What is passive income? | 5 ways you can get paid in your sleep

What is passive income

Passive income is a way to generate income from investments, properties and other methods which result in a partially self-sustaining income stream, meaning the money keeps coming in after you’re finished working for the day.

Passive Income Image

In a world filled with buzzwords made to confuse you and fake examples of “I made £2,513,402 in my first week from my side hustle” it can be hard to figure out what way of making money on the side is for you. I’m sick of the clickbait and I’m sure you are too, so I have written a blog to lay it bare, to set straight your expectations of passive income and to help educate you on how to do it yourself. 

You may be thinking, ‘well I’ve got the kids to look after, the job to work, the house to clean etc, there’s no way I can start this with such little time’. You may be right, starting a business is not for everyone, a business plan that would suit your free time might not suit someone else’s and vice versa, but by reading blogs like this, you will have a chance to explore the many options that there are and test which is right for your schedule.

Here are 5 ways that you can start your own passive income streams. These will be ranked by Time investment, Financial investment and level of success potential.

Start your own Online Shop

Time🕰️🕰️🕰️

Investment 💵💵

Potential 📈📈📈

Starting your own online business seems daunting, but it really doesn’t matter if you have no experience in business. With the right platform you can get set up very easily, for example, here at EKM we have a very simple platform, which can really help people starting out to grasp website design and if it’s still too complicated, you get your own account manager assigned to you to help you understand. Setup would initially be a monthly payment to your ecommerce provider, then sourcing and buying stock as well as shipping costs. 

Selling online really explains itself, you have a larger audience, a platform to sell on and if you wanted to, you could utilise features on your EKM shop such as PPC to get your orders in quicker. If you want to get started and aren’t sure on which platform to go for, take a look at this blog on the 5 best ecommerce platforms in the UK in 2022.

Take a look at some of the examples of people setting up their own online shop with us at EKM here.

Dropshipping

Time – 🕰️🕰️

Investment – 💵

Potential- 📈📈📈

Dropshipping, the new “get rich quick” scheme, nope. This one actually works. The way this one works is you would set up your own website, source your items that you want to sell, create a dropshipping deal by liaising with a dropshipping wholesaler, list your items on your website and promote them in any way you want to. Customers will order on your site, your wholesaler will then be sent the order, will source and ship the item to the customer and the wholesaler will take a percentage of the sale via stock purchase and delivery fee in the deal you have with them. If you want a more in depth take on drop shipping, take a look at our blog, Beginners guide to dropshipping

Dropshipping should be treated as a business, the more effort and time you put in, the more it’ll grow. You should put time in at the start to reap the benefits later. You could set your dropshipping site up in a couple of hours, liaising with wholesalers and finding good quality items will be the activity which takes up most time .if you do it right, when the orders come in, they’ll be received and shipped without you even lifting a finger.

Dividends from investments

Time – 🕰️

Investment – 💵💵💵

Potential- 📈📈

Dividends are payments that businesses and corporations make to shareholders. If you buy stock in a business, you will get a share of the company’s profits. If the business is large and consistent, this investment will grow with the company if you add the money you make back into the investment. Most companies pay from 3%-10% per share.

An example of how this works is if you invest into a company that pays a 4% dividend per share. You buy one share worth £100, with the 4% dividend you would receive £4 and so on. 

It’s a safe way to invest especially if the company is astronomically large such as Pepsi. A tip from The Balance says “ In many cases, companies that pay 60% or less of their earnings as dividends are safer bets, because they can be counted on for predictability.”

Property Investment

Time – 🕰️🕰️🕰️

Investment – 💵💵💵

Potential- 📈📈

An investment property is purchased with the intention of earning a return through rental income or the future resale of the property.

Property investment to put it simply is done by investing in property. The way this can become a passive income stream is regularly done by purchasing property on a house that could use some TLC and selling it after the work is done. For example if you were to get a mortgage on a house worth £120,000 and fix it up by spending £15,000 on a new kitchen, bathroom etc, that house value would rise due to the quality you have added yourself. This would mean your investment of £135,000 could increase by 10-25%. With property prices increasing regularly now too, ROI could be better than ever in the future.

When you cash out, you would get the profits in straight up cash which you could invest in more property and continue to build your property portfolio.

Crypto Currency

Time – 🕰️

Investment – 💵💵💵

Potential- 📈

Similar to investing in dividends, this is an investment based income, you need to do your own research into what cryptocurrency you want to invest in. Essentially Crypto is any form of currency that exists digitally or virtually. Similar to investing in the price of gold or silver, the price of the currency varies depending on multiple factors.

As we have seen with Bitcoin and Ethereum this can end up incredibly effective if you time your purchase right. Unfortunately the crypto market became very saturated very quickly so doing the right research, buying and selling at the correct time is how you’ll make extra money from this.

Bonus : Ideas from Reddit r/sidehustle

Passive Income can also come in the form of a side hustle as it is a part time income stream, here’s what Reddit has to say to help out people with inconsistent schedules. 

Reddit side hustle

“So I’m kind of in the same boat. I’m a long haul trucker with very inconsistent days, and with the way I run my days off are very random, as well as my time out on the road. Having said that, here’s what I have discovered:

Youtube (not really a hustle, more of a “I’ll keep at it and see where it goes”)

Stock/forex/crypto trading – The markets are pretty much open 24/7 depending on the asset, so no matter what schedule I have I can take a bit of time out of my day to check the charts and try to make a profit.

Microtasks – There’s websites that will pay you to do tasks like Mturk. I can sit down at the end of the day and do a couple of tasks. I then take the profits from there and apply it to investments/trading

Reviews – There’s other websites that will pay you to review things, like Slice The Pie

— The above are the ones that I am capable of doing, as I’m not in a location for very long so there’s not a whole lot of things I can do as a hustle on the road. But I do have a few further suggestions for you

Thrift flipping – Buy items at a thrift store and flip them. Really decent profit to be made here as you can find high end items for the cheap and flip. Collectibles, etc, as well.

Ubereats – I know you mentioned you didn’t have a vehicle, however some of these gig apps allow you to use a bicycle instead, if that’s viable for you.

Freelance – I’m not sure what skills you have, but you could look at freelance websites like Fiverr. Competition is rough on a lot of those sites, but a couple of gigs a month is better than none.

Blogging – Very hard to get off the ground with this, but once you gain a bit of momentum it can be a decent side gig. Couple this further with Affiliate marketing *GASP, he went there!* And it is lucrative.”

Conclusion
So the rest is up to you, pick a passive income direction and stick with it. These are realistic standards and nothing is going to pay out well with little work so the more you put into these income streams, it’s likely you’ll get more out of it. If you have any questions about dropshipping or setting up your own website, take a look at our blog.