What is passive income?
Passive income is money that you regularly make without much work. Sounds great, right? Nothing like your wallet gets fatter, while you loaf on the couch binge-watching Netflix.
Let’s be real: of course, everyone would like to earn passive income, but it’s not that easy. In most cases, you need to invest some of the money you’ve already made to start generating passive income. In other cases, you can use your capital (home, tools, etc.) to help you earn some passive money.
Even though passive income is taxable in Canada, the idea of generating money while you sleep is too hard to resist. Once you’ve built something, you can watch your bank account grow.
Passive income ideas
What you decide to invest in will determine how much passive income you make, but here are a few ideas on how to make a passive income in Canada
Rent out your home
If you own your home, one easy way to earn some passive income is to rent it out. Websites such as Airbnb and VRBO make it incredibly easy and lucrative, as people from all over the world can search your property. Getting started is simple: all you need to do is verify your identity and upload pictures of your home. If you live in a high-demand area, it shouldn’t take long before your place is booked.
Admittedly, renting out your entire home can be difficult, as you’d need to vacate it whenever someone rents your place. You’ll also have to factor in other expenses, such as cleaning fees, maintenance, insurance, and repairs. An alternative could be to just rent out a single room. You might not earn as much money, but there would also be less maintenance since you only need to worry about cleaning out a single room.
Make what you have available
Instead of renting out your entire home, you can rent out parts of it. Renting out your parking spot is one easy example. A few online platforms allow you to rent out your parking space to anyone, but they take a cut with each booking. Alternatively, you could try to find someone on Kijiji or Craigslist who wants to rent your spot monthly.
If you have a pool, you can rent it out by the hour on Swimply. This can be especially lucrative in the hot summer months. But you can also limit when your pool is available, so you can keep it to yourself when you want to go for a dip.
Another thing worth trying is online websites that allow you to rent out anything you own, such as tools, bikes, air mattresses, cameras, etc. You won’t be pulling in big dollars, but if you’re not using your stuff, why not make some money off it?
Rent your car
One more thing that you can rent out is your car. With many people working from home these days, there are a lot of vehicles that are just sitting in driveways and garages. Turo is easily the most popular app for peer-to-peer car sharing.
Guests (the renters) can browse the app for vehicles nearby. When they see a car they like, they can book it. Turo vets the renters in advance, but hosts (the owners) can also request a picture ID when guests pick up the vehicle. How much you’ll get depends on the model of your car and where it’s located. Turo can walk you through the steps and guide you on a suggested price if you’re unsure.
Write an eBook or an online course
Do you have a skill that people are interested in learning about? Perhaps you have intensive knowledge about writing, marketing, search engine optimization, or even how to apply makeup. A lot of people out there are willing to pay for introductory courses so they can learn more about a variety of topics. All you need to do is create an eBook or an online course first.
Yes, it’ll take time to create an exciting product, but keep in mind that you’re not after the professional market. There are many people who are looking for essential tips from a professional that can help them with their daily lives. If you can offer them more than what’s already free out there for a reasonable price, there’s a good chance people will pay you for your knowledge.
Create a dividend portfolio
Did you know that some companies will pay you if you own some of their company shares? This is known as dividends, and they’re very popular for investors since they get a regular stream of income. Dividends are paid per share, so the more shares you own, the more you get paid out. When you get paid also depends on the stock. Some pay quarterly, while others pay annually.
Investing in dividend-paying stocks is one of the easiest ways to earn a passive income, but you need to have the money to invest first. Many people will start small and slowly add to their dividend portfolio over time. Eventually, they could have dividends that pay more than their monthly expenses.
While this strategy sounds simple, it’s not that easy. You would need to research each company you’re interested in to ensure that they’re a good fit. A company that pays a high dividend may not be able to sustain it. Instead, pick companies that have a strong financial standing.
Try affiliate marketing
If you start a website or YouTube channel, you could promote products that earn you a commission. Essentially, you’d have to create a site first and gain some trust with your audience. You could then add product links where you could earn a commission if your readers buy items through your links. This is known as affiliate marketing and is common on most websites these days. Even some major media outlets participate in affiliate marketing since it’s an additional source of income.
Keep in mind that you need to build an audience that trusts you first. You can’t just create a random website and stuff it with affiliate links. No one is going to click your links since your webpage will appear spammy. You need to earn your readers’ trust and you need to believe in the products you’re promoting.
READ MORE: How to make money on TikTok
Stream on Twitch
Anyone who plays games has likely heard of Twitch. It’s a platform for gamers where you can watch other people play video games. As a gamer, you can use Twitch to stream yourself and build up an audience. Like building a website, your audience won’t grow overnight. It may take years or some serious skills before you build up your views. How you market yourself can also affect your overall audience.
As for the making money part, there are a few different opportunities once you become established. Most Twitch streamers accept donations. While that may seem silly, Twitch users support their own. Alternatively, you could do brand partnerships or sell merchandise. Yes, there’s a lot of work involved here, but getting paid to play video games sounds pretty cool.
The bottom line
As you’ve learned, earning a passive income requires work at the start. If you think you’re going to earn a million bucks snoozing on the couch, forget about it. Getting everything set up to the point where you have consistent income can take years. Even then, it may still require some regular maintenance.
To be successful, you need to find a revenue stream that you’re passionate about. Also, it’s possible to build multiple streams of passive income. If you’re able to pull that off, you may never need to work full-time again.
READ MORE: What type of business should you start in Canada?