What Is Passive Income? Plus 12 Ways You Can Use It To Build Wealth

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what is passive income

Are you looking for ways to make a little more money in your life? Or perhaps you are just interested in finding new streams of income and side hustles? Then look no further as we are here to help you out.

Answer this: which of the following is an example of passive income: a 9-5 salary or a dividend stock? If you aren’t sure, then this article aims to make it clear for good as we show you 12 different examples of passive income.

We hope this will help you understand there are many different avenues to making money that don’t follow the usual ‘9-5’ job criteria.

What Is Passive Income?

Before we continue, we want to make sure the meaning of the concept is clear. Passive income is income that results from cash flow received on a regular basis without continuous effort on your part. This requires little to no effort by the user to maintain it and keep money flowing, unlike a full-time, daily job which usually requires you to work long hours every single day.

People try to make passive income in order to save up on their free time because they believe their time is more precious, and don’t fancy spending all day stuck in an office when they can make money in other, clever ways.

Usually however, passive income can be quite difficult to generate in the beginning. It can take a large investment of time to get up and running. Once it takes off however, it will be well worth the rewards.

Therefore, when an income stream is passive, it flows without much maintenance needed, allowing the creators to free up on their time and sweep up the rewards as they go.

Examples of Passive Income

We will now share 12 popular examples of passive income streams. These are all methods which many internet entrepreneurs have started of just in the past few years, and have grown in popularity.

Truly Passive Income

Lets start with the best kind of passive income…the one that requires basically no work at all. As we see it, there are 6 passive income streams that are truly passive.

  • CDs/Savings Accounts
  • Bonds
  • Peer-to-Peer Lending
  • Dividend Stocks
  • Private Equity
  • Real Estate Crowdfunding (CrowdStreet, RealtyMogul, etc)

We went into greater detail on each of these truly passive income streams here.


One of the most famous forms of passive income, is the classic blog. Blogs can generate seriously high amounts of income, but not right away. These will usually take a careful amount of planning and vast amount of work and time in order to succeed.

All you will have to do is find your preferred niche and stick to it. Once you understand how blogs make money, i.e. through search engine optimization, social media marketing and through writing high-value content, you will start to see results and succeed with your blog.

As soon as things kick off and your blog becomes more popular, this provides you with a platform and audience to generate many streams of income, through marketing relevant products and services to your readers.


Another successful way to earn passive income is by writing an eBook. These non-fiction ebooks can help to educate your audience on any given topic that you wish. The best way to begin writing an ebook is by thinking of any skills you possess, and if you know enough to write a book about it. If the answer is yes, then this can be a great way to earn some good money.

There will always be someone wanting to learn your skill, whether that be online marketing, how to write a first-class thesis, how to learn Spanish, or any other skill you think of, which means there will always be a market to buy it. The best thing to do is fill an existing need in popular niches, where you a good level of expertise. The Amazon kindle Direct Publishing platform can be a great place to start.

Online Course

Do you perhaps have a technical skill? Or are you an artist who wants to teach how to paint like Picasso? Gathering all your knowledge and putting it into an online course could make you a significant amount of passive income.

Similar to the eBook option, there is always someone who is looking to learn a new skill, so if you have something you believe is worth teaching, go for it and you will definitely see some results for your effort in the future. If you are looking for somewhere to begin, Udemy is a platform which allows almost anyone to create and upload a course, and get paid for it.

Sell on Etsy

Etsy is another online platform where many talented crafts men and women sell their creations. If you are good at making things, this can also be a great option to generate a passive income. There is also the possibility of selling digital products, which take a lot less time. Digital products require no overhead and will sell themselves providing that they are high quality and appealing to the right audience.

Develop an App

Another clever way people are making passive income is through creating smartphone apps. This is not for everyone, however if you posses the skills to develop one you will be able to make a good amount of money doing so, providing your idea is a good one and will be profitable.

If you have a really good idea for an app and want to build it yet lack the expertise, you can find a freelance developer to help you out. This might be a bit costly initially, but if it takes off, you will have a nice passive income stream for a good while.

Real Estate

A form of passive income which many have used for years is that of real estate. Renting out a room, apartment or entire home can be a great way to earn passively. Of course, if you do not have something of your own to offer, this will require a sizable upfront investment to begin with. Or, as we mentioned earlier, you can use a platform like Crowdstreet, which lets you get involved with real estate investing, and enjoy the regular payouts, without having a massive upfront cost.

However, if you decide to go for owning a physical asset, you might be able to live off the rent coming in, and spend your free time doing what you prefer.

Final Words

We hope this article has helped to answer the question “Which of the following is an example of passive income?” and hopefully you have been inspired to look for some new income streams yourself.

C. James

C. James is the managing editor at Wealth Gang. He has a degree in finance and a passion for creating passive income streams and wealth management.

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