There are a ton of passive income ideas for UK citizens – but which one generates the most income?
Well, first of all, we need to understand the true meaning of a passive income.
A passive income is an income that is generated without your ongoing involvement. In other words, unlike paid employment or managing a trading business, you don’t have to make a trade-off of your time in order to generate passive income.
It ticks along in the background and generates you the same amount of money, whether you decide to spend the day working, or spend it laid in bed.
Sounds great, right?
Well, it really is the holy grail – to earn money without having to make an ongoing effort to keep earning it.
But it’s not the easiest income stream to create.
In fact, it’s pretty darn difficult.
I’ve spent the past couple of years testing different passive income techniques, from niche sites, to investing, to Youtube videos, to online courses, to automated trading businesses.
And my success rate?
Pretty poor.
Although I will state at this point that my time is still consumed by our trading businesses and my approach to creating passive side incomes is very cut-throat.
I will not, and can not, pile more time and effort into these passive income attempts once they are initially created and launched. For me, it just goes against the concept – if you have to continually push something in order to make it work, it’s no longer passive. You have just created a job for yourself.
If it doesn’t work from the outset – I leave it alone.
It really is the opposite of what I feel is necessary to succeed in any other business. It’s the totally lazy approach, and the notion that you’ll see success right from the off.
If you were starting a regular trading business, or anything else for that matter, I’d be advising you the opposite –
‘Hey, keep your head up. Things never work out right away, you have to keep on consistently working hard, sometimes for decades, to see the results you want to see’.
But this is just why a passive income is so difficult to achieve – by its very nature, it goes against the requisites of (what I believe, at least) make for a successful business.
And it’s also the same reason this ‘holy grail’ maintains my interest – I have to crack it. It’s against all standard business advice and practice, and that just makes me want it even more (because, let’s be honest, the entrepreneurial struggle sucks – it really does).
I know it can be done, and I have some indicators of what may be a successful route if explored further.
My niche site pizzaovenhub.com that I created just over a year ago, still generates a measly £5 per month in advertising revenue.
The most views I’ve ever had on a Youtube video was 700,000 or so, and the copyright wasn’t owned by me so I couldn’t monetise it (I researched, after Youtube take their cut, you earn an average of around £1,000 per million views). Videos on which I own the copyright to, have up to 2,500 views at best.
My Udemy course ‘Fast Track Entrepreneur’, although it has a great number of students and reviews, hasn’t generated that much income after Udemy fees and promotional discounts (around £2,000 over the past 2 years).
And when it comes to investing, I’m really playing the long-game with this – using a lending platform called Funding Circle to earn a steady but respectable 7.2% net yield, and consistently pumping as much spare cash I have into this platform on a monthly basis.
The effect of compound interest (earning interest on interest payments) is easily felt with Funding Circle because they have an auto-reinvest and auto-bid function, so over time, this should become more and more impactful in generating a passive income. But that’s going to be way down the line. I’m talking a couple of decades away. So that one’s a slow burner – kind of like my plan E.
The most success I’ve seen thus far has been with automating processes in my existing trading businesses, but this kind of feels a little superfluous to share with readers on my blog because these businesses I have already spent up to a decade building, and reinvested hundreds of thousands of pounds in their infrastructure.
They’ve consumed a mountain of time, blood, sweat, tears, and cold hard cash to even get to the point where automation is a possibility.
I’m not putting anyone off going down this route – heck, thus far, I can’t really advocate anything less than a ‘bust-your-balls’ amount of effort to make something work to the point where you can support yourself with a half reasonable income. This is all I know. Right now, I don’t have the answer on how to ‘get rich quick’ with minimal effort – I wish I did.
But that’s kind of the point of this blog post.
I’m not giving up.
I want the holy grail of a healthy, sustainable, totally passive income – and I won’t stop until I find it.
Life’s too short to keep on trading time for money – my time is worth more than any amount of money. So to me, this is the only option. I have to find the answer.
Based on my own experiences of limited success with generating a passive income thus far, I’m going to lay down 5 different passive income ideas that I believe have the best chance of succeeding.
Then I’m going to start from scratch with each one, with a small figure – £100 startup capital for each of the 5 ideas. So it’s easily replicable for you guys reading this post.
And let me just reiterate at this point – when I say these are passive income ideas. I mean passive . . . for a lifetime.
Even the passive income king, Pat Flynn (Smart Passive Income), isn’t really earning all of his income in a truly passive fashion – he has to constantly maintain his blog, his podcast, attend talks and media events. If you took a look at his daily schedule, I’m pretty sure it’s still rammed.
True, if Pat stepped back completely and retired right now, even after his blog becomes a dust-covered relic, he would probably still earn a respectable (truly passive) income for the rest of his days – but this guy has now become a Passive Income god!
He’s a true success story in the field of passive income and online business. An idol.
But not necessarily (as I’ve found) someone who you can easily follow in the footsteps of.
Successes on the scale of Pat’s are outliers. Very rare. Very hard to replicate.
What I want to offer is an entirely replicable solution, by anyone.
Will it take you to the heights of $150,000 per month in passive income like Pat Flynn? Probably not.
But it will be this:
- Totally, 100% replicable by anyone reading this right now (with at least £100 to spare)
- Totally passive once established
- ‘Passively compoundable’ – yes, I just made that up – in other words, the income from them does not erode as time passes, it grows (without further time investment required) *Disclaimer: this, of course, only extends as far as the lifespan of the technology or platform you are using*
- It will (eventually) provide enough passive income to live on (modestly, at least)
In a nutshell, it brings the crazy, seemingly unobtainable notion of earning an income for doing nothing, back into the reach of the masses.
These are realistic, pragmatic approaches to generating passive income that will, one day, generate you enough income to live on.
I’ll be documenting my own progress regularly with these 5 different passive income ideas for UK residents, so you can see how my own efforts are performing and which one of the 5 ideas is outperforming the rest.
So, here goes:
- Create Youtube Videos
If you develop a popular Youtube channel, the income can be huge. It really is one of the most lucrative passive income ideas for UK individuals.
Just check this one out:
I know. What the frig did I just watch?
But this lady generated over $3m a year in advertising revenue from her toy review videos.
You read that right – over $3m!
Seems toy reviews, kids cartoon videos, and gaming walkthroughs/commentating are the highest earners.
Provided you outsource the actual video production aspect, it can be 90% passive right from the outset.
I’ve taken to Upwork to launch a new project for someone to create me a kids cartoon video for £100, and, since it won’t cost me any extra and gives me an opportunity to approach this trial from 2 angles, I’ll be creating some other videos reviewing some toys.
Bear in-mind what i mentioned earlier regarding my income research on Youtube – on average it takes around 1 million video views to earn £1,000 after Youtube’s fees. So to achieve a respectable passive income in this field, you need to be hitting millions of views, not thousands.
These are big numbers, so research is going to be key to success here – understanding demand for certain content, and the Youtube SEO algorithms are going to be critical steps to take before even mapping out the specifics of the videos.
But just looking at the top-earners on Youtube gives you an indication of where the most demand lies – it just requires some thought on how you fit into these categories and don’t try to tackle the established players head-on here, because you’ll just be drowned-out of the rankings.
2. Become a Udemy Instructor
In all honesty, this one doesn’t excite me as much as the Youtube venture – the numbers are much more modest (typically instructors are earning between £0-1,000 per month – I was on the lower end of this spectrum with my first course, at around £100 per month), the audience (and therefore earning potential) is much smaller, and the platform is fairly saturated in most spaces (although the same could be said for Youtube).
But having said that, if you choose an ‘evergreen’ course subject ie something that isn’t a passing craze, and also one with a good balance of demand and lack of established competition, you can create a course that will dominate a niche category and generate a healthy passive income for years to come.
With me already being a Udemy instructor, this will be my second attempt at creating a course.
I already spent around £100 on the recording equipment, editing software, and backdrop, so i can’t spend any more on this one in order to keep the project on-budget.
I already have an idea of the niche I want to tackle having done some basic preliminary research, and will share more in future posts.
3. Become a Lender on Funding Circle
Perhaps the easiest one to set-up in terms of time invested, and the most predictable in terms of annual return.
Plus, this one sticks strictly to the rule of producing ‘passively compounding’ income – when you set the ‘autobid’ rule within your Funding Circle account, the system will automatically allocate your funds to various businesses and spread your lending risk, plus it will feed back any capital repayments and interest payments straight back into lending.
This means, you won’t be able to draw an income from this right away, but it does mean that your £100 starting capital will grow naturally and in the most predictable way of all these passive income ideas for UK residents.
For me, this method really hits the nail on the head when it comes to the definition of a truly passive income idea for UK people – the only downside is the time it takes to build a reasonable income from it (assuming you don’t have £500,000 or so of starting capital to throw at it).
In fact, the returns are so predictable, we can take the average annual return and work out exactly how much the investment will be worth in, say, 30 years.
The Calculator Site have a really handy compound interest calculator to make this really simple.
With just £100 starting capital, and no additional payments, at an average annual interest rate of 7.2% net, your total portfolio would be worth £861.54 in 30 years’ time.
Pretty depressing, right?
Absolutely.
There is a ‘breaking point’ when it comes to long-term investing like this, and it really happens around £150k – this is when your investment really starts to gather speed.
So unless you can start with this figure as your initial deposit (in which case, after 30 years you would have a portfolio worth almost £1.3m), then you really have to make regular monthly deposits to supplement your returns – at least until you reach this ‘breaking point’ where your investment can snowball into some more meaningful figures during your lifetime.
Making a £100 initial deposit, and £400 monthly deposits thereafter for 30 years, provides you with a total portfolio worth of £511k (and a half reasonable annual income thereafter of £35k). And if you can hold out doing this for just 10 more years, that becomes £1.19m (and a healthier annual income thereafter of £77k).
To me this illustrates the importance of two things with this passive income technique – starting early, and pumping as much spare cash into it as you can possibly afford (especially in the early days). Because the bigger the portfolio, the bigger the returns, the bigger effect that compound interest starts to have. It really is a snowball effect.
4. Trade Cryptocurrencies
More speculative than Funding Circle investing, but with a higher risk/reward profile, is cryptocurrency trading.
Another passive income idea for UK individuals.
RIght now, things have cooled off substantially, and we appear to be in a slow and steady decline right now.
But that’s not to say you shouldn’t step in – in fact, this is probably the perfect time to get involved.
There’s a mountain of opinions when it comes to crypto investing – with billionaires and successful investors divided in their views.
The ones who have a negative opinion of investing in crypto are claiming it to be the biggest ‘bubble’ of all time.
My view is quite simple – the success or failure of an investment in this sort of market is dictated by timing. Get in at the right time, and get out at the right time, and you’ll do extremely well. Do the opposite, and you’ll do extremely badly.
Understanding and predicting these timings is the hard/impossible part – but due to the volatile nature of crypto prices, there exists huge opportunity to make very abnormal returns on your capital, far more than you could earn in any conventional investment.
And true, the reverse could also be said – there exists huge risk in losing all of your capital.
And there lies the risk-reward profile.
Now, this can be as involving or as passive as you make it. You could buy your £100 of crypto and literally sit on it, or you can try to anticipate and catch the peaks and troughs.
With historical returns on crypto hitting 4,000% in just one year, there exists the potential to turn your £100 into £4k within 12 months. But similarly, the market could literally crash overnight and you lose it all.
For me, looking at those numbers, the risk profile seems very controlled in relation to the potential upside.
5. Digital Products
My background and expertise lies in ecommerce, so I’m keen to put this to work – I just don’t want to create another inventory-holding business as this isn’t passive, and it’s pretty difficult to eke a good income from dropshipping alone nowadays.
So my attention in this regard is switched to digital products – they are infinitely scalable and easily automated.
I’m not 100% sure which direction to take this one just yet – I just know I would like to steer clear of the ‘app’ world. To me it just appears very over-saturated, with an app out there for every conceivable requirement.
I’m sure there will still be gaps in this space, so feel free to explore this in your own experiments – but the level of research required to find the right gap appears too burdensome to me.
The same can be said for the digital information space – there’s just so much amazing free content available on the net now, that it’s pretty difficult to sell information-based products.
Instead, I’ll be researching and exploring the gaming, software, and online tool spaces to try to find a gap.
My aim will be to outsource development to a competent developer via Upwork, and get them to create a very basic MVP (Minimum Viable Product). Something that does the job, and can be taken to market to assess initial demand, and can be built upon if initial response from the market is positive.
I’ll provide updates as I go along with this.
So there you have it! There are my 5 top passive income ideas for UK residents.
I’ll be updating you on my progress with each of these as time goes by, including income reports and more detail on how I get things going.
Please feel free to share your own thoughts and passive income ideas for UK people in the comments below, I’d love to hear them.