Passive income is money earned with minimal ongoing effort. It’s an excellent way to generate a steady stream of income and additional assets without having to sacrifice your most valuable one-time. There are several ways to build streams of passive income including high-yield savings accounts, investing in dividend-bearing stocks or bonds, rental property or real estate investments, creating digital or print-on-demand products, or using affiliate marketing to fund a blog.

High-Yield Saving Accounts

Interest-bearing savings accounts don’t usually return ‘high’ interest (5% vs 0.05%), but in today’s economic climate with inflation as high as it is, the Federal Reserve has reacted by increasing interest rates (the cost for businesses to borrow money) in an effort to reduce demand and slow the economy just enough to stabilize inflation back to its ‘desired’ 2%. This stabilization hasn’t quite occurred yet, so interest rates are at an all-time high and have been for a while. Taking advantage of them now by moving any of your funds in typical savings accounts to high-yield savings will get you that 5% extra cash until rates plummet again.

Investments

Investing in dividend stocks or dividend index funds is a great way to help build passive income streams, though you generally need a bit more capital to see the benefits at scale. Investors receive regular dividend payments from these without having to actively manage the stocks or funds. Equities that pay dividends tend to be from companies that have been around a while and have passed their growth stage, so are less volatile (in general). Investing in bonds is another ‘fixed income’ source of dividends that pays the investor a consistent amount without constant interaction. Both of these stock market options can build streams of passive income while helping to diversify your portfolio.

Rental Properties and Real Estate Investment 

Real Estate projects are another type of financial investment. You can purchase a property, rent it out, and pay a property management company to take care of actively ‘managing’ it for you (maintenance, receiving lease payments, landscape upkeep etc.) Investors who don’t want the hassle or upfront investment of purchasing entire properties (think 20-30% down payment) can use real estates crowdfunding companies like Crowdstreet or Fundrise to leverage this passive income stream. Real estate investing through crowdfunding works similarly to fractional shares in that investors can collectively fund large-scale commercial real estate ventures and become partial owners, and then receive rental income. These ventures can be situated in up-and-coming urban areas with attractive property values, robust employment expansion, and increased rental profits. This presents an excellent chance for portfolio diversification, as investors are no longer restricted to investing solely in their local real estate market due to logistics.

Digital Products

Creating digital products like educational materials, e-books, online courses, or smartphone apps can also generate significant extra income through sales and royalties. If you have ideas but lack the know-how you can leverage the power of AI to help you or hire someone to help from a service like Fiverr or Upwork. Print-on-demand is another popular business model many people find attractive with minimal setup. Once the designs, products, and order processes are set up, the business becomes extremely low maintenance. 

Affiliate Marketing

Finally, If you’re looking to build streams of passive income, affiliate marketing is an excellent business venture. With numerous brands and products to choose from, the earning potential is virtually limitless! While probably the least passive method mentioned so far, after the initial setup, once you have an audience, it becomes more and more hands-off. Affiliate marketing is basically like being paid to tell your friends about products you enjoy and recommend. You team up with companies whose affiliate products you support and are given a special link to use. Whenever someone buys a product through your link, you get a commission. No need to handle products, shipping, or customer support directly. Just be genuine, share what you love, and build trust with your audience. Below are the steps to get started.

Choose Your Niche

The first step in any affiliate marketing venture is picking a niche. This is crucial because focusing on a particular market segment and audience makes it easier to become an authority and build trust with your readers. Clarity here is also essential for social media and search engine algorithms to accurately place your content. Consider your passions, skills, and existing knowledge base when choosing a niche. If you’re not genuinely interested in the topic, you can lose steam quickly or burn out. It takes time and a good deal of content to plant your passive income seeds, you’ll thank yourself later for choosing to spend your time on something you truly enjoy.

Tools and Technology

Don’t be overwhelmed by the mind-boggling number of tools out there for affiliates. You do NOT need all of them- promise! At the most basic level, you’ll need a way to communicate with your audience (usually social media and/or a website, blog, etc). You’ll also need a way to manage your email list and send automated emails as different contacts reach different points in the purchase process (I use Aweber for this but there are lots of great ones out there). Unless you want to manually track and manage this yourself which could be a super fun story, but I do not recommend it! 

A marketing funnel is also essential to this process – its most basic makeup is called a ‘lead-magnet’, ‘squeeze page’ or ‘opt-in’ page (where a new contact gives you contact information in exchange for something of value you’ve offered like a free template, “How-To”, or E-Book), and a thank you page (where you tell the new contact when to expect the E-book and other details about subscriber benefits). Finally, a tracking system for your affiliate products, sales, and campaigns is usually done by each individual program, but for your side of things, you can usually get by with a spreadsheet in the beginning. If you don’t track your sales, things can get confusing very quickly.

Research Affiliate Programs AND Your Audience

Once you have identified your niche, start choosing affiliate programs aligned with your chosen market. Look for programs that offer competitive commission rates, have a well-established reputation, reliable tracking systems, and helpful support for affiliates. It’s especially helpful if you’ve had experience with the product or service personally, but at a minimum ensure the programs you sign up for are relevant to your audience. Do some research on your target audience. What are they buying and why? The better you know your audience, the more ideas you’ll have for products that may help make their lives easier or help alleviate frustration for them in some way. For example, the affiliate marketing classes I took were very high quality for the $7 price. They cover transferable marketing skills you would learn in school in addition to their core curriculum. You begin learning how to use the tools and how to write copy as early as day 3, and the skills are applicable to any product. (See that – that was an affiliate link right there!)

Create Quality Content

Quality content is the backbone of successful affiliate marketing. You’ll want to create blog posts or articles that target specific keywords related to your niche and the products you’re promoting. This will help you develop an audience if you don’t already have one or grow your existing followers. Quality content also helps boost your website’s SEO ranking and attract organic traffic. To search engines, quality means your content is both helpful and relevant to your target audience. You’ll also benefit from considering exploring other types of content like podcasts, videos, or social media posts. Many times you’ll see ads for affiliate marketing that make it look like you can make money quickly and without any effort, and it does seem like some people get lucky (usually with a viral social media post) – but the vast majority of people have to work at it, and create a good deal of content before seeing real results. Then after getting everything set up and automated, that’s when the income becomes more and more passive over time. Then all you need to worry about is refreshing content and maintaining your business relationships.

Build an Email List

Having a responsive email list is crucial for any affiliate marketer, as it provides direct access to engaged customers already interested in your topic and maybe even some of your offers. Start building this list by offering valuable content or free resources in exchange for contact information from visitors to your site or social media posts. Use email campaigns thoughtfully and nurture these relationships over time. Your subscribers are your VIPs, treat them as such.

Employ SEO Tactics 

To drive traffic to your website and rank higher on search engines, employ SEO best practices like targeting keywords in headlines and body text of articles. Use relevant meta tags and always add alt text to images as well. This enables screen readers to ‘see’ what each image is, and not only helps with SEO but also helps those who are listening to an audio version of your page being read to them. It’s also a good idea to implement a solid internal and external linking strategy, and always be on the lookout for ways to improve your site’s loading speed. If you hate the idea of SEO and don’t want to learn about it or deal with it, there are a bazillion SEO companies out there you can outsource this to.

Promote via Social Media Channels

Leverage the power of social media to reach a broader audience and share your content organically. Join relevant groups, participate in discussions, and share valuable insights to establish yourself as an authority within your niche. Strategically promote your affiliate content by crafting attention-grabbing headlines but avoid appearing overly promotional or spammy. Some people ONLY use social media to promote content (another way to avoid SEO), which is great but just know you’re potentially missing out on search engine traffic by not optimizing your content for them.

Be Transparent and Genuine

Maintaining transparency with your audience is vital for success in any kind of relationship marketing. Always disclose your affiliate relationship and ensure that any sponsored content is clearly labeled as such. Building trust with your readers is essential, so only promote products that you genuinely believe in, have tried, or would recommend to friends and family. And once you have their email address, be respectful and don’t email them every day, especially not with a new sales offer or promotion!

Stay Up-To-Date and Be Patient

Finally, remember that affiliate marketing is an ever-evolving industry, and staying informed about industry trends is a must for success. Be prepared to adapt to platform updates and emerging technologies. Check for changes in your audience’s needs and interests. Keep up with your market research. Keep in mind that it takes time for your efforts to come to fruition. It takes time to build an audience, an email list, and social media followers. But hang in there, keep creating helpful, relevant content, stay true to your VIPs, and you’ll be well on your way to building and growing those passive income dreams. 

There are affiliate links in this post. If you click a link and make a purchase I may earn a commission. Please see my Affiliate Disclosure for more info.