Passive Income Investment Ideas in 2022: Making Money While You Sleep

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In today’s modern world, earning a living is difficult. The average personal income in the U.S. is only $63,214, with the median income across the country being $44,225.

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With the ongoing pandemic and future uncertainty, it can be hard to generate an income. As such, it takes to know how to make money.

How do you earn money then? Either start a business or get a job!

But there’s one viable solution: generating passive income. Earnings from this can come from other businesses, limited partnerships, or rental properties. However, you don’t need to have an active involvement.

In this article, we’ll share with you some investment ideas for generating passive income. Learn how to make money while you sleep.

Passive Income Investments Explained

Warren Buffet once said, “If you don’t find a way to make money while you sleep, you will work until you die.”

This idea rings true in this modern age. You don’t have to remain employed until you die or have side hustles after retiring. You don’t have to toil and sweat in launching and running a business.

Fortunately, you can stop trading time and create passive income instead. Let’s understand what passive income is and how to invest in it:

What is a passive income?

Passive income refers to money flowing regularly without putting too much effort into generating it. The ultimate goal is to make more and more money while you sleep.

The trick here is to make your money work for you. You start by investing in products or building assets at the outset. These will then generate income for you in the long run. However, they require zero-to-minimal effort on your part.

How to invest for passive income

There are different ways to generate passive income. You can venture into business or have a side hustle without putting in too much effort.

For instance, you can put your money into a business without spending time and energy running it. Your partner will be responsible for keeping it fully operational. Your only contribution is your financial resource as working capital.

Also, you can resort to options like:

  • Starting a vlog or blog
  • Becoming a social media influencer
  • Selling digital products (ebooks, online courses, graphic designs, photos, and videos).

However, the best option is to get into passive income investments. There are four basic investment options for this:

  • Real Estate – Passive income generated from renting out or investing in a property
  • Peer-to-Peer Lending – The act of lending money directly to an individual or business
  • Dividend Stocks – A portion of the profit that goes back to an investor
  • Index Funds – Either mutual funds or exchange-traded funds linked to a market index

What the statistics have to say

Passive income investments are best for making money in 2022. Passive income has become all the rage this year, CBS News reported. It also suggests some passive income streams like getting:

  • Regular interest from financial accounts
  • Dividends from stocks
  • Commissions from affiliate marketing
  • Royalties from creative products
  • Income from online activities

Note: We’ll tackle and expound on some of these in the next section.

If you’re still unconvinced about investing for passive income, check the statistics below:

  • One in three Americans has a side hustle. (Zapier)
  • Almost half of them have begun a side hustle to earn passive income. (Zapier)
  • A mom makes $760,000 in passive income every year. (CNBC)
  • Real estate (rental and investment properties) is the most popular and profitable side hustle. (The Hustle)
  • The affiliate marketing expenditure could grow from $5.4 billion in 2017 to $8.2 billion by 2022. (Statista)
  • Blockchain technology (crypto investment) might reach $23.3 billion in market size by 2023. (Statista)
  • The global e-commerce market size (including digital products) could grow to $27.15 trillion at a CAGR of 14.7% from 2020 to 2027. (Grand View Research)
  • 86% of investors plan to put more money in stocks in 2022. (CNBC)

13 Investment Ideas To Generate Passive Income

Now, let’s look at different investment options for generating passive income this year:

1. Consider dividend investments

Dividend investments have long been proven effective for earning passive income. Dividends are portions of profits shared by a company with its stockholders, shareholders, or investors. You can consider investing in company shares, investment trusts, and funds.

Start by looking for financially stable companies for your investment. Then, find and buy good stocks, shares, or assets. You’ll receive dividends for your investments in time. However, be wary of investing this year as many companies suspend such amid the pandemic.

2. Invest automatically in the stock market

Some investors are hesitant to choose a company and select dividend stocks. However, you can automatically invest in the stock market and generate passive income.

One perfect example is to invest through a Robo-advisor — a robotic financial advisor. All it takes is to set up an account, answer a few questions, and have AI do the rest for you.

I’m the founder and CEO of WallStreetZen, I recommend performing a stock market analysis. Independent investors must have better means to analyze and research stocks. The goal is to make better and long-term investment decisions.

3. Opt for a high-yield savings account

A high-yield savings account is another way to earn passive income. This type is just the same as a regular savings account. But as the name suggests, it pays a much higher interest on your money.

This type pays 20 to 25 times the national average of a standard savings account. While the national average yield is 0.06%, the high-yield savings accounts pay up to 0.60%.

Consider investing in one of the best high-yield savings accounts this year. By doing so, you’ll have robust passive income for the long term.

4. Go for money market funds

Aside from a high-yield savings account, a money market fund is another option. Both types somehow work the same. However, the differences lie in their account types and financial institutions.

A high-yield savings account is Federal Deposit Insurance Corporation or FDIC-insured provided by banks. However, a money market fund is only sometimes FDIC insured offered by both banks and investment companies. It is a mutual fund investing solely in cash and cash-equivalent securities.

Brian Dechesare, the founder and CEO at BIWS, said it is a beneficial financial vehicle. “As it plays a crucial role in investment portfolios, a money market fund can be a great source for passive income.”

5. Purchase an annuity

An annuity is a contract between you and any insurance carrier. It provides you with passive income through monthly disbursements for the long term. However, you have to make a lump-sum payment at the outset. You’ll then get some money almost immediately or sometime in the future.

Catherine Schwartz, Finance Editor at Crediful, suggests thinking twice before purchasing an annuity. “This isn’t for everyone as it requires a huge amount of money for investment. But if you’re looking for a passive income stream after your retirement, buying an annuity is worth it.”

6. Invest in REIT

Real Estate Investment Trust (REIT) owns and finances income-generating real estate assets. It covers properties like apartments, office buildings, hotels, warehouses, and even mortgages.

REITs can be a steady source of passive income stream. Individual investors can earn a share of the income from commercial real estate ownership. You can take advantage of this as you don’t have to go out and buy commercial properties.

7. Have rental properties

Real estate is the best source of passive income. You can rent out your properties and receive regular payments. You should have time to maintain your properties and engage with your tenants. However, you don’t have to do these all the time.

Keep in mind, however, that managing your rental income is imperative. It’s best to consider hiring a property manager to oversee your rental properties. Property management includes:

  • Addressing tenant concerns
  • Maintaining and repairing properties
  • Collecting rental payments
  • Managing your finances

8. Pursue a limited partnership

A limited partnership usually consists of two or more business partners. The primary owner runs the business, but the secondary partners do not partake in its operation. But while they contribute through shared capital, business partners also earn some profits. That’s where passive income comes in.

When investing your money in business, be critical in choosing the right partner. Understand that managing business cash flow is imperative. Your partner should always be on top of the finances. The goal is to earn more than you spend. That’s how to make profits in business!

9. Venture into peer-to-peer lending

Peer-to-peer  (P2P) lending is a viable source of passive income. As defined above, P2P lending is loaning money directly to an individual. However, this financial scheme usually applies to borrowers who don’t qualify for traditional loans.

As a lender, you can set your financial qualifications and choose your borrowers. That’s a great way to minimize the risks! To get started, consider some of the best lending platforms online like Prosper, PeerStreet, and LendingClub.

But for borrowers, the CEO at Fig Loans, Jeff Zhou, suggests building credit when taking loans. “This way, you can get approved for payday or fig loans. But if all else fails, that’s when you try peer-to-peer lending.”

10. Take advantage of crypto opportunities

Cryptocurrency has become increasingly popular in recent years. But for those who still don’t know what it is, it’s a form of digital currency.

Cryptocurrency is an alternative payment using encryption algorithms via blockchain technology. This technology is a distributed ledger in a network of computers. You can financially transact online without using conventional currencies like dollars or euros.

That said, capitalize on crypto passive income opportunities. Put your money into crypto savings accounts to earn a high yield. However, be wary, as cryptocurrency may be volatile and risky.

11. Try affiliate marketing

Affiliate marketing has become increasingly popular. In the U.S. alone, the multi-billion dollar industry could reach $8.2 billion in 2022. Eight out of ten companies are running an affiliate marketing program. It accounts for 16% of e-commerce sales in the U.S. and Canada.

What do these statistics imply? You should try affiliate marketing to generate passive income.

But how does it work? You partner with companies to become an affiliate and promote their products or services via your website, blog, or social media. When customers buy their products or hire their services, you receive a commission moving onward.

12. Sign in to cashback sites

Simply put, cashback is a reward program. It allows you to get back some money you spent on shopping. This program typically works for credit and debit cards offered to cardholders. However, even brick-and-mortar stores and e-commerce businesses now have this option.

Cashback can be a good source of passive income for regular shoppers. All it takes is to sign up for one on a shopping website. You can earn some points when you place orders online via this site. In time, you can turn these accumulated points into cash. Ultimately, it’s a great way to earn free money that requires little effort.

13. Consolidate your debts

Debt consolidation may not be a direct way of earning passive income. However, it’s a practical way to save some money. This wise financial option somehow helps you generate income instead of making payments for the long term.

Dean Kaplan, CEO of Kaplan Collection Agency, suggests consolidating debts and paying off most of them. “Imagine having a handful of loans and paying high interest on each. Why not look for a loan with a lower interest rate and get approved?

Kaplan continued, “Once approved, you can use that money to settle all your other debts. Moving forward, you’ll only have to pay for one.”

Making Money while You Sleep

There is nothing more rewarding than making money while you sleep. Yes, you don’t have to start a business or get a laborious job. You only have to be wise in investing your money.

But before taking the plunge, educate yourself about the various options available. Consider the investment ideas for passive income recommended above. More importantly, consult with financial experts and decide what works for you.

With these in mind, you’ll make informed financial decisions. Ultimately, you’ll make more and more money while you sleep!

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