In this article, we will look at the 20 passive income ideas for young adults. You can also see the 20 Best Ways to Generate Passive Income for Beginners.
The rise of passive income streams has become an important global trend in recent years. According to a 2024 Bankrate survey, over one-third (36%) of US adults earn extra money through side hustles. This phenomenon is particularly common among younger generations as 48% of Gen Z and 44% of Millennials engage in side hustles. On average, side hustlers make $891 per month in 2024.
Despite inflation cooling, many Americans still find it challenging to sustain their lifestyles on a single income. More than a quarter of side hustlers (28%) earn over $500 monthly from their side gigs, indicating the important role these additional jobs play in financial stability. Interestingly, the gender gap persists, with men earning an average of $1,034 per month from side hustles compared to $735 for women.
The trend towards side hustles also confirms a shift in financial planning and lifestyle. A huge portion of side hustlers (52%) have started their additional jobs in the past two years. Moreover, nearly one-third (32%) believe they will always need a side hustle to make ends meet.
How to Passively Make $2000 a month with Amazon.com, Inc and Etsy, Inc?
Amazon.com, Inc (NASDAQ:AMZN) provides several avenues for generating passive income by capitalizing on its vast ecommerce infrastructure. First, Amazon.com, Inc (NASDAQ:AMZN)’s Affiliate Program enables individuals to earn commissions by promoting products. By joining the Amazon Associates program, users can generate affiliate links to share on websites, blogs, or social media. When someone purchases through these links, the affiliate earns a percentage of the sale, typically between 1% and 10%, depending on the product category. Creating high-quality content to drive traffic and conversions is essential for success, as the program requires a minimum of 3 sales within 180 days to maintain the account.
Moreover, Amazon.com, Inc (NASDAQ:AMZN)’s Fulfillment by Amazon (FBA) program allows users to sell products without handling storage or shipping. Sellers identify high-demand products, source them from suppliers, and send them to Amazon.com, Inc (NASDAQ:AMZN)’s fulfillment centers. Amazon.com, Inc (NASDAQ:AMZN) then handles storage, packaging, and shipping. This model is quite popular because it eliminates the need for large inventory storage. In 2023, over 60% of Amazon.com, Inc (NASDAQ:AMZN)’s third-party sellers used FBA.
Additionally, Amazon.com, Inc (NASDAQ:AMZN) Audible offers another passive income stream. By joining the Amazon Audible affiliate program, users can earn $10 for each new Audible membership they drive through their unique links.
On the other hand, generating passive income on Etsy Inc (NASDAQ:ETSY) can be achieved through digital products, which require minimal ongoing effort. For instance, one can create a collection of high-quality prints and list them on Etsy Inc (NASDAQ:ETSY). Customers purchase and download these prints which allows one to earn money repeatedly from a single creation. With Etsy Inc (NASDAQ:ETSY)’s large customer base, one could potentially earn $500 per week from selling just 50 prints at $10 each.
Does Passive Income Mean Effortless Income?
In the United States, passive income is often misunderstood. According to Census Bureau data, only 20% of American households earn passive income, with a median annual amount of $4,200. This income typically comes from dividends, interest, or rental properties. Despite the perception that passive income is effortless, many find it requires a high initial investment and ongoing effort, as seen in examples like rental property management or creating online courses.
A common misconception is that passive income is easy money. For instance, online stores or rental properties might seem like low-effort ventures but often demand substantial time and financial resources. As observed with Luca Alboretti’s experience, setting up an online store cost him $5,000 and countless hours, yet he only earned $300 in sales after a year. This explains that what is labelled as passive income often involves a considerable level of active work.
Also see 27 Passive Income Ideas to Make Money & Build Wealth in 2024 and 22 Best Online Side Hustles for College Students.
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Our Methodology
To list the best passive income ideas for young adults, we essentially tried to target methods which were either a) simple b) involved minimal to no initial investment or c) were accessible to a large number of people. Thus, after identifying 30 such ways, we shortlisted 20 on the basis of consensus score for their friendliness for beginners gauged through our internet research. We have scored each idea out of 60 and a higher score indicates a higher level of simplicity and ease for the young. The list is presented in ascending order.
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20. Rental Property
IM Score: 21
Owning rental property is a time-tested way to generate passive income. Young adults can earn monthly rental income by purchasing a property and renting it out. While this method requires a high upfront investment and ongoing property management, it can provide a steady and reliable income stream.
19. Real Estate Crowdfunding
IM Score: 24
In 2024, platforms like Fundrise, Groundfloor, and Realty Mogul provide accessible entry points, with minimum investments starting as low as $10, as noted by Forbes. Hence, this option is one of the smartest passive income ideas for youth. By pooling resources with other investors, young adults can partake in real estate ventures previously reserved for the wealthy.
18. Developing a SaaS Product
IM Score: 25
The global SaaS market is currently valued at approximately $3 trillion and is projected to expand to $10 trillion by 2030 according to estimates by the World Economic Forum. Hence, for young entrepreneurs looking to generate passive income in 2024, developing a SaaS platform can cerainly offer a lucrative avenue.
Recently, Leemons, a Madrid-based ed-tech startup, has successfully secured €1.5 million ($1.63 million) to expand its SaaS platform for data-based learning. Founded in 2021, the platform aims to revamp the educational sector by offering a modular platform tailored to the needs of different academic institutions.
17. Creating a Mobile App
IM Score: 26
The mobile app development industry is experiencing unprecedented growth as the market is projected to reach $571.62 billion by 2030 while growing at a CAGR of 13.5% from $207.31 billion in 2022, as highlighted by AppDeveloperMagazine. Thus, with the growing popularity of mobile commerce and in-app purchases, even simple apps can yield high earnings. Platforms like the Apple App Store and Google Play provide access to a vast audience that allows young developers to monetize their developed apps effectively.
16. Investing in Index Funds
IM Score: 29
Young people should consider index funds for generating passive income due to their proven track record of steady growth and low fees. In 2012, passive index funds held 21% of the US equity fund market and grew by over 50% by 2023 as assets swelled to $13.3 trillion. These funds offer diversification by mirroring market benchmarks like the S&P 500 which largely reduces risk compared to individual stocks.
15. Dividend Stocks
IM Score: 30
Investing in dividend stocks allows individuals to earn passive income through regular dividend payments while benefiting from potential capital appreciation. For example, a young investor who buys $10,000 worth of dividend stocks with an average yield of 3% can expect to earn $300 annually in dividends. Over time, reinvesting these dividends can significantly boost returns through the power of compounding.
14. Investing in REITs
IM Score: 32
Investing in Real Estate Investment Trusts (REITs) is common in the US as 50% of households own REIT stocks which equals 168 million Americans. Young people should consider REITs for their high, steady dividends and long-term capital appreciation. With the average annual return of REITs being 11.6% over the past 20 years, they provide an accessible way to invest in real estate without needing large capital, making it one of the easiest forms of passive income.
To read more about the best investment options, see the 12 Best REIT Dividend Stocks To Buy for 2024.
13. Investing in Bonds
IM Score: 35
Buying bonds is an excellent way for beginners to generate passive income owing to their relative safety and predictable returns. With bonds, you can earn income through interest payments, often at higher rates than savings accounts. For example, I Bonds currently offers rates above 5% as of February 2024. Investing in government bonds through TreasuryDirect has no broker fees, and bond ETFs provide diversification with lower initial investment requirements.
12. High-Yield Savings Accounts
IM Score: 40
High-yield savings accounts offer a way to grow your savings more quickly than traditional savings accounts. Currently, the best high-yield savings rates range from 4.50% APY to 5.30% APY which is way higher than the national average savings account rate of 0.36%, as reported by the Federal Deposit Insurance Corporation (FDIC).
As of July 2024, the BrioDirect High-Yield Savings Account and the Ivy Bank High-Yield Savings Account offer a competitive 5.30% APY.
11. Cashback and Rewards Credit Cards
IM Score: 42
Using cashback and rewards credit cards is a simple way for young adults to earn passive income on their everyday spending. By choosing credit cards that offer cashback, points, or miles for purchases, they can collect rewards that can be redeemed for cash, travel, or other benefits.
10. Peer-to-Peer Lending
IM Score: 43
Precedence Research notes that the global peer-to-peer (P2P) lending market, valued at $110.9 billion in 2023, is projected to expand to over $1,168.1 billion by 2033 with a CAGR of 26.6%. Young investors are drawn to P2P lending platforms like LendingClub and Prosper because they offer average returns of 5-7%. Moreover, the accessibility of these platforms, which allow investments as low as $25, is also one of the factors that attract young people.
9. Creating an Online Course
IM Score: 44
Online courses are becoming a common source of passive income. To get started, it’s important to choose a popular platform like Udemy Inc (NASDAQ:UDMY), which provides access to a vast audience and effective internal marketing.
While it is one of the ways to make $100 a week in passive income, the process of creating a course typically involves around 100 hours of work. This includes brainstorming and researching course topics, outlining content, filming, and editing.
8. Creating and Selling Digital Products
IM Score: 46
Creating and selling digital products such as graphic designs is one of the top passive income ideas for young people online due to the low startup costs and scalability. Platforms like Amazon Kindle Direct Publishing, Udemy Inc (NASDAQ:UDMY), and Etsy Inc (NASDAQ:ETSY) make it easy to reach global consumers without major overhead. Digital products can be produced once and sold repeatedly and thus, provide a handsome passive income.
7. Become a YouTube Content Creator
IM Score: 48
YouTube is a promising pathway for passive income, especially through ad revenue. Creators earn between $1.61 and $29.30 per 1,000 views, depending on factors like content type and audience location. For instance, a video with 100,000 views can generate between $161 and $2,930. With high traffic, the earnings can scale significantly—videos with 1 million views could net between $1,610 and $29,300. The potential for income increases with subscriber count and video engagement. Creators with over a million subscribers, such as those in personal finance or lifestyle niches, can earn upwards of $50,000 a month.
6. Creating a Blog
IM Score: 51
By consistently producing valuable content on a specific niche, bloggers can attract a dedicated audience and generate traffic to their site. Monetization methods like Google AdSense or sponsored posts can provide steady income.
It is worth noting that in 2020, there were an estimated 31.7 million bloggers in the US which represents over 10% of the country’s population. Despite the rise in social networking sites, blogging remains highly popular, with 77% of internet users reading blogs daily.
5. Building a Niche Website
IM Score: 52
Creating a niche website focused on a specific topic can be a profitable passive income strategy. These websites generate income through affiliate marketing, advertising, and digital products. By providing valuable content and resources on a particular subject, niche websites attract a targeted audience, leading to higher engagement and conversion rates.
4. E-book Publishing
IM Score: 54
Publishing eBooks can be one of the best sources of passive income for beginners given its low upfront costs and minimal ongoing effort. Amazon’s Kindle Direct Publishing (KDP) simplifies this by allowing authors to easily convert and publish their manuscripts as eBooks or paperbacks. Authors retain control over content, pricing, and royalties, and benefit from Amazon.com Inc (NASDAQ:AMZN)’s massive marketplace. KDP offers royalty rates of 35% or 70%, based on pricing and distribution.
3. Print on Demand (PoD)
IM Score: 56
With PoD, young individuals can design and sell custom merchandise without handling inventory or shipping. Printful and Teespring are two popular platforms that facilitate this process. Printful integrates with different e-commerce platforms and handles production and shipping, making it beginner-friendly. On the other hand, Teespring offers a user-friendly design interface and a broad range of customizable products.
2. Dropshipping
IM Score: 58
With startup costs ranging between $100 and $200, it allows individuals to launch a business without the financial strain associated with traditional retail. This affordability is ideal for young people who may have limited capital but possess a strong entrepreneurial spirit. Moreover, the dropshipping market is expected to grow to over $1 trillion by the end of the decade which also indicates ample opportunities for young entrepreneurs to tap into emerging niches.
1. Affiliate Marketing
IM Score: 60
The rise in the popularity of affiliate marketing can be attributed to the low barrier of entry and the potential for high earnings without the need for a high upfront investment. Platforms like TikTok, Instagram, and YouTube, which are predominantly used by younger demographics, offer ideal environments for affiliate marketing with their visual and engaging formats. The trend shows that 85% of weekly Pinterest users and 52% of customers are more likely to purchase a product featured in a YouTube product review video.
Once an affiliate link is shared on a platform, it can generate sales and commissions without continuous effort. This is particularly attractive for students and young professionals that are trying to supplement their income without interfering with their primary responsibilities. For instance, Instagram users with under 10,000 followers have seen a 35% increase in story reach rates which confirms that even those with smaller audiences can achieve significant engagement and earnings. All of these factors collectively explain why affiliate marketing is the best passive income idea for young adults.
At Insider Monkey, we delve into a variety of topics, ranging from passive income ideas to business aspects; however, our expertise lies in identifying the top-performing stocks. Currently, Artificial Intelligence (AI) technology stands out as one of the most promising fields. If you are looking for an AI stock that is more promising than NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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