Are you looking to boost your income in 2020? In this post, Enoch from Savvy Canadian Money shares 7 passive income ideas with us. If you’re an avid Peerless Money reader, you may remember hearing about his from broke to financially woke journey. Take it away, Enoch!

7 Passive Income Ideas To Boost Your Income in 2020

Passive Income

Generating passive income and lots of it is the dream for many folks who desire to retire early.

While the 9-5 hustle pays our bills and can help us live comfortably as long as we remain healthy, nothing sounds better to my ears than the idea of earning income while I sleep.

This post covers some of the passive income strategies I have used to beef up my earnings, boost my retirement savings account, and pay off debt.

What is Passive Income?

Passive income refers to income you earn that requires little to no ongoing effort to maintain.

Whether you are getting returns from your investment portfolio or are earning income from a rental property, passive income is all about ensuring your earnings exceed your effort.

That said, it is important to note that passive income is not necessarily a ticket to easy money. As the saying goes, “there is no such thing as a free lunch.”

Many of the recurring income ideas detailed below require an initial investment of time, money, and effort.

After you have put in some work, your passive income machine continues to pay you well into the future.

Legit Ways To Earn Passive Income

These seven passive income strategies can help you get started on your journey towards financial independence.

1. Invest in the Financial Markets

If you have been avoiding the financial markets, it’s high time you became a participant. In the past, putting money into the markets involved a lot of work and it was also expensive. This is no longer the case.

These days, you can simply log on to the internet and buy and sell stocks and Exchange-Traded Funds (ETFs) at a low cost  and with minimum start-up capital.

Some of the options available include:

Dividend Stocks: DIY investors who are comfortable with building their own investment portfolio can purchase individual stocks using a commission-free stock trading platform.

These stocks can potentially pay you dividends for life without needing to sell them.

Spare Change Investing: If you don’t have a huge chunk of money to invest, micro-investing apps such as Acorns can help you to invest your spare change in exchange for a small monthly fee.

They round up your purchases and invest the difference in a customized portfolio that suits your risk tolerance.

Low-cost ETFs: ETFs are preferred to traditional mutual funds because they charge a lower management fee and are passively managed. You can purchase them yourself or use the services of a robo-advisor.

Robo-advisors such as Wealthsimple and Betterment do all the work for you, including rebalancing your portfolio automatically when it is required. They also offer free financial advice.

Investing is all about long-term thinking and expectations. Money that seems like a drop in the bucket can grow significantly over time through compounding interest.

[Editor’s Note: Be sure to due your due diligence when it comes to investing in the market. Past performance does not guarantee future results. Reach out to a professional if you have to.]

2. Invest in Real Estate

Passive income generation from real estate properties is as old as the hills. And, the advent of today’s financial technology companies in the real estate industry, has only made this strategy even more attractive.

Rental Properties: A rental property can generate cash flows that cover your mortgage payments and expenses, while leaving you with residual income every month. In addition, as the years go by, it can appreciate in value and further increase your net worth.

You can use a property management service to oversee your rental property and take care of maintenance needs so you don’t have to deal with tenants directly.

Real Estate Investment Trusts (REITs): While purchasing a rental property is the traditional way to make money in real estate, REITs offer a hassle-free opportunity to invest in real estate.

REITs trade like stocks and pay out dividends to shareholders. A portfolio of real estate properties is managed by a professional company and it is more diversified than investing in just one rental, essentially reducing your risk.

An advantage of investing in a REIT is that you can sell your shares easily from the comfort of your home. You can invest in publicly-traded REITs e.g. Vanguard Real Estate ETF (VNQ) through your brokerage account.

Crowdfunded Real Estate Investing: In addition to buying a physical property or investing in REITs, you can now buy into a commercial property via real estate crowdfunding.

Popular crowdfunding companies include Fundrise, DiversyFund, and RealtyMogul. You can start investing with as little as $500.

Become a Airbnb Host: If you have an empty room in your home, you can list it on Airbnb for short and long-term stays. When you go on vacation, you can even rent out your entire house.

3. Use a High-Yield Savings Account

This is a no-brainer. If your money is put into a low-yield account offering nearly 0%, you could just as well keep the funds under your bed.

The best savings accounts pay you enough interest to beat inflation and leave you with a positive return. Savings accounts are also generally insured by the Feds up to $250,000 per category for peace of mind.

Online banks offer a majority of the high-yield accounts that are worth your time. For medium term savings, you could also buy a high-yield Certificate of Deposit (CD).

While other investments may offer better returns, a savings account has minimal risks and can hold your emergency funds for future use.

4. Peer-to-Peer Lending

Peer-to-Peer (P2P) lending platforms such as LendingClub provide personal loans to individuals and businesses outside of the traditional banking system.

Borrowers take out a loan after they have been assessed by the platform. They then pay back the principal plus interest over a set period of time.

How do you make money? You can sign up to a P2P platform as an investor and invest in loan notes.

The minimum investment amount per loan is typically low (e.g. $25) and you get monthly payments that comprise of principal and interest.

Depending on the types of loans you invest in, your expected returns can vary from 5-10%. 

P2P lending can be risky, however, this is an inherent part of the investing game. The higher the risk, the more the expected return.

5. Start a Blog

Blogging is tough business and while it won’t start paying you right away, it is definitely one way to earn passive income.

If you have a story to tell or are interested in helping others tell their stories, you can start a profitable blog.

To start, find a niche, a suitable blog name, good web hosting, and begin writing. After you have developed a following, you can monetize your blog by offering advertising spots, sponsored reviews, online ads, affiliate marketing, merchandise and more.

Your blog can also serve as a portfolio to show your abilities if you are looking to start working as a freelance writer.

Check out this guide for details on how to start a blog and make money.

In addition to blogging, you can also generate an income stream by producing online courses or an ebook. You can use your blog to market these products to your readers.

If you don’t want to start a blog from scratch, you can buy an existing blog and develop it further.

6. Earn Cash Back

Earn cash back on purchases you would make anyway and put some money back into your wallet.

Businesses go out of their way to attract customers. Cash in on the opportunities available for some extra cash.

Cash back Apps: Whether you are buying groceries or shopping for clothes online, there is a cash back app you can use. Examples include Rakuten and TopCashback.

These apps are free to join and they automatically credit your account.

Credit Cards: Cash back credit cards offer a percentage of your spending back in real cash. Even if it’s just 1% you earn, it does add up over time.

When you need a new checking account, search for promotional offers. The rewards being offered are sometimes worth the effort.

7. Pay Off Debt

If you are carrying high-interest debt such as credit card debt or a payday loan, plan to pay it off quickly.

There is really no point in thinking about investing for passive income when you are paying 15% or more in interest on your loan balance.

The interest fees you save by reducing or eliminating your balance could easily exceed the average returns from the stock markets.

If you carry a large balance, find out whether you can refinance your loan at a lower interest rate.

Becoming debt-free (excluding our mortgage) has been one of the best financial wins for our family in the last decade.

[Editor’s Note: If you’re looking for some ways to get out of debt, read the debt payoff stories in my From Broke to Financially Woke Series! Also, check out my post on the pros and cons of refinancing debt using a balance transfer credit card.

Closing Thoughts

Many of the really rich people you hear about have mastered ways to make money while they sleep.

If you really want to retire early, a standard 9-5 job will rarely cut it. 

Find ways to earn an income on the side. Even better, find ways to earn passive income.

It will take some efforts to start, however, you will be better off in the long-run.

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Author: Jerry

Jerry is a Business Insider Contributing Writer who is obsessed with personal finance. He believes you can improve your financial situation by applying principles taught by the financial independence community to your financial life.

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2 thoughts on “7 Passive Income Ideas to Boost Your Income in 2020

  1. Jerry, thanks for having Enoch on to share some income ideas!

    Enoch, I like the idea of treating debt as an opportunity (in reverse) to build passive income. It’s similar to a mental trick I like to use when building up your portfolio (and following the 4% rule of thumb for expected safe withdrawal rates in the future).

    I climbed a little “level up” ladder, taking out monthly bills on the way:

    $2,700 Saved & invested = $9/month Netflix for the rest of my life = ($9 * 12mo * 25)

    $11,700 = $30/month Internet service for the rest of my life (+Netflix)

    $32,700 = $70/month electric bill covered for life (+Netlifx, +Internet)

    $248,700 = $720/month (HOA + Property Taxes + Home Insurance [everything but the mortgage itself, so ongoing cost once paid off) yields housing for life (+Netflix, +Internet, +Electric)!

    I’m sure you get the idea. I liked the thought of slowly taking out monthly bills for the rest of my life as I hit new “levels” of investment.

    So far as starting a blog for income… well, I’m not sure that’ll pan out for us since ours is just for fun and education, but it’s an interesting idea for other niches!

    Cheers!
    Chris@TTL recently posted…How to Sell Your Stuff: A Guide to Local Apps, Websites, and ToolsMy Profile

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