5+ Best and Worst Passive Income Ideas of 2022

Last Updated on August 14, 2022 by coffeepo

Passive income is all the rage these days. Everyone seems to be looking for ways to make money without having to do much work. But what are the best and worst passive income ideas? In this blog post, we’ll take a look at some of the most popular options and see how they stack up. So whether you’re looking for a way to make some extra money on the side or you’re interested in making a full-time switch to passive income, read on for some tips!

Who doesn’t want a way to earn money without doing anything? We all do! If you’ve been in the workforce for a while now, you understand the appeal of having passive income.

But not all passive income streams work the same way. Some are worth investing your time in, while others are… a tad questionable. You need to tell them apart, so you won’t waste any of your precious resources doing something that won’t make you financially freer. 

Here are the best and worst passive income ideas this 2022.

Best 3 Ways to Earn Passive Income

We’ve listed the best ideas below, going from easiest to hardest. Choose based on your capability and availability, as these options will still require some effort and time. After all, passive income doesn’t mean earning cash with zero effort. It only means making money without trading it for too many resources.

1. Open a Retirement Investment Account

Yes, we know that this idea is awfully boring. But it’s necessary and simpler than you think! The idea is to open a retirement savings account so you start investing in your future. 

Here are a few tips to get the ball rolling:

• We recommend that 10% of your income should go to your retirement. If money is a bit tight right now, you can start with just 1% and work your way up until you hit the mark.
• Start as early as possible so your money can grow over time. It’s about compound earnings, where you have your money to make more money.
• Choose the best plan based on your situation, like company-sponsored ones (e.g., 401k, 403b, or a Thrift Savings Plan if you’re a government employee), individual retirement accounts (IRAs), Roth IRA, or life insurance that allows you to build cash value.

It’s not exactly “earning cash,” but rather, lessening the money you’ll spend in the future. It’s also relatively low in risk since you’ll be investing your money little by little, going with the flow of the stock market.

2. Earn Royalties from Creative Work

Now, if you’re a creative person with artistic skills like photography or music, you can sell your work to sites that’ll give you royalties. You can kick back, relax, and wait for people to buy your stuff. 

Here are some options to consider:

• Sound effects that you can sell on Pond5 or Envato Market (AudioJungle)
• Background music that you can sell on Fiverr or Soundstripe
• Stock photos and videos that you can sell on Adobe Stock or Shutterstock
• Fonts that you can sell on Envato Elements or Creative Market

If you have more time and knowledge, you can even invest your time creating an online course on Skillshare or Udemy, or writing an ebook (no need to print it!) that you know people will need. Not only will you exercise your creative muscles, but you’ll also earn extra cash by selling it over and over again.

3. Rent Out Your Things

The next idea is to rent out your things. You’ll be surprised with how many people are willing to borrow your stuff instead of buying their own—especially if you have high-value items that most people will only use for a short amount of time.

This idea is also hinged on psychology. People tend to avoid owning anything because they might regret it (i.e., buyers’ remorse) or because they want to have a “minimalist” living. Renting, on the other hand, is temporary and often associated with new experiences.

So, these are some of the things you can rent out for profit:

• Audio and visual equipment like cameras, drones, or even big speakers.
• Clothing, especially if you have expensive or unique items.
• Adventure stuff like snowboards, surfboards, and bikes.
• Musical instruments like drums, violin, or portable keyboard.
• Party supplies like smoke machines, bean bags, or table decorations.
• Power tools like pipe threaders, high-power drills, or even a complete set.
• Storage or parking space especially if you’re living in a crowded, business area.

Then, list them in rental marketplaces like FatLlama, Rentah, Loanables, or Keeple. Alternatively, you can just post them on your personal social media accounts like Facebook and Instagram. After all, most of us would rather rent from friends than strangers!

Just remember to list the rental terms, have a protection policy, and stick to things that are high in demand but won’t break too easily. You don’t want to lose more money by renting out your assets.

3 Worst Examples of Passive Income

Now, these “bad” passive income ideas aren’t necessarily bad. In fact, some of them can be good ideas, depending on your resources and past experience. We only lump them together under “bad” because they aren’t good ideas for most people, so evaluate each option with a grain of salt.

1. Leasing Out Rental Properties

Chances are that you don’t have any experience in real estate investing. If this is true, don’t fall into the trap of purchasing a property and renting it out to tenants for “passive” income. The reality is that it takes a lot of work to become a landlord, and it’s far more complicated than most individuals can handle. 

The business only becomes semi-passive when you have enough properties in your real estate portfolio to hire third-party management (e.g., property managers) to run the business for you. And if we were to guess, a huge investment for eventual passive income streams like that isn’t what you want.

Moreover, there are many mistakes that beginners will make when investing in rental properties, like:

• Not understanding the market and paying way too much money for a property, not being able to charge enough monthly rent and generate enough income to pay for the ongoing expenses.
• Purchasing a property with a small tenant pool, resulting in having to deal with high vacancy rates all year round (which means no money coming in to afford property upkeep).
• Not paying for professional help when bringing a distressed property up to rental standards, doing more harm than help in DIY-ing all the property issues
• Being unaware of your landlord responsibilities, and not reading up on the local rules and obligations that you’ll need to follow.
• Forgetting to screen for quality tenants. This results in renters who won’t pay rent, won’t take care of the property, and won’t abide by the lease agreement.

In other words, it’s a high-risk, high-reward investment that can easily become a sinkhole that depletes all your money. So many things can go wrong at so many stages, so we recommend that you steer clear from investing in rental properties if you’re not ready to commit.

2. Investing in Vending Machines

Vending machines are getting more popular. In fact, the global market for vending machines was $134.4 billion in 2020 and is projected to reach $146.6 billion by 2027. However, investing in vending machines takes way more time, effort, and money than you may realize. 

This business is really only good if you have the capital to get started and a location where it will work. Small towns, for example, aren’t ideal for this.

For example, to have a successful vending machine business, you need to:

• Create a profitable business plan that identifies the best location and products to sell repeatedly for decent returns, among other things. You’ll also have to maintain the machines and visit them regularly to manually collect your money.
• Figure out your financing option because you’ll have to invest around $3,000 to $10,000 for a single machine, spend a little more on licenses and permits before installation, pay 5-25% of your total sales to rent the location, and pay sales tax.

In short, investing in vending machines is being an entrepreneur and creating your own business. If you’re not knowledgeable or have enough time for this, then don’t get into the mix! 

3. Becoming a YouTuber or Influencer

Lastly, a popular yet overestimated way to generate passive income is by becoming a YouTuber or other online influencer. Here’s the thing: You can’t become an influencer overnight, and it’s only somewhat passive when you’ve established your name. 

This is not “passive” in the beginning and actually won’t make any money at all in the beginning. It can take months or years to get monetized.

Here’s the reality of becoming an influencer:

• You need to be online all the time, even during the weekends, especially once you get the momentum going and have brands supporting your platform. There are no breaks with this job.
• You have to be flexible, constantly analyzing and adjusting yourself. After all, social media trends are changing all the time. You’ll have to keep up with the evolution and come up with fresh, relevant content to keep your audience engaged.
• You have to be authentic but unique, which can get difficult. You have to build trust with your followers with transparency and honesty, all while gaining enough interest to stand out.
• You have to deal with fluctuating finances, as the majority of influencers (especially smaller ones) can never predict the number of opportunities to work with brands, among other things.

Yes, the life of an influencer looks glamorous and amazing. After all, that’s all we see online. But it takes a whole lot of time, effort, and understanding of brand marketing to become financially self-sustaining. In other words, becoming an influencer is not a passive job.

Make Cash While Doing as Less Work

There’s always some work involved with earning money. But there are options out there that enable you to generate additional cash while you study or work, giving you an income stream that you can pretty much leave alone. 

Remember, the key to passive income is to choose something value-generating that won’t require too much of your resources. Some ideas are better than others, but you should always make sure you’re getting into something that works for you.

More Best Passive Income Ideas:

1. Renting out property: This is a great option if you have some extra space that you’re not using. You can list your space on sites like Airbnb and VRBO and start earning money from renters. Just be sure to screen your tenants carefully to avoid any headaches down the road!

2. Investing in stocks and bonds: This is a more traditional way of earning passive income, but it can still be quite lucrative if done correctly. You can invest in stocks and bonds through online brokers like Vanguard or Fidelity.

3. Creating an online course: If you have expertise in a particular subject, you can create an online course and sell it on sites like Udemy or Teachable. This is a great way to share your knowledge with others and generate income at the same time!

4. Writing an e-book: This is another great option for those with expertise in a particular subject. You can write an e-book and sell it on Amazon Kindle Direct Publishing or other platforms.

5. Building a blog: This is a more long-term approach, but it can be quite profitable if you’re able to attract a large audience. You can monetize your blog through advertising, affiliate marketing, or selling products and services.

More Worst Passive Income Ideas:

1. Gambling: Don’t try to make money by gambling! This is a surefire way to lose money, and it’s not even remotely passive.

2. “Get rich quick” schemes: These are just scams designed to take your money without actually providing any value. Avoid them like the plague!

3. Multi-level marketing: Many people get lured into these schemes by promises of easy money, but they rarely ever deliver. In fact, most people who get involved in multi-level marketing end up losing money.

4. Day trading: This is another risky activity that is more likely to lead to losses than profits. Unless you’re an experienced trader, you should steer clear of this one!

5. Pyramid schemes: Pyramid schemes are illegal in many countries and are nothing more than a way to steal money from unsuspecting people. If you’re approached by someone offering this type of “opportunity,” just walk away!

Final Thoughts

So there you have it, the best and worst passive income ideas. As you can see, there are some great ways to generate passive income, but there are also some risky ones that you should avoid. When choosing an option, be sure to do your research and only invest in something that you understand. With a little bit of effort, you can start earning money from one of these options and then sit back and relax!

Hope this article shows you the best kinds of passive income, and we’ll see you in the winner’s circle! 🙂