5 Ways to Turn $100 Into Passive Income

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You don’t need much money to start a passive income business. Read on to find a few good ways to get started. 

Creating passive income is one of the best ways to build wealth and protect your personal finances from an emergency, like losing a job or having your salary cut. According to U.S. Census Bureau data, about 20% of Americans have some level of passive income, with the average amount earned from passive income being $4,200 annually.

Passive income strategies aren’t get-rich-quick schemes, and many initially require a significant time investment. The good news is that many can be started with $100 or less. Here are a few inexpensive ways you can start generating passive income.

1. Buy stocks

Some people think that owning stocks is only for rich people. It’s not. In fact, 61% of Americans own stocks, according to Gallup. And while you won’t get rich investing $100, you do have the potential to easily make money.

You can open an online brokerage account for free and typically buy stocks for either little or no fees these days. The hard part is figuring out what company you think will do well over the long term so that you get the largest return.

Let’s look at one popular company that many people own stock in: Apple. Let’s say you invested $100 annually over the past 10 years to buy Apple’s stock and reinvested any dividends you received to buy more shares. Thanks to Apple’s phenomenal growth over the past decade, your stock would be worth $4,848 — a 385% return on your investment.

Of course, picking stocks can be difficult. If you want to potentially earn passive income in the market without picking specific stocks, you may want to buy shares of an exchange-traded fund (ETF). These funds follow market indices and can be purchased for as little as $1, thanks to online platforms that allow you to purchase fractional shares.

2. Rent out an extra room

This one is super easy and might cost you $0 if you already have the extra space. The latest Census Bureau data shows that 27.6% of Americans live alone. This means that many Americans may have a spare room in their home that could be transformed into a passive income stream.

While it’s not for everyone, renting out a room in your home could be one of the easiest ways to generate passive income because you’re already in the space — either renting or as a homeowner — so all you need to do is find a roommate and collect their rent payments.

This could be a very lucrative way to boost your income, considering that rent prices have skyrocketed over the past few years.

3. Rent out your car

With 13% of full-time Americans working from home right now and 28% on hybrid schedules, many cars are sitting unused throughout the work week. With some planning and effort, your vehicle could quickly begin generating income through car-sharing websites like Turo.

You can list your vehicle on the site for free and pay Turo a fee when you’ve rented out the vehicle. Turo says the average annual income for one car on its site is $10,516. Of course, some work is required to keep the vehicle clean and coordinate pick-up and drop-off. Still, renting out your vehicle could be a low-cost way to earn semi-passive income.

4. Create an online course

Many people have accumulated many skills through jobs and even hobbies. You likely know how to get certain things done that someone else would find very useful — and pay for.

There are many online platforms — including Udemy, Skillshare, and Thinkific — where you can create your own professional course and then sell it to an established online audience.

You’ll need to do a fair amount of work upfront creating your course — including planning the sessions, recording videos, and making other content — but once you have it up and running, you can earn passive income from your hard work.

Some course-creating platforms charge a monthly fee, while others may take a percentage of each sale you make. But while this option isn’t free, it’s certainly inexpensive.

5. Start a dropshipping business

There are many different businesses that fall under the dropshipping category, including selling T-shirts online or print-on-demand content like notebooks and journals.

The startup cost for dropshipping businesses is low because you don’t buy any inventory and don’t have to rent an office or retail space. Instead, you’ll spend money setting up a website and potentially selling ads to market your products. You can even become a seller on Amazon and sell products without investing in your own online shop.

You’ll have to invest significant time on the front end to build your business. Still, once you’ve found a niche and have established the relevant products, dropshipping allows you to spend minimal time keeping up the business while still making online sales.

Keep these things in mind

While all of these ideas will cost you little money and have the potential to generate passive income, you’ll still need to invest time and mental energy in setting them up. For example, you may need to do a lot of research before setting up a dropshipping business or launching an online course.

Like anything worthwhile, be patient and take small steps to get started. You likely won’t be an overnight success, but making any progress toward generating passive income will move you further toward your personal financial goals.

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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Chris Neiger has positions in Apple. The Motley Fool has positions in and recommends Amazon.com and Apple. The Motley Fool has a disclosure policy.

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