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Sep 05, 2023

A Guide to Passive Income


It’s fair to say that there has been a shift in our collective mindset over the last couple of years. People have come to value time over money and career. The pandemic, and subsequent lockdowns, have made people appreciate a slower pace of life. We don’t want to go to work at 6AM and come home at 6PM.

Of course though, we need money to live: to keep a roof over our heads and food on the table. That’s why more and more people are looking for a source of passive income, which allows them to live comfortably without the everyday grind. We’ve compiled a list of the best passive income opportunities in the UK, so you can spend less time working and more time doing the things that you love.

What is Passive Income?

Passive income is money that is earned with minimum effort. Sources of passive income include interest on savings, dividends from stocks, or income from rental property. It may require some effort to start, but after that income should be generated automatically.

Active income, on the other hand, is something you have to actively earn. That includes running a business or working a normal 9 till 5 job. You have to do something to earn that money.

Debunking 5 Myths About Passive Income

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There are many misgivings and misconceptions about passive income in the UK. We’re here to debunk some of those concerns.

1. Passive income requires no initial effort

You will need to put in effort to set up a source of passive income. For example, if you’re letting a property, you will have to renovate and market the property. Even less involved sources of income like stock dividend investing require some initial effort, as you need to research the stocks you are buying. However, once it is set up, it will require minimum effort.

2. You can get rich overnight

Passive income is a long-term investment. It will often take a while to generate enough money to live off, unless you have a lot of capital to begin with. There’s often a process of trial and error before you find the right passive income stream for you.

3. It’s always a hands-off endeavor

Some sources of passive income may be a little more involved than others. For example, if you write an eBook which people pay to download, you will have to market that eBook. That might mean social media posts, running a website or even paid advertising. However, it is still a lot less involved than active income.

4. Passive income guarantees steady cash flow

Like everything in life, there are some risks. One day, your share price might be up and the next day it might be down. Just like one day you can have a job and the next day you can get fired. That’s why diversification is important.

5. It’s easy to scale up passive income

It requires capital to scale up your passive income. You may not always have this cash to hand. It is important to maintain a steady source of income until your passive income can take over.

Is Passive Income Realistic in the UK?

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Passive income is achievable, but can require a lot of capital and hard work to get started. Initially, it is more realistic to expect your passive income to supplement your regular income, rather than replace it. Use the capital you earn to invest back into your passive income stream and watch your profits grow.

Not everyone will be able to live off their passive income. Most of us will not be able to generate enough capital to get those kind of returns. However, you may be able to cut down your hours at work or use your money to retire early. And that’s a lot better than nothing!

7 Passive Income Ideas

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We’ve compiled a list of some of the best UK passive income ideas.

1. Rental Properties

Letting out properties is one of the most popular sources of passive income in the UK. It involves purchasing a property to let out to renters.

A lot of property investors buy a cheap house that needs a bit of work. They’ll spend a few months renovating it to a high standard before they put it on the market to rent. After all, the nicer your property, the more you can charge.

The monthly rent should cover your mortgage fees, plus a bit of profit too. Once you’ve completed the initial renovation, it should need very little management to generate revenue each month, especially if you let it through an agency.

2. Develop a Website or Blog

Got a lot to say? Starting your own website or blog is a great way to earn passive income. You can do this through advertising, sponsorships or affiliate marketing.

Businesses will pay to show their ads on your website. That includes display ads and in-article ads. This takes very little work on your part, as businesses simply pay for the space. Sign up to Google AdSense to start displaying ads on your website.

If your blog is relevant and attracts enough traffic, some brands may sponsor a post about their product or service. For example, if you run a camping blog, HI-GEAR may pay you to write a review about their new tent. You should always be transparent about sponsored posts and maintain objectivity, or risk losing readers.

Affiliate marketing is another great way to earn passive income from your blog or website. If you write about a brand or products, you can add a special link. Every time someone buys something from this link, you get a small percentage of the profit.

This is a little more hands-on than our other passive income ideas, because it requires a stream of high quality content. However, you could focus on a few evergreen pieces of content which get most of your traffic, and then make these pages as profitable as possible.

3. Affiliate Marketing

Affiliate marketing doesn’t just have to be on a website or blog, you can also do it on social media or YouTube. If you already have a presence on these platforms, this is a great way to monetise it.

Affiliate marketing, again, is a special link you can put in your bio or video description. When users purchase an item through this link, you get a small commission. Just remember to disclaim this to your followers and subscribers.

4. Dividend Stocks

Traditional investing can be time-consuming if you don’t have a stockbroker. You have to watch the market carefully to make sure you buy and sell at the right time. It can become more like a full-time job than a source of passive income. Dividend income is less hands-on.

Dividends are a share of a company’s profits distributed to investors, often paid once or twice a year. The amount could vary according to profits or it could be a set dividend. A set dividend means you’re guaranteed that amount regardless of profits.

Dividend income means you don’t really care whether the share price goes up or down, because you don’t plan to sell your shares. Instead, you have invested in it to get regular payments from the dividend. You will need to invest a significant amount of capital to be able to live off these dividend payments.

5. Sell digital designs on Etsy

Are all these ideas sounding a bit dull so far? If you’re creative and handy on the computer, you can make money by selling digital designs on Etsy.

Create a design that’s unique or appealing; it could be a slogan or a quirky illustration. You can do this on a free website like Canva. Once you’ve created your design, upload it to Etsy and start seeing sales. You don’t have to print or post anything, customers can just download it.

6. Write an eBook

If you love writing, this could be the perfect passive income idea for you! Write an eBook which people pay to download. This could be fiction, self-help or career advice. Just make sure it’s something that other people would pay to read.

The first step is writing your eBook. You can write about anything you want, just make sure other people will enjoy it as well! If you’re a successful entrepreneur, you could write a guide to running a small business with useful tips and insight. This could be written like a memoir or more like a business manual. Just make sure it feels authentic. Don’t worry about being perfect, once you’ve done your first draft you can go through and edit.

You can publish your eBook directly on Amazon via Kindle Direct Publisher. This is pretty easy to do, just make sure you use a formatting tool so it looks right. Once you’ve uploaded your manuscript, you have to set your royalties. You can choose to own 35% or 70% royalties. Just bear in mind that if you own 70% royalties, you can only set your book at £9.99 maximum. Whereas if you own 35% royalties, you can set the price at up to £200, so this may actually make you more money.

Once you’ve published your eBook, you will need to market it to attract readers. That might include social posts to tell people about your book. This is great if you already have a large social media following. You can also use paid advertising (on social media or Amazon) to help your book appear in front of more people.

Once you’ve attracted enough readers and reviews, word-of-mouth should take over marketing your book. That means you can start to enjoy your additional income, or start working on your next eBook!

7. Create an online course

If you’re an expert in your field, you could create an online course which people pay to access. Imparting real, genuine knowledge, whilst also making money. Here’s how to do it.

Creating an online course is a good idea if you already have an established following or are a recognised authority in the industry. For example, many fitness influencers launch their own exercise plans which followers can buy. That means they already have an audience and don’t have to do as much marketing.

When it comes to making your course, you have full creative control. You could create a written course, a video course or a blend of the two. Make your course as long or short as you like, just make sure it’s enough to add value to learners. You could add in learning resources throughout, like a quiz or worksheets to test what they know. Remember, the better your course, the more you’ll sell!

Once you’ve created your online course, you’ll need to decide how to sell it. There are online course websites like Teachable or Kajabi which people use to search for and sign up to courses. This has the benefit of an audience who are already looking for your services. However, you will have to pay to use these platforms. Alternatively, you could market and host the course yourself. This may be better if you already have a large audience you can sell the course to.

Other Ideas to Make Money

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Not sure whether you can commit to a passive income just yet? Not to worry! Here are some other ideas to make money.

1. Sweatcoin

This is a great way to make extra money if you’re on your feet all day. Sweatcoin is a cryptocurrency that rewards your daily steps with currency. You can use your Sweatcoin to buy products in the app or donate it to charity.

2. Sell your old books

Sell your old books to WeBuyBooks and earn some extra cash! It couldn’t be easier. Simply enter the ISBN code and receive an instant offer. Post it to us for free and we’ll pay you the next day, as soon as we receive your items. Plus, if your sale is worth £25 or more, we’ll automatically increase our offer by 10%!

And selling is even easier on our app! Just scan the barcode and receive an instant offer. It really is that easy!

3. Transcribe

Are you a good writer? Can you listen well? Become a scribe! You’ll have to listen to a recording and type up the content. This could be captions for a YouTube video or the minutes for a meeting.

Find plenty more ideas in our 50 easy ways to make money blog.

We hope this has given you some ideas of how to earn a passive income in the UK! There should be something for everyone, depending on the capital and skillset you have available. Once you’ve got your passive income stream set up, start spending your time (and money) doing the things that you love, not working.

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