9 Different Passive Income Streams

Owen Winkelmolen

Advice-only financial planner, CFP, and founder of PlanEasy.ca

Work With Owen

Money is amazing. Just the concept of money itself is incredible.

We all agree to take this worthless piece of paper and assign value to it. Most of us trade a considerable amount of our personal time for these pieces of paper. Then we trade some, or all, of those pieces of paper for stuff and things. Money is just a concept but it’s one we all agree to believe in.

One thing I find amazing about money, is that money can make more money. You put those little guys/girls to work and they start to multiply.

You can put your money to work in different ways. Some ways require you to be an active participate, like starting a business. This is active income. You need to spend money, and time, to make money.

But you can also put your money to work in other ways, ways that are more passive, ways that require little to no work from you.

Earning passive income means your money makes more money with very little help. It just does its thing, day and night, and once in a while, you get a nice little chunk of money deposited into your bank account.

The benefit of earning passive income is that you no longer need to trade your time for money (but you may still choose to do so). The more passive income you earn the more flexible you can be with your time.

Earning passive income is a goal for many people. They know that earning passive income means they can be more flexible with their time. Earning passive income gives them financial flexibility.

If they can earn enough passive income they can stop working indefinitely.

How To Create Passive Income:

The first thing you need to know about passive income is that no passive income stream is truly 100% passive. Even buying stocks and bonds, which is considered to be passive, requires a tiny bit of work up front to make the trades and then a bit of work once in a while to re-balance your portfolio.

There are different ways to earn passive income. Some require just a bit of work up front. Others require more work at the beginning. And some ways require a bit of work up front plus a bit of attention once in a while.

Which method you choose will depend on your personal preference. I like the idea of having a few different steams of passive income, even if it requires a bit more work. I would rather not be too reliant on just one form of passive income.

That being said, you need to decide how much effort you want to put into setting up your passive income steam. You also need to decide how much risk you’re willing to take. Some forms of passive income are riskier than others.

In this post I’ll share with you 9 passive income ideas. Some are common ways to earn passive income and others are not so common. Some of these ideas are truly passive but others require a bit of work.

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Common Passive Income Streams:



The classic way to earn passive income. It’s incredibly easy to start investing.

Buying index ETFs through an online broker lets you buy many companies at one time and they’re very inexpensive to own. It’s a very inexpensive way to diversify your portfolio.

Investing in ETFs doesn’t require much capital either. You can buy an index ETF for as little as $20-$30. ETFs have low annual fees and its free to purchase ETFs through certain online brokers.

If DIY investing doesn’t appeal to you there are also many robo-advisors that will do the work for you in exchange for a small fee.

Finally, the added benefit of investing in stocks is that they’re very liquid. If you want to get your money out, it’s easy to do so.



Similar to stocks, it’s also very easy to start investing in bonds. Rather than buying individual bonds you can purchase a bond ETF that tracks a bond index, like corporate bonds or government bonds, long term bonds or short term bonds. These ETFs own thousands of different bonds so you benefit from lots of diversification.

It doesn’t require much capital to get started either. Bond ETFs can be purchases for as little as $20-$30. Plus investing in bond ETFs are very liquid, if you need to get your money out it’s easy to do so.


Savings Accounts:

You can earn passive income in a savings account, but the returns are relatively low, often below inflation. The benefit of earning passive income in a savings account is that it’s very low risk. Your principle is guaranteed, even if the bank goes under (thanks CDIC!).

Savings accounts are perfect for short term savings goals like a down payment, a wedding fund, or a vacation fund. Some online savings accounts have interest rates in the 2%+ range.


Rental Property:

Real-estate is a favorite way to earn passive income for many people. Investing in a rental property requires some work up front to identify a good rental property. And unless you use a property management company it may require ongoing management too.

Finding a rental property that provides positive cash flow can be tough. Getting into a rental property also requires a lot of cash up front for a down payment. On top of the down payment it also requires a cash reserve to cover unexpected issues/repairs/vacancies.

The other downside to rental properties is that the transaction fees are very high. This means you should plan to hold a rental property for many, many years. The other downside is that real estate is not very liquid. Getting your money out of a rental property can take a long time, especially in a down market.

Do your research and educate yourself before getting into rental properties. Visit BiggerPockets for more info.

“Earning passive income means your money makes more money with very little help.”

Less Common Passive Income Streams:


Peer-To-Peer Lending:

Peer-to-peer lending is a new way to earn passive income. It cuts out the middle man (banks) and connects you directly with people who need a loan. By cutting out the middle man it increases the possible return, but it also increases the risk.

Using a peer-to-peer lender as a passive income steam also requires a bit more work to review new loans and loan write-offs, so it’s not as passive as other methods. It’s also not as liquid as stocks/bonds. Once you loan out your money is locked in for a certain period of time.



Royalties are another way to earn passive income. Royalties are basically like rent for a creative asset. People pay you each time they view or use your asset.

Assets can be things like books, e-books, music, digital art, software or intellectual property like patents.

If you’re creative, you can make these assets yourself and let others use them in exchange for a royalty payment.

Or! You can purchase the rights to a creative asset that someone else has created and earn royalties from that. For example, if you had enough money you could buy the rights to the Beatles catalog.


Website With Advertising:

Digital advertising is huge. Last year Google made around $74 billion in ad revenue. Through Google AdSense they have ads on millions of websites. Ever time an ad is displayed or clicked, Google pays a percentage of the revenue to the website owner.

There is a whole group of people out there making websites specifically to put up Adsense ads. They create an information resource for a certain niche, get website traffic from good SEO or social media campaigns, and then monetize it with ads from Google.

Alternatively, you can buy an existing website that already has content and website traffic and start earning income immediately.

For more info on how to create passive income from a website visit Pat Flynn at Smart Passive Income.


Buy A Self-Sustaining Business:

Businesses make money (some of them do anyway) and you can buy a successful business as a way to earn passive income. Owning a business is rarely passive but certain businesses can be more passive than others.

You can buy real world business like a vending machine business, a kiosk, an automatic car wash or digital businesses like websites or drop shippers.


Sell Digital Products:

It seems like every day there are new ways to make and sell digital products. My recent favorite is Merch by Amazon.

Basically, you do the creative work, upload your artwork to Amazon, and they take care of billing, printing and shipping. You collect a percentage of each t-shirt sold. If you’re a naturally creative/fun person this is a really interesting way to earn somewhat passive income.

Another option is to sell digital downloads on Etsy or your own website. For example, selling “printables” is a huge business and comes in many different forms. You can find printables for organization, children, holidays, and of course personal finance!

Owen Winkelmolen

Advice-only financial planner, CFP, and founder of PlanEasy.ca

Work With Owen


Join over 250,000 people reading PlanEasy.ca each year. New blog posts weekly!

Tax planning, benefit optimization, budgeting, family planning, retirement planning and more...



Join over 250,000 people reading PlanEasy.ca each year. New blog posts weekly!

Tax planning, benefit optimization, budgeting, family planning, retirement planning and more...



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