For a lot of people it sounds like a dream come true: earn enough in passive income to follow your passions, work part time or even stop work altogether.
It’s not the easiest dream to achieve, but it can be done.
A passive income stream is a stream of money that flows from some form of cash-creating investment. It will usually require you to put in a bit of work to start with, but can pay massive dividends.
Here’s some ideas to get started.
Rent out a spare room – $15,000 a year
It’s perhaps one of the most popular strategies: rent out an unused room for cash. You could leave it specifically for holiday renters through platforms like AirBnb or you could find yourself a bona fide flatmate through accomodation site Flatmates.com.au.
You could reap up to $15,000 a year doing this if you charged $197 a week, according to comparison website, Canstar.
However, you should be aware of the lifestyle changes that come with this and also consider whether your insurance covers share housing.
Turn your friends into your audience – Up to $35,000 per social media post
You know your hot friend who is obsessed with drinking cleansing teas and posting about it on Instagram? Well, she’s getting paid to do it. The good news is you can too!
More and more businesses are realising the value of a social media presence and are paying influential Instagram users to share their product.
However, building the initial following can take time and you need to be prepared to stick to a posting schedule, post good content and build an audience who share your interests. Hopefully, this audience is also interested in products you can help sell.
The best influencers engage with their followers, ask questions and respond to comments as well as engage with other accounts.
However, you will need a few followers before you can start monetizing. In fact, you’ll need at least 10,000 followers before you can start earning anything, former Love Island UK contestant, Olivia Buckland told the BBC.
She said at that level, Instagram influencers can get paid around £100 ($179) for an Instagram post, but can start earning £750 ($1,342) once they have 30,000 followers.
Rachel Brathen is a self described “Yoga Girl”. The influencer with 2.1 million followers commands more than $34,000 per post, according to Forbes.
Invest. The sky’s the limit
It might not be as unusual, but there’s a reason more than 11 million Australians choose to invest; if you invest wisely and have time on your side, it’s difficult to lose.
A recent investment risk analysis carried out by personal finance website NerdWallet found it’s practically impossible for a young investor to lose money by investing in the stock market.
That’s based on a 25-year-old earning a starting salary of $US40,456 who saves 15 per cent each year. The study analysed 10,000 different investment outcomes and found that the investor has a 95 per cent chance of nearly tripling their investment, while traditional savers had less than a 3 per cent chance.
That’s as long as the investor is investing in the stock market over a 40-year investment span.
And, none of the simulations saw the stock market investor lose their initial investment. This is thanks to two things; compound interest and the smoothing effect of a longer timeline. Essentially, the longer your timeline, the easier it is to ride out rough patches.
Rent out your caravan – $20,000 a year
Nearly half a million Australians would be $20,000 richer if they realised the potential hiding within their unused caravan or RV.
Yup, the humble camping holiday is having a bit of a renaissance and you can cash in.
Given the average campervan is used between four and six weeks a year, savvy operators can rent out their vehicle via sites like Camplify and reap the benefits.
In fact, renting out an RV for a year could net you a neat $40,000.
Renting out your caravan can bring in between $9,000 and $21,000 a year.
Peer to peer lending. It depends on the individual
If you already have a sum of money set aside, you could consider peer to peer lending. This means lending to people who need a loan via an online platform which matches investors like you to suitable borrowers.
Major peer-to-peer platform, RateSetter announced that its investors had received more than $20 million in returns. The appeal of this type of lending is in the simplicity; there are less hoops for both lenders and borrowers to jump through. The investor specifies the amount they’re happy to lend and can sometimes choose what their investment is used for. Interest rates are generally set by the platform.
However, while the online marketplaces have to be registered with and monitored by the Australian Securities and Investments Commission (ASIC), things can still go wrong.
Investors should consider whether the platform has a fund to compensate them if the borrower defaults, what policies the platform has in place to redeem funds from the borrower and what sort of cooling-off period there is for if the investor wants to withdraw their loan.
Get cash back on your shopping – $400 a year
Get on board the cashback trend and score cash while you shop. ShopBack launched in Australia this year and gives shoppers a portion of their money back when they buy through the ShopBack platform’s store directory.
It can do this because companies pay commission to ShopBack for bringing customers to their sites, which ShopBack passes on to the shopper. Shoppers can save on fashion, groceries, electronics and even travel.
It currently has more than 1.5 million orders monthly and has awarded more than $50 million back to shoppers since 2014, with the average Australian user enjoying $8.50 back per purchase and $400 a year.