5 Best Ways To Earn Passive Income for Beginners (Step-By-Step)

Are you looking for the best passive income ideas for beginners?

Creating passive income from nothing is not as hard as you may think. Passive income can help you to obtain financial freedom. Freedom from your 9 to 5 job, and freedom from the need to have a job.

Robert Kiyosaki, the author of Rich Dad Poor Dad once said,

“To obtain financial freedom, one must be either a business owner, an investor, or both, generating passive income, particularly on a monthly basis.”

Rich Dad Poor Dad is the first book I read that shows me the difference between assets and liabilities. It is the book that shows me the most important mindset in order to be wealthy.

Best Way To Earn Passive Income For Beginners

Passive income in a nutshell is a type of income that does not require active work to generate. It is generally a recurring revenue stream that requires little-to-no effort or time to maintain. This form of income generally puts money into your pocket while you sleep. And it’s the ultimate financial goal for many of us.

In my other article, I’ve made a comprehensive list of all passive income ideas you can start with now.

While there are many ways to earn passive income and in this article, we will explore the best way for beginners to start making money through earning passive income.

1. Rent out your spare room

Being a landlord sounds like a dream to many. But it might not be as hard as you might imagine. What can be better than earning an extra passive income in the comfort of your home?

Earning PotentialMid
Time CommitmentLow
Ease of GrowthLow
RemarksBeginner friendly
Be your Own Landlord by Renting out a room

The Requirements

  1. If you are renting be sure to check with your landlord, as you will need his/her permission to rent out the extra room.
  2. If you own your own home then you simply have to make sure your spouse won’t scream at you when you rent a room to a stranger

Now the hard stuff is out of the picture here are a few simple general steps for renting out a spare room (details not included):

How to rent out a room?

Option 1

  1. Ensure renting out part of your property is in compliance with the law.
  2. Determine how much you want to rent out your property for.
  3. Engage a housing agent who will help you to find your tenant.
  4. Screen your potential tenant.
  5. Choose the tenant that passes most of your stringent criteria of screening.

Tada! You are now a partial landlord!

Option 2

The easier way is with Airbnb!

  1. Go to https://www.airbnb.com/
  2. Click “Become a Host”
  3. Follow step-by-step 

Wahoo! You are now a Host!

Example (illustration Only)

John is living alone and he has 2 spare rooms.

He rents out his first room for $100 per week and the second for another $100 per week. His rental income is a total of $200 per week.

This is calculated to approx. $800 per month and a whopping $9,600 per year!

Earning $9600 passive income is pretty impressive for you doing nothing.

How much can you earn from renting out a room?

Renting out a room can earn you upwards of a few hundred dollars each month.

How much will you be making will basically depend on the location, the size, and finally the condition of your home.

Nonetheless, this will definitely be a great way of earning a passive income from the spare room that is sitting there empty all day long.

2. Buy an Index Fund or ETF

What if you want to try investing but don’t have the time or the know-how in investing?

Next in line for passive income is investing in index funds or exchange-traded funds (ETFs). Both index funds and ETFs track the performance of the specific market index.

Earning PotentialHigh
Time CommitmentLow
Ease of GrowthLow
RemarksBeginner friendly but not for everyone
Passive Income Investing with ETF or Index Funds

The Requirements

  1. You have spare cash that you want to invest and will not be using anytime soon (it means more than 5 years)
  2. You have the risk tolerance to see the share price drop 10% or more and raise 10% or more in the few years you are investing. (During a market crash, the share price might even drop more than 50%)

Now the hard stuff is out of the picture here are a few simple general steps for investing in index funds and ETF (details not included)

How to invest in ETFs and index funds?

  1. Open a brokerage account
  2. Screen through the list of index funds and ETFs you can purchase
  3. Identify those markets you are interested in investing
  4. Ensure you know the risk you are taking before you invest
  5. Select the index funds and ETFs that best suit your risk tolerance level

Congratulations! You are now a owner of a bundle of companies!

If you can afford to read just one book, highly recommend you to read this book The Bogleheads’ Guide to Investing, the wisdom of the sage John C. Bogle.

Example (illustration Only)

John is a passive investor and does not plan to sell his stock for a very long time.

John brought 100 shares of ETF at $100 per share (Total of $10,000) on 1st Jan 2013. The ETF he brought gives a 5% dividend every year ($500 per year).

In the year 2023, his ETF stock price has risen to $200 per share (Total of $20,000)

He is still gaining a 5% dividend income because he has not sold his stock, but this time, the dividend he is receiving is 5% of $20,000.

This is calculated to approx. $1000 dividend income per year!

Earning $1000 passive income per year and $10,000 capital appreciation is pretty impressive for you to do nothing.

How much can you earn from Passive Investing?

Passive investing with ETF or Index Fund is a good way to prepare for your retirement. Warren Buffett suggested investing in a low-cost index fund for the general public who know little about investing.

“I recommend the S&P 500 index fund, you just had a diversified group of equities. 500 of the largest companies in the U.S. and you’ll hold for a long, long time.”

The average return of ETF is around 10%.

How much will you be making will basically depend on the timing when you buy and the ETF or index fund that you buy.

Preferably you may want to buy an ETF that is low risk and low fees.

If you are not sure when to start buying ETFs or Index Funds, you can utilize the technique called ‘dollar-cost-averaging (DCA)’ thus the timing of the market doesn’t matter.

Want to learn how to be a prudent investor?

3. Write An E-Book

Read Harry Potter? Or maybe hear of it?

In the past being an author is a very difficult task that requires a publisher to be willing to publish your book.

Authors nowadays have the luxury of writing an E-Book instead. Low barrier of entry and easy to do.

If you love writing, writing a 50-page short story or even a 100-page e-book on the topic of your passion will be an easy task!

Earning PotentialLow
Time CommitmentHigh
Ease of GrowthMid
RemarksBeginner friendly
Write an E-Book and be an Author

The Requirements

  1. You need to have a computer or something similar.
  2. You must have passion for the topic you are going to write

Now the basic requirements are out of the picture here are a few simple general steps for writing and publishing an E-Book! (details not included).

How to publish an eBook for free online?

  1. Open an account with an online Direct Publishing Platform such as Amazon: Kindle Direct Publishing (KDP)
  2. Ensure all details are entered correctly during account registration
  3. Ensure to write the book is in the format that is accepted by the publishing platform.
  4. Choose a topic which you will like to write (Friction or non-fraction)
  5. Build up a draft of how the book should flow.
  6. Start writing!
  7. Upload your masterpiece to the direct publishing platform
  8. Click Publish!

Wahoo! You are now officially an author of your own book!

Tips on selling eBooks!

  1. Quality is better than quantity
  2. Promote your book (No one knows you have something awesome to share unless you tell them!)
  3. Selling an E-Book takes time and some luck
Example (illustration Only)

John loves fantasy books and has decided to write a short E-Book on an adventure.

Day 1 John drafted the story and decided it to be a 50-page short story. He gave it to his friends to read how the story goes and they loved it.

John wrote the book for the next 2 weeks when he have time and finished his masterpiece soon after. 

John uploaded his masterpiece to KDP and the book is soon published.

How much can you earn selling eBooks?

Unless you are a best-selling author, you won’t make a lot of selling eBooks. Nonetheless, 3% of the authors consistently earn more than $10,000 a year.

If you just publish 1 or 2 eBooks that are poorly written, I’ll doubt you will make much. But if you are focused on writing a book, you may want to publish a dozen of good-quality eBooks.

Each eBook you sell earns you a few dollars per day, depending on your pricing and the listing fees.

The more good-quality eBooks you write, the more passive income you will get.

Each eBook is like a piece of “real estate”, each ‘real estate’ (E-Books) gives you a different amount of ‘rent’ per month (sale per month). The more “real estate” (E-Books) you have the more income you will get.

4. Create Your Own Youtube Channel

Making money out of a YouTube Channel needs a lot of passion. If you love to be on camera and have the personality to attract an audience. This will be perfect for you.

The main income for most YouTubers is display ads that are found on your channel. You will basically get paid every time someone watches your videos or clicks the link of the Ads on your channel.

Earning PotentialHigh
Time CommitmentHigh
Ease of GrowthLow
RemarksBeginner friendly
Create a YouTube Channel and Be an Online Superstar

The Requirements

  1. A YouTube account
  2. A passion to always improve after each video!
Optional (Dependent on your video type):
  1. You need to have a camera (A phone camera will do, but the quality of the video does matter to the audience).
  2. A good quality mic (Sound quality does matter, but your smartphone usually does the trick.)
  3. If you don’t like to use your voice, you can always opt for good text-to-speech software to create videos with a natural human-sounding voice. (I’ve reviewed one of the best software out there you can take a look at my review article.)
  4. Outgoing personnel that will attract your audience.

Now the basic requirements are out of the picture here are a few simple general steps for being the next YouTube Superstar! (details not included).

How to become a YouTuber?

  1. Open a YouTube Account
  2. Create a YouTube Channel with a Name that suits the project you are working on.
  3. Update your YouTube Channel profile, such as logo and contact information.
  4. Update the setting of your YouTube channel so that YouTube will know what is your channel is about.
  5. Start creating your video!

You are now officially a Video Producer aka. YouTuber!

Tips for creating a YouTube Channel!

  1. Quality is as important as quantity
  2. Ensure to post a new video every week on the same day of the week. This is to allow your audience to know when to expect a new masterpiece from you.
  3. Encourage your audience to subscribe.
  4. Turn on the Monetization option when it is made available.
  5. Promote your channel
  6. Do videos on something you are passionate about in
Example (illustration Only)

Joey loves cooking and created a channel where she will teach her audience to cook.

She created one cooking video per week and each video earns her $1 Ads revenue per day.

After 1 year, she has 52 videos and earns a whopping $1,560 per month.

Even when she stops creating videos after 2 years she earns around $3,120 per month every month as long as there is a demand for her video.

How much can you make as a YouTuber?

YouTubers make between $3 and $10 per 1,000 video views through monetization with AdSense. If your channel has a lot of views, this can stack up to a big sum of money. Some big creators cash out upwards of $10,000 each month from AdSense alone.

The more good quality videos you post, the more income you will get. Even when you stop creating videos after a few months, you will still have a passive income as long as there is a demand for your video.

Each video is like a piece of “real estate”, each ‘real estate’ (video) gives you a different amount of “rent” per month (Ads income per month). The more pieces of “real estate” (video) you have the more income you will get.

5. License Your Photos

Do your friends always comment that you take really nice photos like those you find on a postcard?

Are you the one who always finds yourself always snapping pictures from different angles just to make that perfect shot?

Do you know what is ISO, Shutter Speed, and Aperture?

If you say ‘Yes’ to all the questions, congratulations! You have the potential to earn a passive income by licensing your photos!

Earning PotentialLow
Time CommitmentHigh
Ease of GrowthMid
RemarksBeginner friendly
Build Passive Income By Licensing Your Photos

The Requirements

  1. A Good Camera
  2. A Love for Photo Taking

Now the basic requirements are out of the picture here are a few simple general steps for being the next YouTube Superstar! (details not included).

How to sell photos online and make money?

  1. Open an account at a website that sells your photos
  2. Grab your camera
  3. Start snapping some great photos!
  4. Upload your photos

You are now a part-time photographer! Let the world know your Masterpiece!

Tips for selling photos online!

  1. Quality is the most important
  2. Take photos in Raw format
  3. Use the techniques that teach you in the photography class!

Best websites to sell your photos online:

Example (illustration Only)

Sara loves taking photos during her travel, and her photos are loved by all her friends.

She took tonnes of great photos during his travel and selected only the best to be uploaded. She reviewed the online photo-selling website mentioned above and decided to be a contributor to Shutterstock.

Her photo is really popular and many people brought her photo earning her a good passive income for the years to come.

How much can you earn selling photos?

Selling photos can earn between $0.10 and $99.50 per (royalty-free) sale. For selling stock photos under an extended license, you can potentially earn up to $300.00 per sale. On average, stock photos will earn you $0.30 per image per month.

The more good-quality photos you take, the more income you will get. Even when you stop taking photos, you will still have a passive income as long as there is a demand for your photo.

Each photo is unique and each is like the little employees that help you earn an income while you sleep. The more employees (photos) you upload the better the income.

Why Even A Beginner Can Earn Passive Income

There are a few key reasons why even a beginner can earn passive income.

  • Earning passive income does not necessarily require a large upfront investment. You can start small and gradually grow your earnings as you gain experience.
  • Passive income can be generated in a variety of ways. You can earn interest on investments, rent out a property, or sell products and services online.
  • Passive income often comes from investing in assets, such as rental properties or stocks and bonds. Over time, these assets tend to increase in value, which results in increased passive income.
  • Passive income is often residual, meaning that you continue to earn money even after you have completed the initial work.
  • Many forms of passive income are relatively low-risk, which means that even beginners can earn good returns with relatively little effort.

What Should You Do Now?

Finding the best way of earning a passive income will depend on each individual. Do something which you like and will be happy to continue doing even if you do not need the money.

When you are doing something you are passionate about, it is no longer work considered. When that happens, you will continue pursuing your passion which will always lead to success.

Passive income does not mean laziness, it means doing something now so you can ripe the benefits in the future.

All the ideas as stated above require some level of work, but these are some of the best and proven ways to make money while you sleep!

There are definitely many other ways of making a passive income, but these are some of my favorites!

Read Also: Best Life-Changing Books I Wish I Have Read Earlier

Remember! If you want it badly enough to be financially freed and have control of your own life, you will do what it takes to achieve it!

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