Best ways to earn passive income

Contrary to popular belief, “passive income” isn’t money you get for doing nothing. It means acquiring assets that can generate an income for you without too much effort on your part, or using your knowledge and skills to create products or services that people can purchase at any time.

This article explores ways in which you can generate passive income, and suggests factors to consider if you would like to start earning passively.

Tip: Unit trusts can be a safe and simple means of earning passive income. Find out more here.

Passive income: A path to financial freedom

Building a passive income stream takes time, planning, and financial input, says Ronel Jooste, business and financial consultant and founder of the FinanciallyFit Group.

It’s not something you can do overnight, unless you inherit productive assets, such as a house you can let out. However, done correctly, building passive income will give you the financial freedom you won’t have on a limited salary.

“What it can potentially mean for you is freedom of choice,” says Jooste. “However, it does require homework and a lot of initial work, such as building up networks, buying assets, designing processes, developing an online presence, and advertising.”

Six ways to earn passive income

Jooste lists six reliable ways to earn passive income, provided you go about it in the right way.

1. Investments. Invest in shares and earn dividends based on the profitability of the business you are invested in. Use the services of a financial adviser if you are not an experienced investor.
2. Rental income. Rent out part of your property, or an additional property. Appoint a letting agent to do the work for you, including collecting the rent and doing maintenance.
3. Online publishing. Write an e-book that can educate others about a topic you understand, and sell it via Amazon or similar platforms. This may take some marketing work on your part, however.
4. YouTube videos. Create videos about interesting topics, or share your knowledge. When popular enough, you can turn it into a paid channel, or you can attract advertisers who want to reach your audience with their products.
5. Online course creation. Package your e-book and videos as online courses and sell them on online training platforms.
6. Flipping houses: Acquire a TLC property (one that needs “tender loving care”) that you can improve without too much trouble and sell it at market value.

Additional ideas for earning passive income

With a little creativity and initiative, the possibilities for passive income are virtually endless. The following are some further ideas from a local furniture restorer, and global online learning platform Coursera.

• Restore or renovate items. Scout about for bargains, upskill yourself via online tutorials, and enjoy the process of bringing new life to a formerly-treasured piece.
  Gerhard Potgieter, owner of Mieke’s Cottage & Antiques, started flipping high-quality wooden furniture in his twenties. “In the beginning, I did everything myself, from buying suitable pieces on auction or from people in distant farming communities, to fixing and restoring pieces to their former glory,” he says.“I built my business without accruing debt - all it cost me was tools and time. As I sold the restored pieces, I could afford to buy bigger and better ones to flip.”
• Set up a print-on-demand business. Sell your original designs on T-shirts, mugs, posters or more with the help of a print company. Advertise them through your online store, then produce them as orders come in.
• Open a Shopify store. Merchants in South Africa sell both physical and digital goods on e-commerce giant Shopify. Common digital products include digital art, video or audio clips, as well as non-fungible tokens (NFTs).
• Sell stock photos. If you’re a photographer, earn some extra money by selling your original photos as stock images to websites like Shutterstock, Stocksy, or Alamy.
• Create an app. If you’re a developer, create a mobile app and sell it via Google Play or the Apple App Store.
• Affiliate marketing. Promote products and receive a portion of the sales generated in return. Bloggers can do this fairly easily, especially if they combine search engine optimisation (SEO) techniques with affiliate marketing strategies. Take a course first to get you up and running.

Coursera notes that there are three questions to consider if you want to start earning passively:

1. What kind of upfront investment can you make, in terms of time, money and effort?
2. Do you have skills or knowledge that others would find valuable and useful?
3. Can you automate the process of sharing your skills or knowledge?

Tip: Earning passive income supplies you with funds to invest in your future. Find out about retirement annuities today.