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The 5 best passive income methods in 2020

Apr 23, 2020 | Passive Income

When the term ‘passive income’ is mentioned there’s often a strong misconception. Thoughts can turn to get rich quick schemes, pyramid schemes or schemes you can set up in 24 hours and then sit on the beach all day sipping on cocktails watching your bank account balance whir skywards.

There are unfortunately amass of these types of ‘tutorials’ and YouTube videos promising untold riches for 15mins worth of work. Just like the age-old adage ‘if it sounds too good to be true, then it almost certainly is’.

There are of courses ways to earn a passive income and people have been doing so for many years. In order to earn a passive income from ‘something’, you need to have the ‘something’ to earn a passive income from. You need an asset.

An asset is simply something that has intrinsic value and the ability to earn you additional money without input, or with very minimal input.

A bank account, with cash of course, is an example of such an asset. Your money is an asset and by keeping it within a bank account the bank will pay you interest. You can keep your money in a bank account and without doing anything you will earn extra money. You’re earning a passive income.

Having a second property and renting it out is another form of passive income. The house is the asset and you can earn money extra month by renting this out to someone else. You may have some minimal upkeep to do in the property, or you can involve a maintenance company to take care of everything for you.

 

Here is a run down of the best passive income methods to take advantage of in 2020

 

1. Create a Website or Blog

There is a lot of advice on the internet about creating blogs. People started creating blogs way back in the early 2000’s through platforms such as Blogger to share their stories. It was a little like Twitter but not restricted to a certain number of words in short tweets.

A blog’s original purpose was simply to share information about you as a person. A combination of Facebook and Twitter if you will. People shared stories of themselves, their family and activities.

Today when people refer to a blog they mean a different thing. This could be about you, but generally it’s something you’re interested in and want to write about. It could be to offer advice, support or teach people new things.

Imagine if you were an expert in a particular field. Let’s say gluten free baking for example and have put together lots of deliciously creative recipes. You could create a blog sharing recipes and cooking instructions. You could create videos of you baking to help others. With some good photography for your creations, and some good video skills, you could find yourself with some regular followers.

Now that you have an audience, and people interested in gluten free baking, you could look at opportunities to promote baking products such as utensils, books, scales, mixers etc… or maybe you could promote full gluten free baking courses – or even create your own!

If your followers click on adverts, make purchases of products, services or courses you could earn a nice commission.

The more followers you have the higher your advertising revenue can be.

Building a blog has long been considered as a side hustle rather than passive income. In some examples, like the Gluten Free Baking example you may need to update you blog continuously, but if you become known in your field and people find you it may be possible that people will continue to visit for weeks, months or years to come without an additional work.

Even if you created and posted a new recipe or blog posts each week, fortnight once your website is created, the work is often minimal based on the income you can earn.

Further Information -> Earn a Passive Income by Writing a Blog

 

 

2. Invest in Stocks and Shares

Buying stocks and shares in companies is by no means a new thing. In fact, the first record of an investor purchasing stocks and shares within a company dates back over 415 years!

In 1602 the Dutch East India company allowed outside investors to purchase shares of their business for a fixed percentage of the Dutch East India’s profits.

The concept of buying shares in a company may have become quite extravagant and to outsiders extremely complex filled within jargon, the principle is the same. The company sells shares in their business, the shares are bought by investors. The money for those shares is used by the company to expand, develop and grow – and your share price increases as the profitability of the company you invested in increases.

The stock market though is easy to enter, but not for the fainthearted.

For those wanting to take the step of investing in stocks and shares and want to spend the time understanding the market, the buy and sell process and the how to’s around investing in stocks and shares you may find our Top 5 Investment Books feature helpful.

If you want an easier route you could choose a managed investment fund. This is where you have the opportunity to give a steer as to where you would like your money invested, from a range of options, and the management company manage your investment portfolio and trade on your behalf – for a small fee (usually a very small % of the amount you have invested).

Invest in the right shares and you could be paid out a dividend. Consider this a bonus (usually annually) for making an investment in the company. These dividend payments are often considered a source of passive income.

Remember though share prices can go down as well as up. No investment is 100% risk free and you could end up with less than you started.

 

 

3. A YouTube Channel

Of all the social media platforms out there it’s YouTube receiving the most attention from the passive income chasers. Unlike Facebook, Twitter, Instagram or Pinterest, YouTube has its own inbuilt advertising system meaning you can choose to display adverts on the YouTube videos you create and upload for others to watch and earn a revenue from how many adverts are shown.

With Facebook, Twitter, Instagram and Pinterest you not only have to build an audience but have a product or service to sell – or an affiliate product to promote. YouTube simplifies the entire process.

YouTube may be the easiest social media platform to earn money from, but it’s not easy.

You first need to create a channel and create and upload videos others will want to watch. YouTube will start showing your videos to a small audience. If the videos are well received and liked, YouTube will show more of them. Create more videos to your channel and link your videos together and you will naturally get more views – and as we’ve seen, more views equal more income.

In order to start earning from YouTube your channel must first amass 1,000 hours of watched videos. This means if your video is 15 minutes long that one video must be watched 4,000 times before you can start earning. This may sound a mammoth task, but there are millions of videos with 4,000+ views. If you though create 10 videos, each for 15 minutes in length, then each video only needs 400 views before you start earning.

Once your video is created it’s on YouTube permanently, or until you remove it, and every single watch of your video brings you an income passively. Some channels have hundreds of videos. If each video earns you £15 per month, and you had 100 videos uploaded (which at two videos a week would take a year to create) your video ‘asset’ could be worth £1,500 per month – and if YouTube really pushes and promotes your videos or channel it could be a lot more.

These are all hypothetical numbers of course. Some people make £millions per year on YouTube and others nothing. But if this sounds like something of interest to you it’s free to do, and could earn you a great passive income

Further Information -> How to make money with a YouTube Channel

 

 

4. A Buy to Let Property

We are all aware of the continuing increase in property prices across the UK. They have been climbing quite rapidly since around 2008. Investing in properties is something many consider to be one of an ever-growing trend. Buying a property with the aim of it increasing in value is an investment idea but the regular passive income could come by way of rental.

With the explosion in property prices, huge first-time buyer deposits required even and ever-increasing number of people trying to get on to the first rung of the ladder, it has led to a rapid demand for rental properties.

This surge in demand for rental properties has led to a general rental charge increase from landlords. More investors are entering the buy to let property market as a way of an investment for the future, a higher investment percentage than those offered from regular and savings banks – and a way to earn additional passive income.

Once you have your buy to let property it becomes your asset. Your asset can be rented to tenants and you earn a passive income.

 

 

 

5. Outsourcing and Outservicing

I’m sure many of you have come across the term outsourcing, but perhaps not outservicing. By their very nature they are the same.

The term outsourcing refers to taking a task and providing it to someone else to do. It can be a small simple job or a more complex ongoing work.

Perhaps you have a website and need content. Well written articles and features. This you can outsource to someone else to provide.

Outservicing is the new buzz word. It’s a little misleading as it’s being considered something new. It isn’t. It refers to the method of outsourcing some kind of service – such as logo design, website design, book cover design etc…

The passive income hype around outservicing is to set up a website offering a service, like those I just mentioned. Then when orders are placed, you simply place an order for the same work with a outservicing or outsource provider. They complete the work to you, you pass on to the client.

When outservicing, particularly to some countries within Asia, you often will pay considerably less for the work to be done than you could charge a client.

For example, you could charge for a book cover to be designed for £99, when a outservicing provider could take on the work for £20. The remainder £79 is your profit.

This sort of activity is very ripe on the internet. Your client is yours of course and you have to manage to relationship, communication and any issues etc… unless of course your outsourced this too, but by having a team of designers you can pass work on to, you can build your own agency specialising in different subjects – which means you can manage many more clients than you could being a one man band and carrying out the work yourself.

 

 

In Conclusion

These are considered to be the best ways to earn a passive income in 2020. There are no get rich quick schemes as you will notice, and you should avoid anyone promising such.

Put in the time to create your asset, make it valuable and you can use to your own monthly passive income benefit!

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