5 Passive Income Streams to Grow Your Income in 2023
If the past has taught us anything, it’s that we need to keep our income diversified and an emergency fund in place.
One of my favorite ways to do this: passive income. This allows you to grow streams of income that don’t require much ongoing work to keep the cash flowing in.
If you currently have a full-time job, passive income is a great option to help you grow your income while limiting your financial stress.
In this post, I’ll explain some of my favorite passive income streams you can use to keep your finances in check. Let’s get started.
You probably know that investing your money is critical on your financial journey. But did you know that investing in dividend stocks can help you to grow passive income?
These investments will pay you a cash dividend a few times per year or more. This money will start to compound, providing you with a steady cash flow that is 100% passive.
Dividend stocks are known for their reliability and historic performance. These companies tend to be more stable and somewhat older when compared to growth companies that may not pay a dividend.
Whether you’re looking to invest and make money every day or set yourself up for long-term growth, dividend investing can do both. Best of all, you don’t need to be an expert to get started. Instead of picking individual stocks, you might consider investing in a dividend-paying ETF like the Vanguard High-Dividend Yield (VYM).
Rent Out a Portion of Your Home
If you own a house and have some spare room, consider renting it out to make some extra money each month.
Because this won’t require any additional work, it is 100% passive. Depending on where you live and the condition of the room and home, this could amount to more than $1,000 per month in passive income.
To find tenants, you could consider posting an ad on a local classified or placing your room on a short term rental website like Airbnb or VRBO. Another great option is to ask family and friends for referrals.
Purchase an Investment Property
If you’re looking to generate passive income without having tenants living in your own home, you might consider purchasing a rental property. While this will require a larger investment than other passive income methods, the returns can be well worth it.
When purchasing a rental property, you’ll want to do plenty of research beforehand that considers all of the costs and expenses involved. Items like home maintenance, property management, and vacancy rates will need to be accounted for in your analysis.
By investing in real estate you have the potential to generate income in multiple ways: rental income and your property’s potential appreciation over time. While rental income can be somewhat more predictable than a home’s value, there’s a good chance you might gain 1%-2% annually in home appreciation.
Okay, so blogging is certainly not the most passive way of making money. To grow your blog, you’ll need to focus on creating engaging, unique content that leaves readers satisfied.
But there comes a point in which the money you make from blogging will become more passive than active.
Once your content is getting found, you can easily profit from display advertising throughout your posts. The money made through display ads is completely passive and you won’t need to do anything to keep it running.
Your passive income doesn’t stop at display ads, however. In addition to this, you can also monetize your blog using affiliate marketing to profit whenever someone completes an action through one of the links on your website.
Affiliate marketing has become extremely lucrative over the past 5 years as companies look for new and less expensive customer acquisition channels. By pairing your content with a trusted affiliate partner, you can make extraordinary amounts.
Start a Business
Starting a business is simply not for everyone. It will likely require a significant amount of work upfront before seeing any returns.
However, those capable of starting and growing a business can see tremendous returns with the possibility of being a full-time entrepreneur.
You don’t need to have the next big idea to grow a successful business. Some of the most basic service businesses and products can do extremely well. For example, starting a candle business can be an excellent way to make money with low startup costs. If you’re looking to start a local business, lawn care, pressure washing, or starting a cleaning business are all great ideas with proven business models. (You can even start some of these as side hustles.)
Once your business grows, you can begin to hire employees to offload as much work as possible to scale your passive income.
How Much Money Can You Make With Passive Income?
One of my favorite things about passive income is the unlimited income potential. By acquiring more income-producing assets, you can continually grow your money with no upper limits.
For example, if you purchase $10,000 worth of dividend-paying stocks that have a 5% average annual dividend, your portfolio would bloom to $16,288.95 after 10 years without any work required. Add an extra $1,000 per year and your portfolio would grow to $28,866.84.
By combining multiple methods of passive income you can help to keep your money diversified, helping to limit losses and maximize gains.
No matter how you choose to build your passive income portfolio, getting started is the first step.
It’s important to understand that passive income requires one of two things to get started: time or money. This means that anyone can get started.
Time is your biggest asset when growing passive income. Because your income compounds over time, you’ll be left with significantly more money the longer you let it grow.
What are your favorite ways to build passive income? Comment below!