what is passive income 
passive income is money that doesn t take much time or effort to make and you don t earn it from a traditional job it can include earnings from rental properties dividends from stocks selling courses online and other projects where you re not involved in the continued generation of revenue although you may have had to put time money or effort into starting up such ventures eventually you collect income passively without breaking a sweat to help understand passive income in greater detail we called in marguerita cheng the ceo of blue ocean global wealth and one of our 100 top financial advisors each year since 2017 she s optimistic for those looking for passive income to help them financially i think there are more prospects than ever for people to create passive income from creating courses to writing e books to affiliate marketing and everything in between she said learn the difference between active and passive income below plus 25 ways you can make passive income in 2024 and how much you can expect to make from each 25 ways to make passive income in 2024the best ones for you depend on your circumstances it is important to consider the following cash flow constraints and requirements time horizon and risk tolerance cheng said for example investment real estate may have higher upside potential but a longer time horizon require significant financial capital and exposure to liquidity risk in the short term remember to consider your situation not just what s worked for others be positive and optimistic while being pragmatic cheng said you can build upon your success with that in mind here are the 25 ways to make passive income in 2024 later in the article we discuss each of these in depth understanding passive incomepassive income can be a great way to generate some extra cash and supplement regular earnings from your job if you re interested in passive income stay away from get rich quick schemes found among search results for the term online cheng suggests you stay mindful of some common misconceptions about passive income people often underestimate the initial costs of a passive income opportunity and as a consequence may not have adequate liquidity she said cheng gave some examples with a franchise there are certain fixed costs that people will incur before they can experience positive cash flow with investment in real estate there are mortgage payments insurance payments property taxes maintenance and management fees involved even if there is no rental income she said marguerita cheng ceo of blue ocean global wealth and one of the 100 top financial advisors notes that there are many prospects for passive income but beware some red flags include sales pitches that sound too good to be true as well as act now before this opportunity runs out she said 1passive vs active vs portfolio incomethere are three main categories of earnings passive active and portfolio income while you can receive passive income without regular labor active or earned income is money you get from direct effort or work it includes salaries wages commissions tips or revenue from a business where you provide material participation 2it is the most common form of income and is subject to standard income tax rates active income is the primary source of earnings for most individuals and households and also includes making investments that might later generate portfolio or passive income portfolio or investment income is revenue from investments including dividends interest capital gains and other returns from stocks bonds currency exchange and mutual funds unlike active income earned from employment or business activities portfolio income is based on securities an individual or group owns note that portfolio income is not passive income although it seems to have many of the same elements even though you may wait months or years before reviewing or changing your portfolio selections an investor is constantly making decisions about buying or holding different securities thus even if you don t change your portfolio for decades it s your ongoing choice not to do so that makes income from it not wholly passive also remember that the irs may treat investment income differently than passive income passive income ideas in depththe ideas below are streams of income where you can limit your involvement to the beginning of the venture and expend less time or effort afterward for 2024 we ve included ideas that include leveraging artificial intelligence ai as a means for creating products that provide recurring income i think people can be really creative cheng said many ideas on this list can be a great way to express your creativity in a way your career might not 1 rent all or part of your propertyrenting your property entirely or partially can provide regular rental income this could include short term rentals through platforms like airbnb or long term leasing income potential1 short term rentals e g airbnb 100 to 300 per day2 long term rentals 1 000 to 2 500 per monthadvantagesdisadvantagestips for success2 store stuff for peopleif you have extra space in your home or on your property to store items for others you can do so for a fee through platforms like neighbor or storeatmyhouse this can be especially profitable in urban areas where storage space is at a premium income potential1 self storage units 25 to 500 per month per unit2 renting out extra space e g garage basement 50 to 600 per monthadvantagesdisadvantagestips for success3 rent out items for people to useoffer items you own like tools specialized equipment or even your car for rent to others this can include anything from gardening tools to camping gear income potential1 equipment and tools 25 to 150 per day per item2 vehicles 40 to 100 per dayadvantagesdisadvantagestips for success4 bonds and bond fundsbonds bond ladders and bond funds are popular investment vehicles that can provide investors with a predictable stream of income and potentially lower risk compared with stocks income potential1 government and corporate bonds 2 to 5 annual yield2 bond funds 2 to 6 annual yieldadvantagesdisadvantagestips for success5 put up content on youtubeyou can take your favorite interests like travel and use social media to earn extra income if you enjoy travel writing a travel blog takes time energy and commitment you could consider creating a youtube channel cheng said while most who earn money from youtube have a constant presence you may have an idea for content that fits a perennial need and can earn you income from ads sponsorships or affiliate marketing income potentialadvantagesdisadvantagestips for success6 create an online courseshare your expertise by designing and selling courses in your field of knowledge platforms like udemy are a popular choice while putting a course up with lectures quizzes and so on is a lot of work some courses resonate and earn their creators money for years income potentialadvantagesdisadvantagestips for success7 invest in real estateperhaps the oldest way to earn passive income on this list invest in property to rent or sell at a profit consider different markets and property types for the best investments income potentialadvantagesdisadvantagestips for success8 sell stock photos if you enjoy travel you can consider taking pictures and selling them online cheng suggested you can earn royalties by selling your photography to stock photo websites like shutterstock or adobe stock income potentialadvantagesdisadvantagestips for success9 design custom productscreate and sell unique product designs online use platforms like etsy or shopify to reach a broader market income potentialadvantagesdisadvantagestips for success10 affiliate marketingincome potentialearn commission by promoting other companies products on your platform advantagesdisadvantagestips for success11 advertise on your carturn your vehicle into a moving billboard for businesses using services like wrapify or carvertise income potentialadvantagesdisadvantagestips for successpartner with reputable car advertising companies with a track record of timely payments and satisfied drivers 12 peer to peer lendinglending money through peer to peer lending platforms like lendingclub and earning interest can earn you more than you would from a traditional savings account income potentialadvantagedisadvantagestips for success13 use cash back rewardsearn rewards or cash back on credit card or app purchases use your apps and credit cards that offer the best rewards for your spending habits income potentialadvantagesdisadvantagestips for success14 create an appdevelop a mobile app and generate income through sales or ads this requires some technical skill but can be highly rewarding if the app meets a market need income potentialadvantagesdisadvantagestips for success15 flip retail productsbuy products at a lower price and resell them for a profit commonly through online marketplaces like ebay or amazon income potentialadvantagesdisadvantagestips for success16 automated dropshippingrun an e commerce store without holding inventory using a dropship model this involves selling products shipped directly from the supplier to the customer income potentialadvantagesdisadvantagestips for success17 create an e commerce subscription boxoffer a subscription service for a curated box of goods focusing on a specific focus like beauty products food items or your favorite hobby income potentialadvantagesdisadvantagestips for success18 buy a vending machinebuy and place vending machines in strategic locations for passive revenue ideal locations include high traffic areas like malls offices or schools income potentialadvantagesdisadvantagestips for success19 license your musicthis can be through platforms like audiojungle or by directly licensing to content creators and businesses one of my clients passions is music cheng said in retirement he is earning passive income from creating and selling stock music income potentialadvantagesdisadvantagestips for success20 invest in index fundsindex funds are among the most popular investments with passive exchange traded and mutual funds offering easy ways to earn passive income income potentialadvantagesdisadvantagestips for success21 ai backed tools and appscreate ai driven applications and tools that create revenue through automated language learning tools tutoring apps or games you can also earn through in app purchases income potentialadvantagesdisadvantagestips for success22 dividend paying stocksdividend paying stocks provide investors with a steady income stream through regular payments which can be reinvested or used to supplement other income sources income potentialadvantagesdisadvantagestips for success23 real estate investment trusts reits income potentialadvantagesdisadvantagestips for success24 invest in a businessprovide capital for a business and earn a share of the profits this could be through angel investing venture capital smaller local business investments or crowdsourcing investment platforms income potentialadvantagesdisadvantagestips for success25 buy annuitiesannuities are investments offered by insurance companies that can provide investors with a guaranteed income stream income potentialadvantagesdisadvantagestips for successpassive income according to the irspassive income is revenue you get from neither your portfolio nor wages and does not require an ongoing effort the term passive income is frequently used loosely for any revenues including investment returns that appear to require little or no effort by the one receiving it the irs which gets the last word on this when you re filing your taxes rules out the following as passive income interest dividends annuities and royalties not derived in the ordinary course of a trade or business income tax refunds and income derived from the cancellation of debt 1meanwhile the agency defines passive or unearned income as net rental income income from a business in which the taxpayer does not materially participate and in some cases self charged interest 1