How to Make Passive Income Online in 2025 – Your Ultimate Guide

Trying to work out how to make passive income online? First of all, something you probably wouldn’t expect me to say: being completely honest, passive income doesn’t really exist.

That is to say, you don’t get money for nothing. It will take plenty of hard work at the beginning to find/create a product or service and then market it.

However, with the right strategy, you absolutely can build multiple income streams that pay you a recurring income – and which can become your primary source of earnings. I have done it many times over, and it works. If you give it time.

What is Passive Income?

Passive income is extra money earned outside of your regular 9-5 job or contract. The idea is that you don’t have to trade time for money – you do something once, and then the income is recurring.

Do the heavy lifting upfront, and then with a bit of touching up from time to time, you reap the rewards – and, yes, sometimes that is while you sleep.

Let’s look at some of the best passive income ideas.

1. Start a Dropshipping Store

Let’s start with a business model that has become incredibly popular: dropshipping. The reason it ticks so many boxes is that while you have your own online store selling a variety of products, you don’t need to carry any inventory.

That makes it a low-cost and, therefore, low-risk business model. Although you’re the seller, you transfer all customer orders and shipment details to a third-party supplier.

Dropshipping is often used as a springboard into the world of entrepreneurship. With no upfront inventory costs, you can dip your toe in and have an online business up and running pretty quickly.

That said, dropshipping is more than just opening an online store and expecting sales. It takes time, a smart strategy, and a relentless focus on customer service because competition is high.

That’s the downside, but it’s still possible to make money relatively quickly. Sebastian Ghiorhgiu tells the story of how he started dropshipping with $1,000 and earned $8 million in 6 years. Not bad!

2. Launch a Print-on-Demand Store

Just like dropshipping, the appeal here is the low-cost, no-inventory setup. This is a business model that lets you sell customized products (like t-shirts) on a per-order basis.

Platforms like Printful handle the production, fulfilment, and shipping processes, removing all the headaches of inventory management. Better still, payment for their services is required only when an order is placed.

Choosing the right print-on-demand sector is important, and then the right vendor. You should consider the following factors:

• The range of customization options
• Product quality
• Fulfillment speed
• Costs to maintain healthy margins

3. Build and Monetize a Blog

The world of content creation, the world I’m in, is less passive, but you can do it from anywhere. While it may seem like a hobby to some, blogging or vlogging can be a powerful tool for generating passive income.

With a regularly updated blog or YouTube channel, you can ultimately reach an annual 8-figure income. (I’m definitely still working on that!)

Vlogging in the 2020s can be more profitable than blogging because it’s less competitive. That’s thanks to the scary on-camera aspect and because consumers increasingly want to watch their content.

The good thing is that there are multiple ways to monetize a blog or vlog:

• Affiliate marketing
• Sponsored content
• Selling physical products or courses
• Hosting webinars
• Ad revenue

The more streams you can incorporate into your business, the more passive income you can make. You can start out with just one and diversify later.

If you have the capital, you can speed up your route to passive income with paid ads and faster content generation using AI.

However, you’ll still need to nurture an engaged community, become a trusted source of information, and provide massive value to your audience to increase traffic consistently. As I found out, this takes time.

4. Explore Affiliate Marketing Opportunities

Affiliate marketing is another effective way to generate passive income. It involves recommending a product or service to your audience and earning a commission when someone uses your referral link to make a purchase.

Again, this method requires little to no upfront investment, making it a great option for earning passive income.

Platforms like Instagram and TikTok have become popular destinations for affiliate marketing. Similarly, YouTubers can earn passive income by adding affiliate links to the descriptions below their videos.

The downside to generating passive income via affiliate marketing is the time investment. As described above, you need to build an audience, and that comes from consistently providing value consistently over time.

There’s no shortcut to becoming known as an authority in your niche.

5. Develop and Sell Online Courses

This is the king of passive income. Depending on your niche, you can charge high ticket prices – $10,000 is not uncommon. If you’ve already built a following online or on social media, you have a ready-made audience for your course.

You’ll be surprised at what you’re an expert in. It’s usually the things that come easily to you that you haven’t considered. And you only need to know more than most people you know to be considered an ‘expert’.

If you have good communication skills or specialized knowledge, developing and selling an online course could be your ticket to generating passive income online.

with the potential for long-tail passive income.

The downside is that there is a significant upfront time investment to create a course (planning, writing, filming, editing). But once you’ve created your course, you can often go on selling it for many years.

Despite that significant time investment, it’s a low-startup-cost business model – you just need a camera to record with. You don’t need formal certification to start creating an online course – you just need to create content that has value.

Selling your courses online opens the door to a worldwide audience, extending your reach far beyond a traditional classroom. And there are lots of platforms you can use to sell your course online:

• Udemy
• SkillShare
• Coursera
• Thinkific
• Teachable
• Payhip

Choosing a topic

Before you start creating your course, you need to decide on your subject. A successful course must solve a particular pain point or problem.

You also need to check that there is actually a demand for your subject. So, do your research. Low competition may seem positive, but just because there’s a gap in the market doesn’t mean there’s a market in the gap.

When it comes to choosing a profitable niche, the possibilities really are endless. From emerging topics like AI to longstanding interests such as cooking and personal finance, there’s a market for nearly every skill set.

Creating course content

Start by outlining the structure and dividing the content into short modules and lessons. People like bite-sized chunks… generally, the industry rule is that videos should be no longer than 10 minutes each. (That’s not always possible, I know.)

In addition to video tutorials, you can use interactive exercises, audio, presentations, and printable worksheets. Remember to share insights and skills from your personal experience, as this adds unique value and authenticity to your course.

Marketing your course

Developing a great course is only half the story – effective marketing is equally as important. Leveraging social media platforms such as Facebook, Instagram, and YouTube can help promote your course to a wider audience.

Another powerful marketing strategy is to offer free resources or a module of your course. These act as attractive lead magnets, enabling you to collect the email addresses of potential students for this course and/or your next one.

Forming partnerships with influencers or other content creators is another effective way to find an audience and gain credibility within your course’s niche.

I’ve teamed up with other people to create a joint product, sharing the profits. That exposes you to their audience, who might then follow and buy from you again in the future.

6. Write an eBook

If you don’t want to create a course, an easier route to selling your knowledge could be with eBooks. Anyone with expertise in a particular subject can put pen to paper and share that insight.

You’d be surprised what obscure subjects have sold well.

You can sell your digital book through your own website, but to reach a bigger audience, you’ll need to publish via a platform like Amazon’s Kindle Direct Publishing.

The downside is that a much greater audience means much greater competition. Amazon can work with you (for a greater share of any profits), and you can choose to advertise.

In reality, unless you hit a home run, you’ll probably need several self-published books before you start to earn passive income. However, if you commit to producing a book a month, you could have a thriving business next year.

7. Create and Sell Digital Products

If you’re a creator at heart, selling digital products could be your path to passive income. Some popular digital products include:

• eBooks (see above)
• Templates
• Software
• Online courses

Once again, the work is all front-loaded. However, once made, the same digital product can be sold again and again, making profit margins high. Like dropshipping, there are no inventory or storage costs.

Lots of options for selling digital products – platforms like:

• Shopify
• Stan
• Gumroad
• Sellfy
• SendOwl

Each platform comes with slightly different features like third-party integrations, social media selling, and customizable checkout, giving you the flexibility to choose the one that best suits your needs.

Keep in mind that the process of creating digital products goes beyond simply offering something for sale. It’s about providing value, solving a problem, or satisfying a need. (Stop me if I’m getting boring, but it’s really important!)

8. License Your Creative Work

For the real creatives, licensing their work can generate a steady stream of passive income. This could be licensing music, photography, or any other type of creative work.

If you’re a musician, there are several avenues for music licensing, such as direct submission and both exclusive and non-exclusive libraries. Each has its own implications for rights retention and earnings, so it’s important to understand these options before diving in.

Photographers can sell their work as stock photos. If you build a strong stock photography portfolio, you can achieve significant revenue – as much as a five-figure monthly income!

However, photography is trickier to make money with. That’s because it takes time, and this industry is incredibly competitive if you’re just getting started. Here, choosing the right platform is really important for maximizing income.

9. Create and Monetize Mobile Apps

Mobile apps are a part of everyday life, so they provide an excellent opportunity for making money online. Obviously, first, you need to have (or acquire) the technical skillset, but after that, this is another low-cost passive income stream.

Monetization can be achieved in several ways:

• Supporting in-app advertising
• Offering freemium upgrades
• Incorporating in-app purchases for virtual goods or extra features
• Offering subscriptions for continuous access to content or services

The barrier to entry is much lower now. There are lots of platforms available that you can use to create apps really easily. Gone are the days of needing to know how to code.

Here are some no-code app builders:

• Softr for beginners
• Glide for ease of use but more expensive
• Bubble for versatility
• Bildr for flexibility and visual building

10. Invest in Dividend Stocks and ETFs

At the other end of the cost scale, there’s the stock market and the potential earnings from investing in dividend stocks and exchange-traded funds (ETFs).

These investment vehicles can provide a steady cash flow by day trading or just set and forget. Either way, this is much more like genuinely passive income.

Dividend-themed ETFs offer a way to diversify, as well as that passive income stream, making them a great strategy for long-term investors.

That said, bear in mind that these yields may earn you less compared to the broader market’s total returns. Therefore, people often balance yield with growth prospects.

When investing in dividend stocks, look for companies with consistent earnings, sound financial health, and manageable payout ratios. This will mean that the company can sustain (or even grow) its dividends and make your income stream a reliable one.

11. Utilize Peer-to-Peer Lending Platforms

Peer-to-peer lending platforms provide another avenue for passive income. They connect lenders with borrowers, allowing you to earn income through interest payments.

Basically, you’re playing the role of a bank, lending money to others and earning interest in return. Some popular peer-to-peer lending platforms include:

• LendingClub
• Prosper
• Upstart
• Funding Circle

By investing in loans through these platforms, you can generate passive income and further diversify your investment portfolio.

Sites like Prosper and LendingClub have made peer-to-peer lending a viable option for many. These platforms handle the lending process, offering returns through interest payments.

Unsurprisingly, there are risks, such as defaults resulting from unsecured loans. However, these risks can be mitigated by diversifying, being aware of economic conditions, and then only allocating a small portion of the fixed-income portfolio to P2P lending.

12. Invest in Real Estate Crowdfunding

Real estate has long been a staple in the portfolios of the wealthy. But did you know that you don’t need a small fortune to start investing? Through real estate crowdfunding, you can pool money with other investors to invest in property developments and, in return, share in the profits generated from these assets.

Platforms like Fundrise and RealtyMogul have, in effect, democratized real estate investment, allowing you to diversify your investment across different geographic locations – and with a lower entry point.

This means you can start investing without the need for a ‘substantial’ upfront investment, by considering other options like real estate investment trusts.

Like all investments, there are inherent risks. These investments often have lower liquidity and higher stakes compared to traditional investments. Therefore, it’s crucial to understand these risks and make informed investment decisions.

13. Rent Out Your Assets

There are lots of ways to earn rental income. Rental property is the obvious one. However, renting out assets is another really good way to earn passive income.

Here are some easy passive income ideas to think about.

Platforms like Turo allow you to rent out your vehicle when you’re not using it. Other platforms like Spinlister and BabyQuip let you rent out your bikes, surfboards, or baby gear.

For a cut, these platforms handle the whole rental process, making it easy to earn passive income.

As with any competitive market, customer satisfaction is vital when leasing assets.

Other things to consider are being vigilant against potential scams, mitigating the risks of property damage or theft with adequate insurance, and offering prompt, high-quality service.

The Bottom Line

As you can see, there are tons of ways to generate passive income online. From dropshipping and blogging to crowdfunding real estate investments, there really is a world of opportunities out there.

The term ‘passive income’ is a bit misleading, as it suggests easy money. As illustrated, the path to passive income often has a heavy upfront workload, but the rewards can be well worth that initial effort – and often for many years to come.

It’s all about finding which format plays to your strengths – and how much spare time you have to give. I know from my own experience that online passive income really can change your life.

So, dive in and make a plan to start living life on your own terms again.