Smart Passive Income Ideas In 2022

What Does Passive Income Mean? Does It Exist?

The basic principle of passive income is that you are not trading your time for money. 

Just like active income, passive income is usually taxable. But it is often treated differently by the IRS. Portfolio income is also considered to be passive by some analysts. So dividends and interest would be considered passive too.

It’s best to think of passive income opportunities on a spectrum. Few things are purely passive.

A new term is “semi-passive income”. This is for the slightly more labor-intensive passive income streams. For example, writing a book. The book continues to sell after you’ve written it. So that part is passive. But the months or even years of writing it does not feel passive. 

The list below has a mix of pure passive and semi-passive income streams. 

Myths About Passive Income

  1. The greatest myth about passive income streams is that it requires no work at all. 

All income requires work on some level. Except maybe inheritance but that required the work of someone in your generational line. It didn’t arise out of thin air. Neither does passive income. 

There’s usually a level of upfront effort in order to earn money. That could be investigating the best dividend-paying business to invest in. Or lesson planning a course you can sell online. Once you have done the upfront work, the product will hopefully continue to sell with very little input from you. 

  1. The second myth to debunk is that passive income is just a financial buzzword you see on Instagram. Passive income is a very real possibility for everyone. It just takes a bit of creativity to see what you can offer. But passive income is a real thing. You can make some serious money if you put your mind to it, so do try it for yourself. 
  2. The third myth is that passive income is a fast way to make money. Very few passive income ideas generate money instantly. Some of the passive income streams below are faster than others. For example, stock photography has a pretty fast turnaround. You might receive a paycheck in your first month. Building a blog or YouTube channel is much more work. It could take months or even years for the passive income to start flowing. Be prepared for a delay when you first start a passive income project. 

Passive Income vs Active Income Examples

An example of active income would be being a journalist. You get paid in return for your labor. You have to keep producing articles to keep earning money.

Passive income would be writing a book. Yes, you labor at the beginning to create the book. But then the book can keep on selling with minimal input from you. 

Other examples include: 

Being a software developer vs creating an app that generates income

Knitting sweaters vs selling an ebook on sweater making

Here are a few passive income strategies to help you build up your personal wealth.

1. Earn Points from Online Purchases

When you use Swagbucks, you earn points for shopping you’re already doing online from places like Amazon, Walmart and Starbucks. Plus, earn extra points for watching videos about a variety of topics, browsing the web and answering surveys. You can then redeem those points for gift cards to your favorite stores or get cash back via PayPal.

Just like Swagbucks, with InstaDollar you can earn residual income for doing stuff online that you already do. Though you also get paid for doing a wider variety of tasks that you do with Swagbucks like checking email and playing games. Overall, the concept and reward structures are nearly identical. With InboxDollars, you do get a $5 sign-up bonus, but you won’t be able to collect it until you build up to $30 worth of rewards.


  • Almost a completely passive income source. All you need to do is install an extension to start earning
  • Multiple ways to increase your points


  • Takes a few months to build up enough points to cash in 
  • Web browsing tasks and video watching can be dull

2. Make Your Car Work for You

Another daily activity you can turn into passive income is driving.

If you’re already driving around to run errands, why not pick up a passenger or two? Driving your car with Uber will help you make money by driving people to their assigned destination.

You can also place advertisements on your car to earn money while you’re driving around. Yes, companies will pay good money to have you unconsciously peddle their product for them on the road. Your car is better than a billboard!

If you can even make money when your car is not being used while you’re on vacation, traveling or just during a typical workday. With an app like Getaround, you can make thousands of dollars by renting out your car while you’re not using it.

Plus, Getaround car owners get:

  • The best parking spots in town
  • A $50 monthly credit to rent whatever vehicle they like
  • $1 million in primary insurance coverage.

Another side to this is parking. On websites like SpotHero, you can rent out your parking space. This is hugely sought after in large cities like New York, Atlanta and San Francisco. Wherever you are in the country, you’ll find someone who will delight in renting your parking spot while you’re on holiday. 


  • Making use of an asset you already own
  • Flexible and easy to run 


  • You have the risk of others abusing your car

3. Get a High-Yield Savings Account

You probably dismissed this hack when you first saw it. We don’t blame you. Traditional banks have historically low interest rates. But online banks are making a difference. They have started to offer enticing interest rates that can help earn money on your savings.

With CIT Bank, you can get a 1.55% return on your savings. It is not money you are going to get rich from but it is free money. And since there are no monthly fees, that’s a double win from CIT Bank.

An alternative option is Discover. Like CIT Bank, Discover offers competitive rates on their savings accounts. The big perk with Discover is that there is no minimum opening balance.


  • Completely passive
  • Easy to set up


  • Interest rates are extremely low

4. Rent out a Room in Your House

If you have a spare bedroom, you can rent out your room through Airbnb. It is totally up to you when the room is available, what the daily rate is and you make the rules for your guests.

A great way to make money while you’re on vacation or out of town is renting out your whole place on Airbnb. Rental income is reliable and trustworthy.

Eventually, some opt to invest in rental properties but this has a higher barrier to entry. Not everyone can buy an investment property just to rent out.

It might feel weird leaving your space in the hands of strangers. But luckily Airbnb has up to one million dollars of insurance in case something goes wrong. There’s also a rating system, so you can review the renter’s reputation before letting them rent your place.


  • Makes use of spare square footage
  • You can make a lot of money this way


  • There are regulations to follow, so it’s not the easiest to set up
  • You run the risk of guests abusing your home or hospitality

5. Invest in Crowdfunded Real Estate

With just $500 you can start real estate investing via a Starter Portfolio from Fundrise. You will get to take advantage of a REIT (real estate investment trust) with more flexibility and potentially high returns. Performance reports indicate that you will get returns of 12.25% on your initial investment.

Another crowdfunding real estate platform to consider is RealtyShare. It is similar to Fundrise but the minimum investment is $5,000. With this platform, there is more control. You are allowed to choose what properties you want to invest in, instead of relying on the performance of the entire portfolio.

If you choose either of these options, keep in mind that since they are private funds and not public stocks. You won’t be able to easily liquidate your investment and access your cash right away. Your investments could be tied up from anywhere from six months to five years. However, you’ll most likely still receive monthly or quarterly payments. It depends on which investment opportunity you select.


  • Proven wealth building strategy
  • Creates wealth for your future


  • You can’t, or shouldn’t, withdraw funds short term. It takes a long time for investments to bear fruit. 
  • Requires a lump sum of money to start
  • Requires some education on investing to make the right decisions

6. Invest in Dividend Paying Stocks

Stock investments that pay quarterly dividends is the oldest and one of the best ways to generate passive income.

Let’s say you buy shares of Colgate-Palmolive stock. When you buy stocks the price is likely to rise over time, you will get paid for each share of stock you own. Over the past seven years, Colgate-Palmolive has paid between $0.34 and $0.68 each quarter for every single share owned by stockholders.

If you’re trying to develop a long-term investment strategy, you might want to reinvest those dividends. If you’re strictly looking for passive income, you do well to cash those dividends.

If you’re new to investing, Ally Invest has free courses to help you have a better understanding. If you would like the guidance of financial advisors, you just need an initial investment of at least $2,5000. You can then get professional help for as low as $0.62 per month.


  • Proven wealth building strategy
  • Ensures you’ll create wealth for the future
  • Pays out dividend income so you don’t have to wait to sell your investment to make extra money


  • You need a lump sum of money to start investing
  • May need support from financial advisors or brokers

7. Peer-To-Peer Lending

If you want a higher than average return rate on your investment, consider becoming a part of the Lending Club. The Lending Club takes your investment and uses it to help people borrow to start a business, consolidate debt and pay for medical care.

Here’s how it works:

Open an account and transfer as little as $0.01 as a minimum initial deposit

Build your portfolio by investing in a range of loans in increments of as little as $25

Get paid by receiving monthly payments as borrowers repay their loans

Reinvest payments or withdraw your money

This is a great way to support the global entrepreneurial community. You can invest in projects that appear interesting and you want to see succeed. It’s like being an Angel investor for a startup. You may just fund the next best thing! Or you can think of it as a charitable donation, offering assistance to those less fortunate. In any case, you can do good while earning extra cash.


  • You are supporting others in the community
  • You receive higher interest rates on your financial investments


  • Risk that the money isn’t returned
  • You need a large sum to invest to get started

8. Affiliate Marketing

With affiliate marketing, you earn a commission by promoting a product. The product you promote online should be something you know about and that you believe is high quality.

There are a few ways to get started as an affiliate. You can form an affiliate relationship directly with a specific company. Alternatively, you can earn through a commission platform like Commission Factory or LTK. You could also sign up for the Amazon affiliate program.

So how do you get started? You’ll need a blog.

When you have an online presence, you have a place to give recommendations and share your knowledge about products. Then you add affiliate links so the affiliate can track your sales. This is an essential part of affiliate marketing. Having a blog opens you up to all sorts of revenue streams. Not only can you earn passive income online with affiliate commissions, but you can also make money on advertising, too.


  • A reliable source of passive income
  • You can make money quite quickly if you already have an audience


  • If you don’t have an audience, it takes time to build one

9. Create and Sell an Online Course

Perhaps, you have a piece of certain knowledge and excelled skill level with a particular topic. You can use these skills that you have earned during a very long career to make you money.

You can create an online course to teach anything from algebra to guitar. Platforms like Udemy, Skillshare and Teachable are incredibly easy to use. Sign up is simple and the platforms give you a lot of support to get you started. 

The only barrier to entry is actually creating the course. You’ll need to think of how you can break your subject down into sizable chunks for your students. You may want to create downloadable exercises and guides too to enrich the learning experience. These aren’t a must, but your course may be better reviewed if it’s more complete than the others on the platform.

The best part about this idea is that once you do the initial work of setting up your course, you will continue to get paid when people take it. 


  • You can earn extra money from your expertise
  • Sales can be fast. You can make money within the first month
  • Low barrier to entry with plenty of course platforms to choose from
  • You can make thousands from course sales


  • You’ll need to spend time writing, filming and editing a valuable course
  • Can be slow growth if you don’t have an audience

10. Get Cashback on Online Purchases

There are several online companies that will give you cashback on your purchases. TopCashback is the best known. By signing up for the free extension, TopCashback will calculate cashback on your online shopping. As long as you are using a partner retailer, you can get a few dollars back. 

Your credit card provider might give you cashback with their partners too. 


  • Completely passive. You are earning money on purchases you would’ve made anyway
  • Fast passive income


  • Generally quite a low amount of extra income

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