What Is Passive Income? Here Are Two Ways To Earn Passive Income

by Hank Coleman

What is passive income?You can make money while sitting on the couch. You can continue to make money in retirement. What if you could make money without even trying? What if your money could make money for you?

That’s exactly what is passive income and what it means. There are several ways or investments listed below that I have been using to earn a passive stream of income.

What Is Passive Income?


What is passive income? Passive income is making money without having to do anything. Passive income is earning an income on autopilot. Passive income is setting up some investment, job, or system that continues to pay you without you having to do anything. It does not require you to manipulate anything.

It does not require you to continually input things. There are many investments and business opportunities that are semi-passive income. It is very hard to find a truly passive stream of income that does not require you to do much in the way of stimulating it.

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For example, many bloggers with popular websites point to Google Adsense ads as a way to make passive income. As long as you have the traffic on your website, you typically earn an income when people click on the links which

For example, many bloggers with popular websites point to Google Adsense ads as a way to make passive income. As long as you have the traffic on your website, you typically earn an income when people click on the links, which do not require you to do anything in return.

In theory, your ads would earn you an income in perpetuity. Of course, that is not quite how it works in reality, and that is why many consider this a semi-form of passive income. Websites require constant updating in order to continue to rank high in search engines typically. And, it is those eyeballs that site owners depend on.

So, you could see how you may have to keep stoking the fire so to speak in order to continue earning an income with website ads. There are a few truly passive income opportunities, though.

Earning Passive Income With Lending Club

What Is Passive Income?I have been investing in Peer to Peer lendingWhat is passive income? loans through Lending ClubWhat is passive income? for years, and I absolutely love it. I started off on a very hot streak of picking great loans to invest in earning over 16% interest, and then I had 12 loans out of my portfolio default. I’m proud to say that my new portfolio of safer loans is performing extremely well with a 10% annual rate of return.

But, how is Lending Club a passive investment? Each month borrowers that I have lent money to repay a portion of their loan balance just like you and I do for our car payment or our home mortgage. That principle and interest payments are then available for me to reinvest in new Lending Club loans. Lending ClubWhat is passive income? allows you to invest a minimum of $25 in a new loan.

So, it does not take very many loans making payments every month to reach that threshold. Every month, I have money that I don’t have to deposit myself waiting to reinvest and reissue in a new loan which continually builds my portfolio in a truly passive income fashion.

Earning Passive Income With Dividends

Another way that I love to earn passive income is through dividends and dividend reinvestment plans which are also known as DRIPs (pronounced drips just like from a faucet). DRIPs allow investors to purchase shares of a company without a stockbroker or discount brokerage firm.

Then, dividends are then reinvested for you continually if you have selected that option. If you want to learn more about dividend reinvestment plans, you should check out the guest post that I wrote about why I love DRIPs on the Dividend Ninja.

There are many options for you if you want to learn what is passive income and how to earn money without having to actively work or engage it. Passive income is having your money work for you without your involvement. Investments such as Lending ClubWhat is passive income?, Peer to Peer lendingWhat is passive income?, dividends, DRIPS, and others offer you a great opportunity to continue to earn income passively without constantly having to monitor them or stoke the fire.

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About Hank Coleman

Hank Coleman is the founder of Money Q&A, an Iraq combat veteran, a Dr. Pepper addict, and a self-proclaimed investing junkie. He has written extensively for many nationally known financial websites and publications. Hank holds a Master’s Degree in Finance and a graduate certificate in personal financial planning. Email him directly at Hank[at]MoneyQandA.com.


Hank Coleman has written 581 articles on Money Q&A. Learn more about Money Q&A on Twitter @MoneyQandA and @HankColeman.


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{ 1 comment… read it below or add one }

Jacob @ My Personal Finance Journey

Cool article! On your Prosper loans that defaulted, did you recoup any of your investment or did you lose that?

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