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Whether it's the hard economic times we now face or the fantasy of having a steady stream of work free money many people today are searching for ways to generate passive income. While the seemingly unlimited potential of the internet allows for more opportunities to do this than ever before; actually accomplishing this task is still far from easy due to the fact that there are literally millions of others doing the same thing.

I have spent many years of my life trying to develop complete financial security in the form of substantial passive income. I am making more now at home than I did working a full-time job as an electrician. I also pay less taxes and have plenty of free time to do as I please. The main source is my Ebay business but I also make good income from investments in the stock market. I am now investing my time in the internet marketing world to create yet another source of income. The reason passive income has so much potential is that when you are receiving income from one source you then have free time to search for others allowing for even greater diversity and financial stability.

This article attempts to cover the less risky and lower cost options available but I will touch on a few riskier and more costly options also. I certainly don't claim to be an expert by any means but I will share with you what I have learned along the way. 

Earning passive income is not difficult in the sense that the options are there and easy to find these days. The how-to part — the actual doing of it — is fairly straightforward. But there are many challenges and dangers you may face in your attempts. 


Things you should consider

One thing people searching for a stream of residual income often fail to realize is that once you get it, it's not going to be permanent. Some forms of passive income may last a few years
or even longer but I can assure you almost none of them will last forever. 

 The most common problem you will face is that the value of your product will almost certainly decline over time(except for riskier or less profitable long-term investments). What I mean by this is that whatever initially generated your income, with a few exceptions, eventually its value will decline. You must be prepared to keep up your product or service otherwise it will most definitely fade away.

The main reason this can happen is that over time your customer base will no longer be interested in whatever was generating your income. For example say I write an e-book about iPhone widgets and it generates $500 a month income. Even 5 years from now iPhones could be a thing of the past resulting in my book not selling meaning no income. Or your customers find a better product developed by your competition . Websites, blogs, articles they will all stagnate over time.

The other most common reason your income will decline is that there will always be others looking to tap into whatever market or niche that is generating your income. Even if you are the best now eventually someone will decide that they can do a better job than you have. You can't stay ahead of your competition by doing nothing because eventually someone will improve on your work or simply come up with something more interesting.

Be ready to maintain and improve on your source of income from time to time and you will bypass most of these problems. You can also lower the risk of these problems by generating passive income from as many sources as possible.

Will passive income ruin you?

If you didn’t have to work and money kept flowing to you month after month, what would you do with your time? Would you play video games all day, do drugs or sit around watching TV and get fat? I actually found it pretty difficult to succeed in creating passive income until I was able to answer these questions seriously. My answer changes from time to time, but the point is that I want to spend my life growing, creating, and sharing. I want to keep adding something of value to the universe. Whenever I keep doing that, regardless of how much money I’m making, I feel happy and fulfilled. Many people have created passive income streams that cover all of their expenses, and they ended up depressed and lost losing the drive that they started with. Just make sure you either love what your doing or know how to manage free time well and you'll be fine.


Low Risk Passive Income


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First off is the absolute easiest and safest way to bring in passive income every year. A high yield savings account. This is by far the easiest and most overlooked way to generate passive income. Most people who have a savings account with even the best banks receive less than 1% interest. When you consider that inflation decreases the amount of the American dollar by an average of 4% yearly you are actually losing money letting it sit in a typical savings account! So you can see that it's not really a good idea letting your money sit in a low yield savings account.

Most well-known banks offer lower interest savings simply because they are popular and trusted so they can get away with this minimal payback. Typically smaller branch local banks will offer between 1-2% interest to attract more customers. The absolute best interest rates are with online banks. Many online only banks offer 2-3% interest rates which not only counters the effect of average inflation but also increases your overall cashflow.

I certainly don't recommend keeping a large amount of your investment money in savings. There are many other reliable options that offer better returns. Having a savings account is always a good idea for quick cash and good investment opportunities or emergencies; having one with 4 times the national average interest rate is an even better idea.


To me this is the holy grail of passive income. A website can be hard to get going and high maintenance at times but in turn it offers an almost unlimited potential to earn. A good website can easily earn $1,000's a month in ad revenue, affiliate programs, subscriptions and
other means. The best thing is that when you get a good website going you can pay others to run it for you while still making a profit or sell it for a large instant earnings. Blogging is a great way to start your own website being cheap to start and easy to maintain.

 *Website tools for beginners

  • Hosting
  • website builder

Articles and free writing

Although I have not made any significant income writing articles for any sites I have read many success stories and often read about free writers making a few hundred to a few thousand a month. This is an amazing opportunity as it can be done almost completely maintenance free after the initial time investment. I can think of only one other passive income stream that is financially risk free making this my one of my top suggestions.


 *Top Paying Free Writing Sites

  • InfoBarrel
  • Bubblews
  • Hubpages
  • Squidoo

Online Sales

Ebay. We've all sold or bought something from the site at one time and that alone should tell you how popular it has become. The main problem with online sales is that the competition here is fierce. It is extremely difficult to find something that isn't already being sold online that you can still make a profit on. The best way I have found to accomplish this difficult task is to look for a physical dealer. What I mean by this is search for good deals in your area from local stores, warehouses, etc. I currently bring in between $150-$200 a week doing this myself (I am in the process of moving to a new home with more storage room which will hopefully allow me to make a lot more with this method).

 *Best Sites for Online Sales

  • Ebay 
  • Craigslist
  • Amazon


Another very popular often overlooked source of income is YouTube. Those that manage to get "viral" status often make $100,000's in ad revenue. This is actually very hard to do as there is a lot of competition here also. The best way to go about this is make a YouTube channel making several videos a month or a one time video series. Basic google Adsense earnings on YouTube are roughly $1-5 per 1000 views. That doesn't seem like much but if you made a video or video series that was getting 10,000 views daily that would be $10-50 a day. Imagine if your video went viral and you suddenly had 100 million views! That's a minimum of 100 grand! Some popular YouTubers make well over $100,000 a year just with their ad revenue. Many of them also use videos for product endorsement which makes them even more cash in the end. Making YouTube videos is great because it costs nothing and is maintenance free like writing articles yet it has the potential to earn a massive profit for a very long time.


Writing and selling E-books or even just one E-book can essentially provide you with a very good passive income but requires the largest initial investment of time and energy. Successful E-books have made many writers fortunes but aren't as easy to profit from as they might seem. Most of those that have considered writing an E-book don't realize that there is a lot more than writing you book and making a website to promote it as if that isn't hard enough. Marketing is the most important aspect of making money from an E-book and just as important as the quality of the book itself. Successful marketing requires almost as much work as writing the book, but after it has caught on it will begin to sell itself.

 *Tips on E-Books

  • Most of all remember to market yourself with social media, blogs and forums. Make a network of back links to promote yourself and your products. If no one knows about your work how do you expect to make money?
  • and easy to use making your first e-book



High Risk High Reward


The stock market, real estate and owning your own business are a few of the riskier ways to earn passive income. All three require a substantial financial investment to make a real profit and typically involve a large amount of risk directly related to the potential profits.

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The stock market is easier than ever to invest in these days and is in my opinion the absolute best way to earn a passive income. Many stocks offer great dividends which pay you quarterly or yearly just for owning the stock no matter if it goes up or down in value. The more money your invest in the stock the more you make in dividends. That said it can sometimes be a dangerous investment for the beginner and certainly requires a fair amount of research and financial intelligence to make good profits.

Bonds are a much safer investment than typical stocks. Many bonds are insured by the FDIC and some even offer tax-free payouts. Bonds are when a large company needs a loan and you loan them your money. Now this may sound risky but many bonds are considered quite safe. When you own a bond you receive a certain amount of money every month, quarterly or yearly for a set period of time, usually 1-20 years, and when that time is up you typically receive  your initial loan back. Bonds are a great way to make passive income and are generally considered much safer than common stocks.

There are a so many ways to make passive income investing in the stock market that I can't list them all here. To those interested I would suggest finding an online broker to help you get started. The major drawback to this source is of course taxes and broker fees which can eat up profits quite quickly especially if you are a small or moderate investor. A good broker will help you to learn the ins and outs of the stock market and help you to make good investments. A long-term plan and researching each investment are the keys to making money this way.

 *Top Online Brokers

  • Tradeking- Excellent customer service,trading tools and the lowest online trading fees I know of. My personal favorite.
  • TDAmeritrade
  • Sharebuilder-Great for beginer traders with humble starting funds
  • STAY AWAY FROM E-Trade- They have the worst rated customer support and take a $40 monthly fee that isn't well advertised. Kind of "scammy" for lack of a better term.

Real Estate

Although this option requires a large financial investment, real estate is one of the best passive income streams around. The value of a quality location will continue to increase over time bringing you more and more income over time and the option to sell at a much higher price later on. Many people fear the thought of renting real estate but many don't realize that when you have quality real estate you can hire a manager or even a part-time "handyman" to deal with your tenants and still make a healthy profit. A storage unit building is also a great hassle free option for those new to real estate.


  • Location is a key element but proper marketing is just as important-The more people who know about your property the better
  • Curb appeal is very important in real estate-The more attractive your property the better chance it will sell or rent

Business Owner

This last one is probably one of the riskier options available but could change your life. Owning your own business is similar to real estate in which it requires a large investment in the beginning and can be managed primarily by others when things take off. My grandfather for example started a small fencing company many years ago. After the first few years of investing his time and money he hired a someone to run his business. Bid his jobs, hire employees and everything else that came with the job. His manager checks in with him weekly and for major decisions. He has become quite wealthy over time and has put little work into his business after he hired someone to do this for him


Have you ever seen some new product in the shops and thought, "I could have made one of those"? The best inventions are often the simplest, and every day new products are invented which are simple and obvious, yet make fortunes for their inventors. Many inventors have been made filthy rich from one invention. There aren't a lot of tips to be given here as it's completely up to you and your imagination going this route but here a few basics.


If you have an idea for an invention, one thing to consider is whether or not to patent it.  Patenting is a very expensive and time-consuming task.  Also, there is no such thing as an international patent, so anyone overseas can make an exact copy of your product and there is nothing you can do about it.  One more thing to note is that when a large company infringes on your patent, they do so knowing that you most likely do not have the resources to follow through with a court trial which can drag on and become very expensive.

If you are planning on patenting your idea, the best place to go is the United States Patent Office.  There are a lot of companies out there who claim to help you with your invention, but beware and choose who you let know about your invention wisely.


A good route to take if you do not want to get into the manufacture of a product is licensing.  This essentially is when you give a company the permission to use your idea.  In exchange you receive either a commission from every product, or some other form of compensation.


My Tree Has Grown

Money Tree

So as you can see there are many ways to make passive income, some that need large financial investments but others that only require your time and imagination. My suggestion and what has worked best for me is to use as many options as possible to generate passive income. The two most important things I have learned on my journey to financial freedom is that it is much easier to work on something you actually enjoy doing instead of simply chasing the most profitable route. You will likely make more in the end choosing this path and will certainly feel better about yourself. The second thing is to educate yourself. Your mind is your most valuable asset but can be your worst enemy. The greater your financial knowledge and the better you learn how to spend your money the more successful you will be. Most of all have fun and remember, the more time you put into your money tree the faster it will grow.