By Christopher Liew
Want to earn money while you sleep? If so, I have some good news and some bad news. The good news is that there are countless ways that you can earn passive income.
The bad news is that there is no get-rich-quick path to passive income. You will either need to invest your money or your time.
Build multiple passive income streams because many of the income ideas listed below are not guaranteed to last forever. Here are 14 different ways to make extra money in Canada in 2020:
1. Robo-advisor investing
As futuristic as robo-advisor investing sounds, how it works is straightforward and is well-suited for both beginner and experienced investors.
In a nutshell the way robo-advisors work is when you deposit money into their investment account, you will be investing in a portfolio of low-fee funds based on your risk tolerance. You will also get access to advisors either online or by phone call if you have any questions.
Robo-investing is the perfect passive income solution because it allows you to deposit money in and forget about it over the long-term.
Your money will be managed and rebalanced automatically at a low-fee. Over the long term, because of compounding returns, having lower fees can lead to much higher returns than a high-fee solution.
Questwealth has the lowest fees in Canada for a robo-advisor. Because of its very competitive fees, I believe in the long run it could outperform its peers. You can try it out and get $10,000 managed for free if you open an account here.
2. Build your own ETF portfolio
If you’re a do-it-yourself type of investor, you can build your own ETF portfolio and manage it with a low time commitment.
There are many resources on how to build an ETF portfolio. You can start by reading about how to start investing in Canada. You’ll need to figure out what asset allocation matches your goals and risk tolerance.
After you get educated and figure out what ETFs you want to buy, the cheapest way to buy ETFs in Canada is using a trading platform like Questrade here that allows free ETF purchases.
3. Dividend stocks
Dividend stocks can be a very effective way to earn passive income. It’s easy to find a dividend stock that pays between 3-5%. There are even stocks that pay 10-13% dividends, but those are much riskier and usually not sustainable.
Dividends are not guaranteed, and a company can cut dividends at any time. Your stocks can also lose value and has all the risks of investing.
If a company has a long history of providing and increasing dividends, it could be a reliable dividend earner if it continues to perform well.
I invest about 10% of my portfolio in dividend stocks and the rest in ETFs. I used to have more in stocks, but I found it too time-consuming. If ever you’re in doubt about dividend stocks, stick with ETFs instead to get diversification at a very low cost.
Wealthawesome.com reader offer: Get $50 in free trades when you open an account with Questrade here.
4. Write a book or e-book
You don’t have to write the next Harry Potter series to make money writing a book. The options about what you can write about are unlimited. These days, anybody can write a book and have it published on Amazon, either by Kindle or a physical copy.
If you’re not a fan of fiction writing, you can write about non-fiction. If you find the right niche and can help to solve someone’s problem, you can write a book about it, and people would be willing to pay for it.
People could be buying your book for decades, and you will get paid for each time it’s sold.
5. Start a blog
If you start a successful blog with many loyal readers, the opportunities to make passive income are endless. Here are just a few ways you can make money by starting a blog:
- Online ads
- Affiliate programs
- Sell an online course
- Release a useful software mobile or online app
- Sponsored blog content
- Freelancing – while not passive, having a successful blog opens up opportunities to freelance.
Depending on your niche, you can break down how much you can make per pageview. It can range anywhere between $0.01 – $0.20 per pageview, but more likely, it will wind up between $0.02 – $0.07 per pageview. This means that for every 10,000 pageviews, you can make roughly between $200 – $700.
For a good beginner hosting platform, Bluehost is very easy to set up. Siteground is the hosting provider that Wealth Awesome runs on, and is good after you start getting more visitors.
6. Outsource your work
Outsourcing your work can be beneficial in making passive income for business owners.
There have been many freelancers who have built a trustworthy business and reputation as a one-person shop, then turned into a full-fledged agency with multiple outsourced workers who work for them.
For example, say you are a freelancing web developer. You build up your business to the point where you are getting more work than you can handle.
At this point, you can start to hire and train workers, either online or in-person, to help you with your work. This will free up more time to add additional projects and increase your income.
I’ve met many people who have built up agencies in this way and oversee their workers and only work 10-20 hours per week. There are countless fields where this could work, such as accounting, digital marketing, social media managers, or virtual assistants to name a few.
7. Passive interest with a high-interest savings account
Sometimes, boring passive income is the best solution. If you know yourself well and know that you don’t want to lose any money on your investments at all, a high-interest savings account (HISA) could be an excellent choice for you to earn passive interest income.
I use HISAs if I know I will need my money in the next one or two year period. This ensures that I will have the funds once I need it.
You won’t earn nearly as high of returns in the long run as investing. You can get between 2-3% interest on your money, which will roughly keep pace with inflation, meaning the real value of your money isn’t shrinking much.
For long-term investing, I like to stick to dividend stocks or ETFs, and for the short-term, I will use a HISA to have my cash readily available to me. I use EQ Bank which has a current savings rate of 1.50%.
8. Airbnb rental
Airbnb is a revolutionary company. You can take your home and turn it into a money-making machine.
The best part is the flexibility of Airbnb. You can rent out extra rooms. You can rent out your whole house. You can rent out a basement. The possibilities are endless. You can find short-term tenants or long-term. If you know you’re going away for a weekend trip, you can rent out your property.
The liability insurance Airbnb provides protects you from any bad tenants.
When starting my Airbnb property, I lived in it while at the same time rented out the Airbnb to get the experience of how to properly manage it. Now it’s being rented out full-time, and I’ve set it up so that it requires almost no time to manage at all.
Many people rent out their garage or basement as storage as well, which serves as a passive income source.
9. Rent your car on Turo
You’ve probably heard that owning a car is the worst investment you can make because it is a depreciating asset. Well, now you can turn it into a money-making asset with Turo.
Turo is like Airbnb, but for your vehicle instead of your home. You can rent out your car while you’re not using it. Turo is only currently available in Alberta, Nova Scotia, Ontario, and Quebec.
10. Sell physical products online
There are many ways you can sell products online. Here’s a few of them:
- Dropshipping – You can sell a product without ever holding any physical inventory, usually done on Amazon. Although it’s a lower risk because you don’t buy any upfront inventory, there are also lower margins because of all the competition.
- Amazon wholesaling – You can buy items in large quantities and resell them online.
- Private labeling – You can order products from a Chinese provider such as Alibaba and white label them with your brand.
- Build your product – Design and manufacture your product from scratch. Then sell them on a platform like Shopify, where you can easily create an online store. You would need some technical knowledge and build connections in manufacturing and commit a lot of money upfront.
11. Create an online course
Think you know a lot about a topic and want to teach others? A great way to earn passive income is by creating online courses. You can start creating some for practice and release it onto Youtube to start. Then, you can try to release them onto paying platforms such as Udemy or Skillshare.
It will take an extensive upfront time commitment, but if you can release some successful courses, it can pay you for years to come.
12. Become a YouTuber
Have you ever dreamed about becoming a movie star? If you love being in front of a camera, becoming a YouTuber could be your path to passive income.
If there’s a topic you are passionate about, you can create a Youtube series about that and start attracting ad revenue and sponsors. If you become famous, you could start charging for appearances.
13. Mobile apps
If you know how to code, building a mobile app can be a way to make passive income without having to pay anything.
If you don’t know how to code, you can hire someone to help build the mobile app. Hiring someone can get very expensive as mobile app developers are in high demand and pricey.
14. Launch a Startup
Do you have what it takes to be the next Mark Zuckerberg? Building a successful startup is one of the most lucrative but also one of the riskiest and time-consuming ways to make a passive income stream.
Having a great idea and being able to execute on that idea is crucial for success. But after you have a successful startup, you can start to generate passive income.
If you want to earn passive income and make extra money in 2021, it will take either hard work or money, but it’s achievable for anybody. The key is to experiment and continue with the things that work.
The other way of seeing an increase in your bank account every month is by saving money in easy ways.
For example, as a constant traveller, there were other things I cut down on such as spending less on bank fees and having no foreign exchange transaction fees.
Hopefully, this list gave you some good ideas to start making passive income today. If you are new to investing and want to learn, check out another blog post on how to start investing in Canada.
The author is Creator of Wealth Awesome. He was born and raised in Canada, and worked in finance for over a decade and worked as a financial advisor at RBC, an investment wholesaler at CI Investments, and an energy trader at Enmax. He quit his 9-5 grind in 2019, started a writing career, and today I travel and work around the world. Read more about his story here.
(Edited for Startupanz. Published In Partnership with WealthAwesome.com)