You might be wondering, “What’s the difference between a side hustle and a passive income?” Well, a side hustle is a project you actively engage with and work on and a passive income is something in which you invest a relatively small amount of time setting up, but you see money come in after the work is done. Of course, you still need to tend to any revenue stream every now and then, making sure that you fine tune as you go along to improve your yields. But in theory, you can let it do its thing without too much involvement (hence “passive”).
So, how to create a passive income? Here are our top recommendations – and don’t forget you can easily keep more than one on the go to maximise your income.
You do need a sizable pot with which to create a portfolio if you’re to see an income of around £1000 a month, but this is one of the least labour intensive options if you’re savvy when it comes to the stock market. If you’re not so confident, you can use a wealth manager like Nutmeg that will invest your money for you via an Exchange Traded Fund (ETF). Of course, there are risks to any investment but the returns can be great, especially if you take an active interest.
Yep, Crowdcube and the like make it super easy for you to invest in a round of funding for a start-up which shows promise. Similar to the stock market, it helps if you take an active interest in trends. But what’s also great is that if you feel passionate about what a small brand is doing to change the status quo, you can show your support. A return on investment is a wonderful thing, but so is backing something you believe in.
If you do a lot of shopping online (who doesn’t?) you could be earning cashback every time you buy. Cashback sites work by using affiliate links so instead of going directly to the site where you’re going to shop, you go via a tracked affiliate link and get rewarded. You could be getting between £300 and £800 back per annum; not a huge amount but not to be sniffed at if you’d be spending online anyway. Quidco and TopCashback are the two leading sites.
If you have a spare room, why not rent it out? Fewer people can afford a mortgage today, but not everyone wants to live in a shared house, student-style. Many people who work in a city may also only need a room throughout the week (a Monday to Friday let), which means you can keep your weekends to yourself. However, people who do rent out a room tend to find that with a good lodger, it’s great to share dinners or a drink at the end of the day.
If you have space on your driveway or perhaps an unused garage, you could have some valuable real estate right there. Using JustPark is an easy way to connect your space with 4.5+ million drivers and potential customers. And if you secure a Monthly Saver customer, you may be able to guarantee months of passive income. JustPark space owners make between £500 and £3000 a year and the first £1,000 is tax free. But even if your parking space is only available during working hours throughout the day, you could be making money by offering a commuter a reliable space.
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This article is part of a series about side hustles and passive income. Interested to read more? Find out how Frani found a way to share her expertise with a broader audience, how Jeyda spotted a gap in the bike repair market (while taking photos of doors!), and how Mike created affordable geo-tracking for SMEs. Or, if you’re thinking about a side hustle of your own, read our top ideas for boosting your income.