Trying to work out how to make passive income online? Let’s be completely honest: passive income doesn’t really exist. That is, 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. Here, I’ll show you actionable steps for creating online passive income sources. These are tried-and-tested methods, from drop shipping to course creation that have the potential to (eventually) put your earnings on autopilot.

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 the income is recurring. Do the heavy lifting upfront, and then with a bit of touching up along the way, you reap the rewards – sometimes while you sleep.

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

Diagram illustrating the dropshipping process

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. This model allows budding entrepreneurs to start with little money down, making it an easier road to financial freedom.

That said, dropshipping success goes beyond merely establishing an online store and expecting sales. It takes time, a smart strategy, and a relentless focus on customer service because competition is high. But you can make money relatively quickly. Sebastian Ghiorhgiu tells the story of how he started 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 allows you to sell customized white-label products on a per-order basis.

Platforms like Printful handle the production, fulfilment, and shipping processes, freeing you from the headaches of inventory management. Plus, payment for their services is required only when an order is placed, making this very cost-effective.

Choosing the right print-on-demand sector is important. 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

Another big earner is the world of content creation. Specifically, blogging or vlogging. While it may seem like a hobby to some, blogging can be a powerful tool for generating passive income. With a regularly updated blog or YouTube channel, you can reach an annual 8-figure income. (I’m definitely still working on that!)

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.

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 consistently increase traffic.

Diagram describing how affiliate marketing works

4. Explore Affiliate Marketing Opportunities

Affiliate marketing is another effective way to generate passive income and earn money. It involves recommending a product or service to your audience and earning a commission when someone uses your referral link to make a purchase. 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, providing a potentially significant source of revenue.

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 providing value consistently over time. There’s no shortcut to becoming known as an authority in your niche.

5. Develop and Sell Online Courses

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 have specialized knowledge, developing and selling an online course could be your ticket to generating passive income online.

There is a significant upfront time investment to create a course (planning, writing, filming, editing), but the returns can be worth the effort. That’s because once you’ve created your course, you can often go on selling it for many years. Despite the early time investment, it’s a low-startup-cost business model with the potential for long-tail passive income. 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. There are lots of platforms you can use to sell your course online:

Choosing a topic

Before you start creating your course, you need to decide on your subject. Successful courses commonly solve a particular pain point or problem. Bear in mind that, as well as needing expertise, you need to check that there’s a demand for that 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, so videos should be no longer than 10 minutes each, where possible.

as well as 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, as well as 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 mini-courses. These act as enticing lead magnets, enabling you to collect the email addresses of potential students for this course 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.

Woman relaxing and reading an eBook on her Kindle

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 to make it available to a global audience. That said, beware: you’ve probably noticed that there are quite a few books competing with you on Amazon!

Unless you hit a home run, you’ll probably need several self-published books before you start to earn passive income.

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
  • Templates
  • Software
  • Online courses

Digital products can be sold repeatedly, boasting high profit margins and involving no inventory or storage costs.

Digital products can be sold on platforms like:

Each platform offers unique features like third-party integrations, social media selling, and customizable checkout, providing you with 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. By focusing on these aspects, you can increase the likelihood of your digital product being successful.

8. License Your Creative Work

For the creatives out there, licensing your work can generate a steady stream of passive income. This could involve licensing music, photography, or any other type of creative work.

For musicians, there are various avenues to music licensing, such as direct submission and both exclusive and non-exclusive libraries. Each carries its own implications for earnings and rights retention, so it’s crucial to understand these options before diving in.

Photographers, on the other hand, can sell stock photos. By building a strong stock photography portfolio, they can achieve significant revenue – as much as five-figure monthly incomes! However, it takes time, and this industry is incredibly competitive if you’re just getting started. Choosing the right platform is really important for maximizing income.

9. Create and Monetize Mobile Apps

In today’s digital age, mobile apps have become an integral part of our daily lives, 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
Diagram illustrating how to make passive income online

10. Invest in Dividend Stocks and ETFs

At the other end of the cost scale, let’s delve into the realm of the stock market, and the potential earnings from investing in dividend stocks and ETFs. These investment vehicles can provide a steady cash flow, making them an excellent choice for passive income generation.

Dividend-themed ETFs offer instant diversification and a passive income stream, making them a great strategy for long-term investors. That said, bear in mind that high yields may potentially result in underperformance compared to the broader market’s total returns. Therefore, it’s crucial to balance yield with growth prospects.

When investing in dividend stocks, look for companies with consistent earnings, sound financial health, and manageable payout ratios. This ensures that the company can sustain or even grow its dividends, and provide you with a reliable income stream.

11. Utilize Peer-to-Peer Lending Platforms

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

By investing in loans through these platforms, you can generate passive income and 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 through diversification, awareness of economic conditions, and then only allocating a small portion of the fixed-income portfolio towards 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, real estate investing carries inherent risks. These investments often have lower liquidity and higher risks 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 an obvious one. However, renting out assets is another really good passive income strategy to generate rental income and create further passive income streams. This could involve anything from cars to storage spaces, all of which can be rented out to generate income. These 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 vigilance against potential scams, mitigating the risks of property damage or theft with adequate insurance, and being able to offer a prompt, high-quality service.

Looking to make passive income from your laptop? Check out my 56 side hustles from home.

The Bottom Line

As you can see, the methods of generating passive income online are both many and diverse. 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 shown above, 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.

Key Takeaways

  • Dropshipping is a low-risk, low-cost model that can be a good entry point for online entrepreneurs, but it’s competitive, so you need to do it smart and have brilliant customer service to succeed.
  • Blogging and creating content can be monetized through affiliate marketing and sponsored content. Success depends on building an engaged community and providing consistent value.
  • Creating and selling online courses allows you to leverage your expertise and sell to a global audience. Find a profitable niche, create valuable content, and use effective marketing tactics.

Want even more money-making ideas?


How can I make $1000 a month passively?

You can make $1000 a month by exploring various passive income ideas, such as starting a YouTube channel, writing an eBook, creating an online course, or investing in real estate. Take your first step towards financial freedom!

What is the best passive income online?

The best passive income online is the one that plays to your strengths and passions – whether that’s from high-yield savings accounts, creating an online course, selling stock photos or music, or utilizing affiliate marketing. These options offer diverse ways to generate income passively.

How can I monetize my blog?

You can monetize your blog through affiliate marketing, sponsored content, selling products, ads and hosting webinars. The key is to consistently create engaging content and build trust with your audience and organic traffic. Good luck!

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Image of the author Richard Riviere

Richard Riviere

Richard Riviere is a former wage slave who decided there must be more to life. Turning 50, he quit his job to try earning an income online and get his life back. From knowing zero about e-commerce, he managed to replace his 9-5 income within a year. He now teaches other midlifers how to start living life on their own terms.