17 Fake Passive Income Ideas, Explained

Time is money. (Clock and bills.)
  • There are so many lists with passive income ideas on the internet.
  • But many items are not passive, not an income or not a good idea.
  •  By passive income, you invest time, money, or knowledge today to earn more later.
  •  We have compiled a list of passive income ideas that aren’t real ones.
  •  We found a lot. We explain why.

Money Growing on a Tree

 

 

21, 35, or 48 Types of Passive Income Ideas Exist?

Passive income ideas is a very popular topic for years, especially among young people. And now they are extremely important because of the crisis, soaring unemployment, quarantine, and an uncertain future. The internet is full of articles like “21 great passive income ideas”, “35 really working passive income ideas” or “59 legit passive income ideas”. Although, if we read a few, it turns out that many times these are different variations of the same activity.

For example, there are those suggesting you buy shares through ETFs (exchange-traded funds). Elsewhere, direct stock buying is considered a good idea. Still, others see the acquisition of dividend income stocks as a different concept. In reality, all three are only variations of the same investment branch, the same asset class. Also, you can invest in real estate directly, but and also through REITs, funds or shares of real estate companies. Some see renting out warehouses and renting out housing as separate ideas. Yet each one means the same, buying and renting real estate. With small differences.

(We wrote about some real estate investments here and dividend aristocrats here.)

Activity and Passivity, Fast Money and Slow Money

The other problem is, not all methods mentioned in these lists are generating passive income. We can call them extra income, a second job or freelancer type, independent work ideas. But they have nothing or few to do with passive earning.

“Making money while you sleep” – say some people about passive income. Others consider passive income “that requires little to no effort to earn and maintain”. (Wikipedia.) But I would say, passive income is an investment. A venture, where the pay (or reward) comes in another period than the work was done. The reward is delayed and also uncertain. So passive income activity is always entrepreneurship.

You are not an employee, not a freelancer, not (or not always) a company owner. But something between the last two. Sort of entrepreneur who invests and takes risks. Passive income is “income that follows its own course” – wrote Daytradingz.com.

Invest Time, Money, or Knowledge in Passive Income Ideas

I have no money. How do I invest in my future passive income – can you ask. Invest one of three things in your business. Time, money, or knowledge. But mostly, some combination of the three. There are more time-intensive and more work-intensive, or knowledge-based businesses.

A good, talented fiction book writer doesn’t need capital, nor special knowledge. Only to work, to write. A scientist, inventor, or artist can make money only selling knowledge, patent, talent, ideas. A blogger, for example, has to write, and needs some knowledge and talent for it. But bloggers need only low capital, for example, to buy a domain and a web hosting service (server). A Youtuber can make it with a simple smartphone and some talent, diligence. But many of them invest in a better digital camera, some lighting equipment, or a good microphone. Or at least a selfie bot.

The List of Fake Passive Income Ideas, Explained

So there are ideas that aren’t passive, some are not income, and some are not a good idea. We read a lot of lists on the internet and have compiled a new list of passive income ideas which aren’t such ones. Three main types are ideas of active work and part-time jobs. Trading or Sales. And ideas of savings.

Traditional Jobs - Not a Passive Income Idea

 01

Classic Active Work Forms Appear

Some authors are categorizing also independent, but active work types as passive income. But an Uber driver, a food deliverer, or somebody who makes marketing for a company on Facebook, is not making passive income. These are flexible working forms but still simple active ones. You work and they pay you. So simple.

I don’t know why some bloggers are putting these incomes in the list of passive income ideas. Maybe only to make their lists and posts grow.

Icons of Social Media Services - Is Not a Passive Income Idea

 02

Managing Social Media Accounts for a Fee is Active Work

You can manage, maintain social media pages of any business, mostly for monthly fees. Yes, you can make it with your phone also in the subway or waiting in the line in the supermarket. But it has nothing to do with passive income. When you make it, they pay you. If not, your source of money depletes.

Freelancer at Work - An Active Type Earning Method

03

Freelancer Life Is Popular, But Active

There are a lot of freelancer activities like programming, web design, translating, guest writing, etc. You can offer and find workforce on sites like Fiverr, Guru, Upwork.

(More in this post.)

You may stay independent and free. But the income is traditional, not the passive type described above. You get the money once the work is done, but no regular income flows in after.

Old Stuff to Sell - Selling Is Not Passive

 04

Selling Your Stuff Is Not a Passive Income Idea

Clothes, movies, old bikes, collectibles you got tired of. You may have many objects in your home you don’t need and is still some money worth. Make a decent amount of money with it, but it’s never the long-term, passive income type. It is more like some extra work. You make efforts to advertise, bargain, and sell, and you earn a one-off compensation for it.

The same applies if you buy something low to sell high. Here, you are pursuing the classic, active occupation of traders.

Shopping Online, by Phone - Not a Passive Income Idea Either

 05

Is Facebook, Amazon, eBay Selling Passive?

It doesn’t matter if you sell offline, or online. Selling, trading is an active work unless you automate it. But if the system works without you, also if you are on your holiday trip, yes, it is a passive income. For example, the “affiliate marketing” and “dropshipping” methods.

 

Cryptocurrency Coins, Ether, Bicroin, Steem - A Too Volatile, Too Risky Investment

 06

What is Blogging for Cryptocurrency?

There are sites like Steemit , Hive, Minds,  Trybe, etc. where you can earn digital tokens (cryptocurrencies) for posting, sharing your posts. You can earn upvotes from community members and these upvotes are converted to money. (Depending on the upvotes you receive, you may get a portion of the “rewards pool”. Also for voting and curating.) But this is also an active type of work. (And many users only earn some cents per post.)

You can earn also some interest-like passive income investing your money in some cryptocurrencies but this is another case. The success depends on the price change of the cryptocurrency.

Poll Form - Filling Polls Is Not a Passive Income Idea

 07

Fill Annoying Online Surveys, Polls

“Get paid for your opinion” – that sounds good. But in practice, it takes a lot of time, I’ve seen several questionnaires of 40 minutes or longer. You make it and get your payment. No long-term passive income effect to find here.

Real Estate Agent - Rent a House Is Not a Passive Income Idea

 08

Rent Out a Room or a House Is Not Always a Passive Income

Airbnb or any other system works if you have a room or home to rent. (And if the collapse of the tourism in the pandemics ends.) But it is only passive income if you can outsource most tasks, hire somebody to work in the business. If you have to clean up, receive guests, chat with them, answer their stupid questions, you are working actively in the accommodation industry.

Trucks to Rent - Who Does The Work?

 09

Rent Out Anything You Have

The same as what we wrote about room renting, applies to a lot of other business. Renting out storage, vehicles, machines, operating food or drink machines, gambling machines, etc. can provide a passive income. But only if others are making the dirty work. If you are the management of the business and you can rely on your employees. (You may notice you have a company, a business, and your real task is to choose your employees. Not always easy.)

Blood Donation - Not a Passive Income Idea

10

Selling Your Body, Your Health? Not a Real Passive Income Idea

Or, at least, a part of it. Donate blood plasma, sperm. Get paid for health experiments, studies, clinical trials. Although this may be a repeating task, these are also active income sources. Some sort of work. You sell your time, suffer inconveniences. Sometimes you also risk, sell your health. But basically, it’s “make it and take the money”, like by other active freelancer tasks.

 

Casino Chips and Cards - Gambling Is Not a Passive Income Idea Unless You Are Professional

 11

Do “Winning Casino Strategies” Exist?

Some authors may promise you a secure income of gambling. But don’t trust them, because the house always wins. Which gambling organizer would be so stupid as to regularly give free money to people? And it’s not ruined yet? Posts like “10 Simple Casino Gambling Strategies That Work”, “5 Top Winning Gambling Tips” may increase your chances a bit, but in the long term, you will lose.

If you are playing against real humans, a game where mental abilities also count, it’s another story. But make sure you don’t want to pluck a professional player. (Or a player simulated by a robot online.) Read more here: 

7 Reasons Not to Gamble Unless You Are a Professional Player

Less Debt, Please - But Not a Passive Income Idea

 12

Debt Reduction Is Good, But Not a Passive Income Idea Either

You can refinance or pay down your debt, your mortgage, your credit card debt, or student loan – write some passive income specialists. Debt reduction is always good but – not an income. Savings are very important and useful but aren’t income sources. A completely different story.

Piggy Bank - Saving Is Not an Income

 13

Discount Hunting Is Nice, But Not an Income

Similar to debt shrinkage, price discounts and savings are also convenient. Cashback, bulk shopping, coupon hunting, cash rewards, points of credit card companies, etc. may offer useful bonuses. But have nothing to do with passive income. Saving is important but is not an income.

Apps in a Mobile Phone - Money for Ads Is Some Sort of Work

 14

Watching Ads, Installing Apps for Cents

Get paid to install applications on your phone. Click on ads to view the content for 20-30 seconds. (Also known as “faucets”.) These are not only very boring and time-consuming tasks. Mostly pay only a few cents. And this work has no long-term benefits, is not a passive income idea.

Online Gamer with Console - More Work, Not a Passive Income Idea

 15

What Means “Farming” in Online Games?

Leveling up MMORPG Characters, farming special items for others. Does somebody still pay for this in quarantine times? It is a simple work, like walking a dog for money. I found this also on a list of passive income ideas. But it can be a passive income form if you can make a robot to farm those items. Or kill monsters in masses while you sleep.

Post Stamp of Costa Rica - Not a Secure income

 16

The Risk of Investing in Coins and Collectibles

I admit I like to collect nice old things. I have a post stamp collection of my family from the 60s-80s, and some phone card sets. Some of my phone cards were 30-60 USD worth each in the 90s, but today? Perhaps 1-3 USD, if you find a buyer. The same with the stamps. Preferences, habits of collectors transform. What was valuable in the past can be devalued soon.

Investing in coins and collectibles – or, cryptocurrencies, artwork – is a perilous business. There is no evidence they provide a decent income. In contrast, we have many decades of data on whether gold or stocks have retained their value.

Man on Treadmill - Sports Is Not a Passive Income Idea
 

 17

Let’s Lose Weight – Very Good But Not an Income

Yes, seriously, that was also a passive income ideas list item. It has a lot of advantages, your expenses can decrease and your incomes increase. Perhaps you will “live long and prosper” (Star Trek). But not an income itself.

Trusting the Right Persons

Some people only need money, money, money to make their lifetime passive income. A wealthy aristocrat or heiress doesn’t have to do anything. He can entrust a lot of money to the professionals who invest it. And he can make a living from a small portion of the interests of the capital. But woe to them if they have entrusted the wrong person, and the money is gone. Choosing the right person or organization to trust is an important science for the rich.

Some businesses provide active income if you take part yourself in the operation. But a passive income if you hire other people to do it. For example, operating food and drink vending machines, or laundromats. The machines need attention, maintenance, and if you do the job yourself, you work. But you can outsource this job and stay passive. If you chose the right employees. But you can do the same in any other industry. You can have a passive income from any business and company if you let others do a large part of the tasks.

You can play the role of the business owner. Owner, or capitalists, are forming mostly the long-term strategy of the company. And they chose the adequate top manager.

Remarks

  • There are also discussions if investments, like stocks, bonds are passive income or a completely different category. We consider these as passive income now.
  • Some ideas are especially dangerous and can cause a great loss to their owners. Gambling type ideas or high-risk investments, for example.
  • In the USA, some passive income types have a special tax rate.

Main sources, readings, lists:

Millennialmoney

Bankrate

Daytradingz.com

Goodfinancialcents.com

TheStreet.com

Wikipedia

Investopedia