to the point above.
When you do any online shopping, you should be doing it through cash back websites like Swagbucks or Rakuten.
These sites partner with retailers and earn a commission when you purchase something through their portal.
They the pass along some of the savings to you.
I’ve earned anywhere from 1% to 25% cash back on my online shopping purchase.
It’s simple to do and adds up.
On average, we make around $1,000 in cash back.
Seeing as how we are paying with our credit cards, this means in total, our annual cash back is between $2,000 and $2,500 a year.
You can click the link below to join Swagbucks and get $5 in the process.
To make sure you are getting the most cash back, I recommend you sign up for Rakuten as well.
There are times when one pays more than the other or different stores are offered.
Click the link below to get $30 when you join and make a $30 purchase.
#6. Peer-To-Peer Lending
Peer to peer lending is a way individuals can loan money to others and skip the bank.
For many reasons, people would rather not involve a bank in the process of getting a loan.
Maybe their income is from self employment activities which makes it harder to borrow.
Or maybe they are working on improving their finances and they can get a better interest rate with a P2P lending service.
So how does this work?
You sign up for a site like Prosper or Lending Club and browse the list of people looking for loans.
If you find someone you want to loan money to, you decide on the amount.
For example, if they need $10,000 for a new car, you don’t need to lend them $10,000.
You can lend them $25 or $500 or as much as you want.
Assuming other people also fund the loan completely, the borrower gets the money and then starts to make monthly payments.
Each month, you get a portion of your lent money back as well as earn a small amount of interest.
After 5 years, you have your entire investment back, plus interest.
Many people diversify their money by investing in a few loans at once.
With various interest rates, they can achieve a higher return without as much risk.
#7. Renting Unused Space
Maybe you like the idea of rental real estate, but it is just too much for you.
Luckily, you can still make money with the simple way of renting out a room in your house or your garage.
You can either rent out a room to a long term renter or to short term rentals using sites like AirBNB or VRBO.
And you can rent out your garage to people who have a classic car but don’t have the room at their house to store it.
There isn’t much work involved on your end, and you get to collect a monthly rent check.
#8. Creating Private Label Rights Content
Here is an idea that involves a bit of work in the beginning, but you profit from it for years to come.
Private label rights content, or PLR is content you create and sell to others.
They have the right to then use that content however they want, even to sell it and make money from it.
Most PLR content these days is in the form of eBooks, blog posts, and workbooks.
You can focus on a specific topic, like personal development, and create various products.
Then you sell the rights to users and they can customize the cover or make small edits to make it their own.
This is passive income because you sell the same product to many people and they customize it to fit their needs.
#9. Selling T-Shirts
Are you creative?
If so, you can create slogans and artwork on t-shirts.
This is a great overlooked side hustle.
To make it work, you create a shirt and then determine who your ideal audience is.
Then create a Facebook ad targeting this customer.
If they want to buy the shirt, they click the link and it takes them to the print on demand t-shirt company where they place the order.
The print on demand company handles all the logistics, so you just focus on designs and marketing.
On an average shirt sale of $20, you can make around $10 a shirt.
Sell 100 shirts and you made $1,000!
#10. Selling Print On Demand Products
You can take the idea above and expand on it.
Some print on demand sites, like CafePress, allow you to design other things too.
You can design mouse pads, mugs, tote bags, and more.
The same process works when customers place an order.
Just know that the profit margin on these items tends to be less than t-shirts, so you would have to sell more items to earn a good income.
#11. Taking Part In Clinical Trials
This could be the easiest way to earn extra cash as you will literally make money while you sleep.
There are all sorts of sleep studies where researchers are learning about the importance of sleep.
For a few weeks, you go to a place where people will study your sleep.
In return you will get a few thousand dollars.
The only catch to this idea is if some medical condition arises as a result of the study.
You are responsible for your own health care costs.
#12. Creating A Website
Having your own site can really be broken down into multiple ideas.
But I’m keeping it as one so you can see the true potential here.
For starters, you can make money through affiliate marketing.
This is where you create a website and place affiliate links to Amazon products.
If users make a purchase after clicking on your links, you make money.
For example, if you have a camping website and link to a tent on Amazon and someone clicks on the link and makes a purchase, you earn money.
Another way to make money with a website is through ads.
You place ads within your blog posts and each time the ad appears, you earn money.
If you don’t like the look of ads, you can offer some basic information for free and then create a membership site where visitors pay for premium content.
Another option is to create and sell your own products.
Online courses, eBooks, etc. can all be sold through your website.
Finally, you can sell your own blog too.
Many sites sell for 10-20 times annual income, so if you are earning $30,000 a year with your site, you can sell it for $300,000 – $600,000.
#13. Writing eBooks
The world of eBooks is exploding, so if you have a lot to say on a subject, you could write and sell eBooks.
It doesn’t need to be 1,000 pages either.
Shorter books, like under 100 pages are in demand as they are quick to read through.
Once you write your book, you can list it on Amazon and collect an income every time you sell a copy.
Rinse and repeat with more books and you slowly create a steady income stream on the side.
#14. Starting A Dropshipping Business
Here is another idea that toes the line between passive and active income.
With drop shipping, you sell a product without taking inventory of it.
When an order is placed to buy the product, the order is completed by the drop shipping supplier and is sent to the customer.
You sit back and collect the profit from the sale.
The work that is done on your part is finding and advertising to the customer.
This is why I say this idea toes the line.
You will be putting in effort to find your ideal customers, so you will be actively working on this business.
But once you find and start marketing to your ideal customer, you can put things on auto pilot and work very little.
#15. Reselling With Amazon FBA
Reselling using Amazon is a popular way to earn an income on the side.
You find items, list them to sell on Amazon, and then ship them to an Amazon warehouse.
Amazon keeps your inventory and when it sells, Amazon will pack and ship the item.
They will also deal with all returns.
You collect your profit, minus Amazon fees.
This is an excellent way to earn a lot of money.
When I was doing this side gig, I was making $500 a week.
#16. Creating Digital Products
Digital products are not only easy to produce, but you only need to make one copy, saving you loads of time.
Once you put forth the initial effort to have the product created, you just sell downloads and make money.
There are all sorts of digital products you can create, including some I’ve listed in this post.
- eBooks
- Workbooks
- Online courses
- Printables
- Cheatsheets
Just think of a problem that needs solving and see if there is a way to create a digital product that will solve the issue and go from there.
#17. Selling Music
If you love to produce music, you can turn it into a passive revenue stream.
There are lots of people and businesses that are looking for music to listen to and use in their videos.
A good place to start is Fiverr, assuming you are making short instrumental tracks.
Here businesses will buy a track and use it as background music for videos.
Or if you are creating more traditional songs, you can upload your music to Bandcamp and let users find it and buy it.
There are many other sites in addition to Bandcamp you can list your music, but that one is by far the most popular.
#18. Building A YouTube Channel
If you like being in front for the camera, a good idea is to create your own YouTube channel.
These days all types of videos get views, so make something you are interested in.
Then begin to promote it.
Once you get enough views, you can monetize your videos with ads and get paid every time someone watches.
#19. Selling Online Courses
Are you an expert in a certain industry?
You could create online courses to help solve issues people face.
For example, maybe you are great at Pinterest.
You could create a few Pinterest courses for users who don’t know how to use the platform.
One course could be for individual users just looking to better understand it and another could be for businesses looking to drive traffic to their website.
After you do the upfront work of creating the courses, all that is left to do is promote it and earn extra money.
#20. Create An Online Store
There are all sorts of online stores you can create and profit from.
If you are into crafts, you can make and sell them on Etsy.
Or if you take great photos, you can set up a store online and sell them.
Once you have your products made, all that is left to do is market your products so they sell.
#21. Start A Business
I gave this example at the beginning of this post.
If you start your own business and get it to the point where you can have someone else manage the day to day operations, you have yourself an income without the work.
Understand that it could take years before you get to this point, so this is not an overnight idea.
- Related: Click here to learn how to become rich overnight
- Related: Discover the cheat sheet to become independently wealthy
You need to be patient with this idea, and if you are, you can make serious money.
Wrapping Up
So there are 21 ways you can make money while you sleep.
As you can see, this is an excellent way to create an additional passive income stream and potentially make a lot of money.
Just be sure to pick some ideas that you think you would enjoy, otherwise, the chances that you stick with it long term and earn as much money as possible is limited.
