Giorgio Trovato via Unsplash

If someone came up to you and said you could make money while you sleep, what would be your initial thought? You might think “what scam is this person running?” or “will I be testing out pillows and mattresses?”. But making money while you sleep is what passive income is all about.

Passive income is income that requires little-to-no effort to earn and maintain. This is different from a side-hustle because passive income methods usually only require the initial effort to get started. People who heavily focus on generating passive income can see earnings up to $50,000 a year (sometimes even more). For people who are just starting out and need some side cash or a small boost of additional income to pay the bills, you can easily generate $100-$1000 a year.

In this blog, I will be sharing the 3 best ways to generate passive income.

#1: High Interest Cash Accounts

If you have a good chunk of money sitting in your checking/savings account, there is a high probability that it is earning absolutely zero interest or 0.05%, which is the national average savings rate. Instead of having your money grow pennies every couple of years, consider putting your money in a trusted high-yield cash account.

The best example is Tellus Boost, a high-yield cash account with a minimum 2.00% APY, which is more than 30x the national average savings rate. Tellus Boost offers secured, fully insured, and daily paid interest accounts that can earn you up to 6.00% interest with Boosts.

This means that if you have $10,000 saved in a Tellus Boost account, you have the potential to earn $200 that year in interest, or with Tellus’s daily paid interest, almost $1 a day. Compare that to only making $5 a year with the same $10,000 based off the national savings rate.

High-interest cash accounts like Tellus Boost are generally online or in an app. This means that there is no need to drive to a bank to get started. Instead, sit in your living room, put money in your high-yield cash account, and watch money come in every day.

#2: Dividend Stocks

Stock market, dividend stocks, investing, robinhood, passive income
Ishant Mishra via Unsplash

If you are interested in stocks, dividend stocks are a great way to generate passive income. Dividends are profits that are paid out to owners of the stocks, usually monthly or quarterly. Investors of dividend stocks usually research and find steadily growing companies to invest in who give a solid dividend yield. Companies like Microsoft Corporation (MSFT), Target Corporation (TGT), or Coca-Cola (KO) are all well-known companies with steady growth that offer great dividend payouts. Exchange-traded funds (ETF’s) like Vanguard ETF’s or ARKK also have stable growth and solid dividend yield.

Let’s use Coca-Cola (KO) as an example. At the time of this writing, Coca-Cola’s stocks are priced at around $50 per share with a dividend yield of 3.21%.

This means that if you buy one share of KO at $50, you will receive $1.60 in dividends that year.

If you purchase 10 shares of KO at $50, which equates to a $500 investment, you will receive $16.05 that year.

If we have a $10,000 investment, as we did with the high-yield savings account, you will receive $321 that year, or $26.75 every month.

It is very important to note that you should not place your entire investment into a single company, but rather diversify between multiple investments and sectors. This is because if, in an extreme example, Coca-Cola products are found to contribute significantly to obesity, their stocks will most likely fall and your investment will fall with it. You also have to put into consideration the risk when it comes to investing in stocks. Using this form of passive income is great, but only if you research extensively and understand the potential risks and fluctuations of the market. For a less-risky option, a high interest cash account like Tellus Boost, as mentioned in #1, could yield you almost the same returns.

Investor and YouTuber Andrei Jikh is well-known for generating a large passive income using dividend stocks. In his portfolio of hundreds of moderate-to-high paying dividend stocks, he makes a passive income of around $800 a month, or just under $10,000 a year. All he does is research the companies, keep up with recent market news and trends, and invests in those stocks long-term.

If you decide to invest in dividend stocks, please do your own research.

#3: Affiliate Marketing

Do you have a social media account, blog, or website with a following? Are there products that you support and use daily from sites such as Amazon? If so, affiliate marketing is a great way you can generate income by sharing products you already use.

Affiliate marketing is a type of performance-based marketing in which a business rewards affiliates for each visitor or customer brought by the affiliate’s own marketing efforts.

Let’s use an example again. I currently have multiple social media accounts and a YouTube channel that primarily focuses on my car and the modifications I put on it. I get a majority of these modifications/accessories from Amazon and each post/video receives thousands of engagements. To take advantage of that, I signed up for Amazon’s affiliate marketing program (which is free). Once signed up, I was able to generate affiliate links for every product I have installed on my car that I showcased on my YouTube videos or social media posts. I place those links within my descriptions or site and each time a person clicks on those links and purchases the item (or purchases another item but still uses my link to navigate to Amazon), I get paid a percentage of that sale.

One of my most successful videos had a total of 9,000 views with 15 affiliate links attached to it. From the date I posted the video to now, I have made $114.27. Again, all I did was place affiliate links in my videos/posts for products I already use and each time a sale is made through my link, I get a percentage of it.

Conclusion

Any time you are trying to generate passive income, there will be some initial startup cost of either time/effort or money. For the high-yield savings account, you will have to set up an account and deposit your money. For dividend stocks, you must spend time researching the best companies to invest in and how much yield they give per share. For affiliate marketing, you will need to sign up for the affiliate program and embed affiliate links in your website or pages. After that initial effort, you will truly be making money while you sleep.