Is your full-time job taking a toll on your health? Do you work overtime, keep a side hustle, and do gigs yet still struggle to make ends meet? Maybe it’s time to explore ways to earn money passively.

Creating multiple income streams leads to financial security. And earning passive income accelerates this journey. The good news is that no matter your financial status, age, and interests, there are means to automate your revenues.

This article will guide you on making your money work so you can start living the life you deserve. 

DISCLAIMER: This article is for informational purposes only and should not be considered professional financial investment advice. The author and FilipiKnow are not affiliated with any of the companies mentioned herein and have held no positions in any of the investments at the time of publication.

Table of Contents

• At a Glance: Best Passive Income Ideas in the Philippines
• Active Income vs. Passive Income
  • Advantages of Passive Income
    • 1. Additional Income
    • 2. Peace of Mind
    • 3. Remote Work
  • Disadvantages of Passive Income
• 22 Best Ideas for Passive Income
  • Part I: Easy Passive Income Ideas
    • 1. Take Advantage of Cashbacks 
    • 2. Open a High-Yield Savings Account in Digital Banks
    • 3. Sell Customized Products via Print on Demand
    • 4. Be a Dropshipper
    • 5. Invest in Pag-IBIG MP2 and PERA
  • Part II: Intermediate Passive Income Ideas
    • 1. Sell Stock Content Online
    • 2. Vlog
    • 3. Join Affiliate Programs
    • 4. Make a Podcast
    • 5. Be a Game Streamer
    • 6. Create an App
    • 7. Create an Online Course
    • 8. Publish a Book or E-book
    • 9. Participate in Peer-to-Peer (P2P) Lending 
  • Part III: Advanced Passive Income Ideas
    • 1. Lease Real Estate Property
    • 2. Stake Cryptocurrencies
    • 3. Invest in Cooperatives
    • 4. Invest in Government Securities
    • 5. Enter an Equity-based Partnership
    • 6. Invest in Dividend Stocks
    • 7. Invest in Financial products
    • 8. Build or Buy Websites
• How To Know Which Passive Income Idea Is Best for You
  • 1. Goals
  • 2. Resources
  • 3. Time Horizon
• BIR Guidelines for Passive Income Earners
• Tips and Warnings
• Frequently Asked Questions
  • 1. What is the easiest passive income source?
  • 2. What are the best passive income ideas for students?
  • 3. What is the average monthly passive income a person can earn?
  • 4. Is it legal to have both a passive income and a full-time job?
  • 5. Can you live with passive income only? 
  • 6. Is there a general rule on how many passive income streams to keep simultaneously?
  • 7. When is the best time to explore passive income streams?
• References 

At a Glance: Best Passive Income Ideas in the Philippines

Passive Income Idea	Difficulty Level
Cashbacks	Easy
High-Yield Savings Account in Digital Banks	Easy
Selling Customized Products via Print on Demand	Easy
Dropshipping	Easy
Pag-IBIG MP2 and PERA	Easy
Selling Stock Content Online	Intermediate
Vlogging	Intermediate
Podcast	Intermediate
Game Streaming	Intermediate
App	Intermediate
Online Course	Intermediate
Book or E-Book	Intermediate
Peer-to-Peer (P2P) Lending	Intermediate
Leasing Real Estate Property	Advanced
Cryptocurrencies	Advanced
Cooperatives	Advanced
Government Securities	Advanced
Equity-based Partnership	Advanced
Dividend Stocks	Advanced
Financial Products	Advanced
Website Building or Flipping	Advanced

Active Income vs. Passive Income

Active income is generated from transactions that require an exchange of goods or services and money in the form of salary, hourly wages, compensation, or professional fees. On the other hand, passive income is associated with assets or activities which produce earnings through rental income, interest earnings, dividends, and royalties. These are ventures from investments or securities that generate income even without direct work.

Advantages of Passive Income

1. Additional Income

The additional cash flow from an established passive income stream allows you to augment your current income, invest in profitable ventures, fund passion projects, and ultimately build wealth. You may even retire early if you can manage your finances well.

2. Peace of Mind

When you are not entirely dependent on your active income stream, you feel less stressed about your financial situation and have more time to pursue your interests, work on personal goals, and enjoy life.

3. Remote Work

Almost all passive income streams can be done and monitored remotely. You have the freedom to work anytime and anywhere.

Disadvantages of Passive Income

Earning passive income is ideal but challenging to achieve. While it is true that there is no limit to the amount you earn with passive income, you do not have complete control over how much you will earn each month as compared to a regular job. You may need to invest a lot of time, effort, and resources upfront before you start generating a decent income.

The advantages of creating a passive income outweigh the uncertainties, which makes it a worthwhile endeavor.

22 Best Ideas for Passive Income

Here are the 22 best passive income ideas for you to check out. These strategies, investments, and business ideas were categorized based on the resources you need to help narrow down the passive income source most suitable to your capacity, lifestyle, and goals.

Part I: Easy Passive Income Ideas

These are intended for those who are just starting to explore passive income. Ideas listed in this category require little to no capital and do not require any specialized skills or equipment to initiate. You can work on these strategies immediately to earn passive income with the resources you probably already have.

1. Take Advantage of Cashbacks

Cashback is a rewards system that allows you to earn back a portion of the money you spend on shopping or paying bills. It can be in cash, rebates, or points you can withdraw or use for your next purchase. 

This is different from vouchers or coupons which provide discounts on your current purchases. A cashback is applicable on top of the discounts which lets you save more.

Make the most of these programs usually offered by certain stores, credit cards, e-wallets, and cashback apps. Earn from your utility bills payment, travel bookings, food deliveries, and online shopping. Remember that this only qualifies as a passive income if you earn from essential purchases and do not overspend.

Here are some of the popular platforms offering cashback, rewards points, and rebates:

• Online Shopping: Shopee, Lazada, Zalora
• Food: Eatigo, Grab
• Bills: GCash, Maya
• Travel: AgodaCash, CitiBank, Metrobank, HSBC
• Cashback Apps: Shopback, Zap

Skills: None

Pros: Earn from your essential purchases and regular payments.

Cons: Easy to fall into the temptation of spending more than you need to.

Capital Requirement: No extra capital is needed.

Time Investment: You can claim rebates immediately or within a few months.

Potential Income: Earn 1% or up to 15%, depending on the promos offered by the platforms or merchants.

Tips for Beginners: If you want to manage fewer apps, look for platforms where you can earn cashback from a wide range of merchants and services within a single app (e.g., ShopBack).

2. Open a High-Yield Savings Account in Digital Banks

With consumers’ increasing preference for transacting digitally, financial institutions have shifted their banking activities online, with some completely digitizing their services. These full-fledged digital banks have automated online processes for account creation, cash deposits and transfers, account management, and loan applications. 

Since digital banks do not operate physical branches and have significantly less manpower than traditional banks, they can offer more favorable interest rates on their savings accounts and have no or minimal transaction fees. From less than 1% per annum offered by traditional banks, you can gain as high as 6% per annum in digital banks. 

Currently, the available digital banks in the Philippines are CIMB, ING, Tonik, Overseas Filipino Bank, and Maya Bank, with more expected to be operational soon. These banks are regulated by Bangko Sentral ng Pilipinas (BSP) and insured by the Philippine Deposit Insurance Corporation (PDIC).

Skills: None

Pros: 

• Enjoy higher interest rates than traditional banks
• There is no initial deposit or maintaining balance required
• No or minimal transaction fees
• Bank transactions are automated, quicker, and more accessible

Cons: 

• You need a reliable internet connection to manage your account.
• Digital banks do not have a wide variety of financial banking services such as the opening of checking accounts and wealth management.

Capital Requirement: There is no minimum balance required to earn interest; however, there is a maximum amount limit to earn the high-yield interest.

Time Investment: Interest income is usually credited to your account every end of the month.

Potential Income: 2.5% to 6% interest rate per annum

Tips for Beginners: Maya Bank¹ was recently launched; it offers an introductory interest rate of 6% per annum. Tonik offers a 6% interest rate per annum for a time deposit with a 6-month period. These are currently the highest rates offered by domestic digital banks.

3. Sell Customized Products via Print on Demand

You can start your clothing line or merchandise without directly managing inventory, marketing products, and processing orders. You can work with a Print on Demand (POD) service supplier to customize white-label products and allow them to sell these on a made-to-order basis. 

A wide range of products available for POD includes shirts, hoodies and jackets, tote bags, and mugs. The supplier handles the marketing, order processing, and shipping of your products to the customer. Once payment is received, they send the profit to you minus the transaction fees.

Skills: Graphic Design (optional)

Pros: There is minimal capital needed in this venture as you save on inventory and operating costs. 

Cons: 

• The product costs with POD items are higher than bulk orders, resulting in smaller profits.
• You are limited to the quality and type of the products offered by the POD supplier.

Capital Requirement: Additional features and tools are available on some platforms at a cost. There are also transaction and maintenance fees for using the platform.

Time Investment: Once the payment from a customer is received, the supplier will credit the profit to you.

Potential Income: You have the freedom to set the markup of your product, depending on your target market.

Tips for Beginners: Some of the POD companies in the Philippines you can check out include PrintDrop², Merchiful, Transfer it!³, and Printify ⁴. You can also opt to market your products independently to save on platform fees.

4. Be a Dropshipper

Dropshipping is a business strategy wherein you sell products without holding physical stocks. Once a sale is made, the customer pays you for the price you set while you purchase the item from the supplier at a lower cost. The supplier will then process, pack, and ship the order to the customer. 

With a dropshipping scheme, you do not directly handle the products but earn a profit from each sale. 

The initial step is to look for a supplier amenable to a dropshipping scheme. Next, you need to choose an e-commerce platform that allows you to list your products, process payments, and fulfill orders. Some of the most popular selling platforms in the Philippines are Lazada, Shopee, eBay, and Carousell. You can also host your store on your website or social media sites.

Skills: E-commerce sites management

Pros: Sell products without handling inventory and logistics. 

Cons: 

• You need to monitor the supplier’s inventory closely to ensure the availability of the items at the time of sale. 
• Since the items are not exclusive to you, other sellers are offering the same products which create stiff competition and result in lower margins.

Capital Requirement: No upfront costs when you only purchase from the supplier after you receive payment from the customer.

Time Investment: It may take a few months to choose a niche market, find trustworthy suppliers, try out trending products, set up an e-commerce store, and promote your business. Once operational, you may need to spend 10 to 15 hours a week marketing and building your brand. 

Potential Income: Average profit margin is between 15% to 20% and can go higher as you grow your business.

Tips for Beginners: You can start by promoting and selling products on your personal social media pages, Facebook Marketplace, or groups. Try the products yourself so you can vouch for the quality and answer inquiries from potential buyers.

5. Invest in Pag-IBIG MP2 and PERA

Have you heard of Pag-IBIG MP2 Savings and Personal Equity and Retirement Account⁵(PERA)? These are voluntary savings programs established by the government to help Filipinos save more and build their retirement funds. They have generous tax benefits and favorable terms. 

MP2 provides higher dividends than the regular Pag-IBIG savings and can be withdrawn annually or at the end of the 5-year maturity. PERA, on the other hand, allows contributors to accumulate income by investing in a wide range of accredited PERA products such as stocks, UITFs, mutual funds, insurance pension products, government bond funds, etc. PERA contributions and investment earnings can be converted to a monthly pension or a cash lump sum at age 55.

Skills: None

Pros: Generous tax incentives and high dividend yields.

Cons: Has penalties for early withdrawal of contribution.

Capital Requirement: Pag-IBIG MP2 Savings has a minimum remittance amount of PHP 500, while for PERA the minimum contribution is PHP 1,000.

Time Investment: MP2 has a 5-year maturity with an option for annual dividends, while PERA assets can be claimed at age 55 and completion of contributions for five years.

Potential Income: The average dividend rate for MP2 is 6%.

Tips for Beginners: To realize the maximum benefits of these programs, wait until maturity and do not make an early withdrawal.

Part II: Intermediate Passive Income Ideas

The following activities require a medium amount of capital investment and specific skills or knowledge to initiate. It takes a lot of planning, time, and effort in the initial phases before it generates a sustainable income.

1. Sell Stock Content Online

If you have a knack for taking pictures or videos, try submitting your work online through stock sites and earn royalties whenever someone uses them. You can grant non-exclusive rights for your work and allow its use across various stock content providers, or you can choose to be an exclusive contributor to unlock higher royalty rates.

Stock image sites such as Shutterstock, iStock, and Alamy are good starting points. On the other hand, you can do away with the stock photo agencies and market your portfolio on your website. You can set your terms, but you need a huge customer base.

Skills: Photography, videography, basic editing

Pros: If you are into photography or videography, this is a great opportunity to monetize your hobby. 

Cons: There is tight competition in the industry.

Capital Requirement: You need to invest in high-quality camera equipment, tripods, camera stabilizers, or gimbals.

Time Investment: The period it takes to credit your earnings depends on the platform used which is usually every month.

Potential Income: Depending on the platform, you may earn a single payment or royalties every time a client uses your photo. For example, iStock royalty rates for photos and videos are 15% and 20%, respectively. Exclusive contributors earn from 25% to 45%.

Tips for Beginners: To make your work stand out, take a unique photo or video based on a niche market. The top categories for stock content are travel, nature, cultural diversity, animals, food, lifestyle, sports, and drone or aerial shots. 

2. Vlog

Being a vlogger is one of the most popular and lucrative passive income sources. The key is to produce engaging video content to build your brand. Choose a niche such as fashion, lifestyle, health and fitness, gaming, travel, or entertainment. Make sure you choose a topic you are passionate about as viewers want to see the authenticity in your posts. 

Initially, you need to put a lot of time into planning your content to attract an audience. The goal is to monetize your platform with minimal supervision as you continuously earn from your present and previous vlogs. Earnings from vlogging will come from the number of views on your channel, advertisement placements, and product endorsements. 

Youtube, Tiktok, Facebook, and Instagram are popular money-making video platforms. As your patrons increase, so are your chances of developing additional revenue streams through sponsorship deals, collaborations, affiliate links, and other opportunities.

Skills: Content creation, scriptwriting, and editing

Pros: You have creative freedom in making your videos. There are also multiple ways to monetize vlogging, making it a profitable industry.

Cons: 

• To maximize earnings and collect a decent amount regularly, you need to build a massive following, which takes time.
• Poor or offensive content that draws negative publicity may cause the downfall of your whole career.

Capital Requirement: Good quality videography equipment, editing software, and the expenses related to the production of your videos.

Time Investment: It may take weeks to publish a video, from planning, scriptwriting, shooting, and editing. You need to publish videos at least once a week to build your subscriber base. It may take several months to a year before making a profit in vlogging.

Potential income: YouTube videos typically earn⁶ between PHP 150 and PHP 250 per thousand views. Profit depends on the channel’s popularity, audience engagement, advertisers’ budget, and the vlogger’s location.

Tips for Beginners: Make sure you join the YouTube Partner Program⁷ and create a Google AdSense account to enable the monetization features of your channel. It comes with the Google Analytics tool, which gives insights about your viewers so you can make relevant content for your target market.

3. Join Affiliate Programs

You need a social media page or website with a decent following or traffic to qualify for an affiliate marketing program. With this scheme, you promote products online by sharing a personal referral link. When a customer makes a purchase using your link, you earn a commission from the sale. To increase your earning potential, your page must rank high on search engines.

Skills: Knowledge of SEO

Pros: 

• There is a wide range of products you can choose from to promote, and there is no cap on the profits you receive.
• Affiliate links can be an additional income stream if you are already operating a website, podcast, or Youtube channel.

Cons: 

• Building and maintaining a website may be costly.
• You must create content related to the products and post regularly to keep your followers engaged.
• You may need to invest time, energy, and money in strategies to boost your ranking on search engines.
• You do not earn a profit if no one makes a purchase using your affiliate link.

Capital Requirement: No capital is needed to promote affiliate links through your social media page. However, for vloggers and website owners, there are additional costs in content creation, website maintenance, and digital marketing.

Time Investment: It may take several months to a year to establish your brand and attract a large audience. Daily or weekly posts are needed to interact and engage with potential customers.

Potential Income: Affiliate programs of Lazada⁸, Shopee, and Zalora⁹ let you earn up to a 10% commission rate or more, depending on the partner brands, product category, and ongoing campaigns.

If we talk about the income from finance affiliate programs that are also popular in the Philippines, like Loanonline, Digido, Cashxpress, Finbro, OLP, etc, the payouts could be from $8 – $30 for the action of the 1st issued loan from a new user. On average, eCPC (effective cost per click) can be from $0,10 – $0,65 depending on the traffic source and period of time. Also, the network arranges different promotions from time to time with cool rewards, so this will help you reach your financial goals. To discover more, please register in the SalesDoubler affiliate network, and you will be able to see all campaigns and payouts in 1 minute. 

To start your earnings with the SalesDoubler CPA network, you will need to register online, choose the affiliate programs you want to promote, and get access from the support team, so you can take your links and launch ad campaigns. Don’t forget to ask for some lifehacks in your manager and check all the tools the network has. With SalesDoubler, you will be able to check your statistics 24/7, get quick payouts via invoice / PayPal / USDT, discover new verticals, and realize your stable passive income in the Philippines.

Tips for Beginners: Choose products aligned with your audience’s interests to increase the chances of sales. Be creative in promoting the products; you can provide reviews, demos, product hauls, or great deals on your pages and groups.

4. Make a Podcast

Creating a podcast is similar to vlogging as you make content to engage an audience but in audio form. The podcast industry is fast-growing, presenting plenty of opportunities to generate passive income through advertisement and sponsorships, affiliate marketing, product or service offerings, premium content, or audio course subscription. A podcast with at least 5000 listeners per episode has a great chance of monetization.

The most popular podcast listening platforms are Apple Podcast (formerly iTunes) and Spotify. There are several more podcast directories you can distribute your material to for a wider reach.

Skills: Content creation, scriptwriting, recording, and editing

Pros: 

• There are multiple income stream opportunities for this venture.
• Once you gain a significant number of listeners, more brands will approach you for sponsorships.

Cons: 

• Initially, you must heavily advertise your podcast to promote your brand and attract listeners to your program.
• As a new podcaster, you must reach out to brands and present a business proposal for ad placements and sponsorships.
• Investing in good quality sound and recording equipment to make your audio material clear and audible may be costly.

Capital Requirement: Some essential items to invest in are: recording equipment, podcast hosting account, production and audio editing software, sound-proof recording space, and podcast promotion.

Time Investment: It may take a week to publish a podcast, from planning, scriptwriting, recording, and editing. Publishing engaging podcast content consistently is key to generating a steady passive income stream.

Potential Income: Ad rates¹⁰ vary from USD 10 to USD 50 per 1000 listeners depending on the ad length, time placement in the episode, type of ad, and size of the podcast audience.

Tips for Beginners: Focus first on establishing your podcast and expanding your audience base. Having a large audience size attracts advertisers to promote brands on your podcast.

5. Be a Game Streamer

Are you a gaming enthusiast who loves to entertain? If yes, you have a good chance of being a successful live streamer and earning additional income from playing video games. Video game live streaming platforms like Twitch¹¹, Youtube Gaming, and Facebook Gaming have built-in monetization tools to help streamers earn directly from their viewers.

There are a lot of money-making opportunities you can explore in live streaming. These can be through tips from supporters or third-party platforms, in-stream ads, branded content, affiliate programs, premium channel membership, and paid subscriptions. You can create and sell merchandise on your channel or offer gaming tutorials.

Skills: Gaming enthusiast

Pros: 

• It is enjoyable and rewarding for a gamer.
• There are various ways to monetize your channel aside from viewership.
• Easier to execute than vlogging as there is no need for post-production editing.

Cons: 

• Scheduling the time of streaming is a crucial factor in maximizing the number of people available to watch your videos.
• You need a stable internet connection to avoid interruptions in your live sessions.

Capital Requirement: You need a gaming desktop, good quality headset with mic, webcam, good internet connection, screen capture software, and audio and lighting equipment.

Time Investment: It may take a few months to build a following and complete the requirements to be eligible for the affiliate or partner programs of streaming platforms. You must produce live streams consistently to grow your channel and keep your community of followers.

Potential Income: Game streamers¹² with over a million subscribers can easily earn a six-figure monthly income. ChooxTV¹³, a top Filipino game streamer with 6.27M subscribers, has earned an estimate of PHP 370k for the last 30 days on Youtube alone.

Tips for Beginners: You can stream games from your mobile phone using the Streamlabs app. You can also apply for partnership or affiliate programs with streaming platforms to maximize the monetization of your channel.

6. Create an App

Creating a mobile app generates passive income through in-app purchases and advertisements. You have the option to charge a fee for every app download or make it free. App makers such as Appy Pie, GoodBarber, and AppsZero help you build an app even if you don’t have any programming background. You can also hire a developer team or programmer to build your app, but it may cost you a lot of money depending on its complexity.

Skills: Coding (optional)

Pros: There are app builder tools available to create a customized app easily without coding.

Cons: Creating an app may be costly and time-consuming without guaranteed returns.

Capital Requirement: To publish an app, the Google Play Store charges a one-time developer fee of USD 25, while the Apple App Store charges USD 99 for registering a developer account. There may also be additional costs in creating your app, depending on the development route you take.

Time Investment: It may take months to plan, research, develop, test, market, and launch your app.

Tips for Beginners: Using app maker platforms is the easiest and cheapest way to launch an app. You can start with creating simple educational apps that provide valuable information about certain topics and monetize it with in-app advertisements.

7. Create an Online Course

If you have expertise in certain subjects, you may consider creating an online course about them. Topics on financial management, programming language, graphic design, photography, and personal development are popular programs individuals take through online course platforms. You can offer custom courses on your website or upload them to websites like Skillshare and Udemy where you can earn royalties.

Skills: Expertise on a certain topic or skill, instructional design

Pros: A single course has the potential to generate recurring income from royalties.

Cons: It may be difficult for your course to get noticed among thousands of existing online courses.

Capital Requirement: You may need to purchase an online course software to help format your material and subscribe to online course platforms to distribute your content. For courses in video format, you need to invest in good quality audio-visual tools and video editing software. You may opt to hire an instructional designer to create effective learning materials.

Time Investment: It may be time-consuming to plan and build your course. The planning, designing, filming, recording, and editing of the lecture may take anywhere from a week to a month depending on the length of the video, type of course content, and style of teaching. Once you submit your course on a platform, it will be reviewed before publishing and made available to the public. Royalty payouts are usually every month.

Potential Income: Online course providers such as Udemy¹⁴ and Skillshare¹⁵ reserve a portion of their membership revenues as a royalty pool to be shared among instructors depending on the time consumed by students on their courses.

Tips for Beginners: If you are marketing your courses independently, you can initially provide free courses to build an audience. Once you establish your brand, you can offer premium content and programs for a fee.

8. Publish a Book or E-book

Getting royalties from a book publication is a decent way of earning passively. You can look for a publishing company to work with so you can concentrate on writing the content while they do the book’s marketing, production, and distribution. 

Traditional publishers take care of all the initial costs in publishing a book but also take a large portion of sales which means you get lower royalty rates. Alternatively, you can take the self-publishing route and have complete control over your book and earn more. You can publish your book on Amazon¹⁶ for free and earn as much as 70% royalties for every book sold.

Skills: Expertise on a topic and proficiency in writing

Pros: Self-publishing on Amazon is easy, and there are available tools to help you format your book and create a cover page. Typically, a publishing house will take care of production costs in exchange for a portion of the book sales.

Cons: Self-published authors may need to heavily promote their books to increase sales.

Capital Requirement: You can upload and publish your book on most self-publishing platforms for free. In a traditional publishing company, you usually do not shell out money when you sign a book contract, but they take a cut from the book sales. 

Time Investment: It takes time to finish writing and editing a book. Once the final copy is uploaded to Amazon, it will take up to 72 hours before it becomes available on their platform. Royalty payments are transferred 60 days after the end of every month. For publishing houses, even if the book has been completed, the time of launch is dependent on the strategy and timeline of the company.

Potential Income: Self-published authors may earn up to 70% of the book price as royalty, while those who worked with a traditional publishing company get 30% or less per book sold.

Tips for Beginners: Publishing a book or e-book is a good idea to supplement or complement your existing businesses. For example, you can turn your online course, blog, or podcast into a book and sell it on your website.

9. Participate in Peer-to-Peer (P2P) Lending

P2P lending allows individuals and small businesses to raise capital through crowdsourcing which they may not have access to with financial institutions. Funds from the P2P investors are pooled together to lend to borrowers. P2P lending provides a transparent, secure, and efficient venue for financial services.

Skills: None

Pros: High potential returns even with a small investment.

Cons: Risk of default by borrowers.

Capital Requirement: You can start investing with PHP 5000.

Time Investment: Some platforms have a monthly interest rate payout, while some release it after the borrower fully pays the loan.

Potential Income: The repayment period may vary on every platform or investment, but most have monthly payouts with an interest income of 6% or more, depending on the amount invested and maturity.

Tips for Beginners: Perform due diligence when choosing a P2P platform to invest in. Start with lending small amounts with short maturities to manage your risks.

Part III: Advanced Passive Income Ideas

These ideas require a medium to high capital investment and have a risk of losing money. It can also generate huge profits or a steady source of passive income if it becomes successful.

1. Lease Real Estate Property

Renting out a space for commercial or residential use is one of the traditional ways to earn passive income. Some individuals purchase land, house, or condo units specifically to lease them in the future, while others make use of their existing properties, especially when it is located in high-foot traffic areas or near transportation access. 

You can also list your space on Airbnb to host guests for a short period. 

Skills: Real estate management

Pros: 

• Leasing is a stable source of passive income especially if the property is in a prime location.
• Investing in real estate provides additional gains from capital appreciation as land increases in value over time.

Cons: 

• You will be required to pay real estate tax and association dues even without occupants.
• Repairs and maintenance can be a burden.
• Construction permits, actual construction, and regular upkeep may be costly.

Capital Requirement: As of February 2022, prices of residential lots¹⁷ in Metro Manila with a 50 to 70 square meters range between PHP 3M and PHP 5M while commercial lots of 200 to 400 square meters are estimated to be worth PHP 6M to PHP 10M. 

For properties outside Metro Manila, you may be able to encounter residential lots priced as low as PHP 1.5M while 250 square meter commercial lots are sold for PHP 2M. 

As of 2021, the average cost¹⁸ of residential construction per square meter is PHP 10,900.

Time Investment: Construction may take several months to a year while renovation and furnishing may be needed every few years. 

Potential Income: In 2021, the minimum monthly rent¹⁹ of a semi-furnished studio unit or two-bedroom condo unit is the highest in Taguig City at PHP 41,400. Rents in other cities within Metro Manila are as follows: Makati (PHP 18,900), Paranaque (PHP 15,000), Pasig (PHP 14,500), Quezon City (PHP 14,200), and Manila (PHP 10,000). 

Monthly office rent²⁰ in Makati is pegged at around PHP 1,350 per square meter or PHP 270K for a 200 sqm. space.

Tips for Beginners: Other creative ways to generate passive income from your property are leasing it for parking space and turning it into a venue for gatherings, co-working spaces, and other commercial purposes.

2. Stake Cryptocurrencies

Cryptocurrency is decentralized digital money used for online transactions. It is based on blockchain technology. 

Staking allows cryptocurrency holders to make their digital tokens work for them and earn passively without active trading. The process is similar to a savings account wherein money deposited to the bank is used for banking activities such as investing or lending to borrowers. In exchange, the depositor receives a portion of the interest gained. 

The annualized percentage yields (APY) in crypto staking are higher than banks offer. However, this also comes with risks as the value of cryptocurrencies may fluctuate wildly.

Some crypto exchanges where you can buy and sell cryptocurrencies are Binance, Coinbase, Crypto.com, PDAX, and Coins.ph. These trading platforms differ in terms of the cryptocurrencies they support and the fees they charge the users.

Skills: Knowledge of cryptocurrency

Pros: When the value of the staked crypto increases, your APY earnings are also higher. You get earnings both from the value of the coin and the APY.

Cons: When the value of the staked crypto plunges, your APY drops drastically. In addition, you do not have access to your staked funds within the lock-up period. Other drawbacks of crypto include high volatility, vulnerability to cyber attacks, and lack of regulation.

Capital Requirement: Some platforms do not require a minimum amount to stake.

Time Investment: Lock-up periods can vary from a few days to 24 months, depending on the cryptocurrency.

Potential Income: APY may vary from 2.5% to as high as 75%²¹, depending on the coins you stake and the lock-up period.

Tips for Beginners: Stake stablecoins such as Tether (USDT) or USD coin. As these are tied to the value of the US dollar, it does not ride with the volatility of other cryptocurrencies, which makes them a relatively low-risk option for beginners.

3. Invest in Cooperatives

Cooperatives are organizations that are created, owned, and controlled by their members to serve a common purpose and improve the welfare of their community. Members contribute to the Coop’s capital to fund their activities, and the profits generated are distributed as dividends and patronage refunds. Cooperatives are exempted from taxes under the Philippine Cooperative Code, which lets you gain more from your investment.

Skills: None

Pros: 

• Earn dividends aside from the high-interest rates on deposits.
• Enjoy membership benefits and perks.
• Contribute to the development of the community it serves.

Cons: There’s a proliferation of scams and fly-by-night cooperatives. To avoid falling prey to these scams, make sure you join cooperatives registered with the Cooperative Development Authority (CDA²² ).

Capital Requirement: Membership fee of PHP 100 to PHP 1000 and monthly contribution.

Time Investment: Dividends may be distributed quarterly, semi-annually, or annually.

Potential Income: Dividends may go as high as 20% depending on the Coop’s financial performance.

Tip for Beginners: Start by checking for existing Cooperatives in your area, workplace, or organizations you are involved in. It would be easier to join these groups as you may already be eligible for membership and you may already be familiar with their services.

4. Invest in Government Securities

Consider investing in government securities issued by the Bureau of the Treasury (BTr) to raise funds to support government projects. These are debt instruments in which periodic coupon payments are made, and the invested principal is paid at maturity. Treasury notes and bonds issue periodic fixed-interest payments until their maturity of two or 25 years. The interest yields allow you to earn a fixed passive income over a specified period.

Skills: None

Pros: 

• Low risk of default as the principal and interest are backed by the Philippine government.
• Provides a steady stream of passive income through interest payments.
• These can be used as collateral when applying for a loan.
• Has various maturity periods for short-term, medium-term, and long-term investments.

Cons: 

• Interest rates may not keep up with inflation.
• Subject to broker’s fees and 20% withholding tax.

Capital Requirement: Minimum investment requirement may range from PHP 5,000 to PHP 1 million depending on the Government Securities Eligible Dealers (GSEDs) and type of securities.

Time Investment: Maturity ranges from two to 25 years, while coupon payments are given quarterly or semi-annually.

Potential Income: The coupon rate of the most recent Treasury bond offered by BTr is at 6.5%²³ for a 7-year maturity.

Tips for Beginners: Government securities schedules and offerings are announced through the BTr website and printed in national newspapers. You can purchase government securities through the GSEDs²⁴ or the online ordering facility via TreasuryDirect²⁵.

5. Enter an Equity-based Partnership

An equity-based partnership is an agreement wherein two or more persons pool their financial resources to support a business venture. An equity partner is part owner of the company and shares its profits and losses. There may also be privileges provided for partners, such as discounted products and services. You can opt to be a silent investor who is not involved in business operations. This arrangement is a passive way of earning money.

Skills: None

Pros: Earn a share of the profits without actively working in the business.

Cons: Returns are not a guarantee; it is based on the financial performance of the company.

Capital Requirement: It depends on the available investment packages offered by the company.

Time Investment: Depending on the sales performance, it might take a few years before you can start earning.

Potential Income: It will depend on the financial projection of the company.

Tips for Beginners: Analyze the company’s profile, fundamentals, and plans before entering into a partnership agreement.

6. Invest in Dividend Stocks

Dividend stocks share a portion of the company’s earnings to stockholders regularly. Therefore, investing in high-yield dividend stocks is a good way of making money passively. The top stocks included in the Philippine Stock Exchange (PSE) Dividend Yield Index²⁶ are PLDT Inc. (TEL),  International Container Terminal Services Inc. (ICT), and Metropolitan Bank & Trust Co. (MBT).

Skills: Knowledge of stock trading

Pros: One of the most passive ways of making money, with the additional benefit of gaining more through appreciation of the share price.

Cons: Receiving dividends from a stock is not guaranteed and is subjected to tax.

Capital Requirement: Online stock broker portals typically require a minimum investment of PHP 1000 to PHP 5000.

Time Investment: Dividend payouts can be given quarterly, semi-annually, or annually.

Potential Income: As of June 13, 2022, the top stocks listed in PSE with the highest estimated dividend yields²⁷ for the year are as follows: LT Group Inc. (14.23% or PHP 1.17 per share ), GMA Network Inc. (12.72% or PHP 1.47 per share), Premium Leisure Corp. (12.56% or PHP 0.05 per share), SPC Power Corp. (7.56% or PHP 0.7 per share), and Global Ferronickel Holdings (7.84% or PHP 0.19 per share).

Tips for Beginners: High dividend yield does not solely determine a company’s profitability and long-term growth. You should also examine the company’s fundamentals, industry conditions, and other relevant factors before investing.

7. Invest in Financial products

The financial sector has been continuously developing financial products and services to better serve the demands of consumers. Numerous financial instruments generate passive income, such as Real Estate Investment Trust (REIT), Unit Investment Trust Fund (UITF), Bonds, Mutual Funds, Index Funds, Variable Universal Life (VUL), Corporate Securities, etc. Each of these financial products has unique features and differing levels of risk. It is best to discuss your goals and budget with your banks, brokers, and insurance providers so they can offer the best products suited to your needs and risk profile.

Skills: Knowledge of financial instruments

Pros: Investing across various financial products diversifies your portfolio, reduces risks, and requires minimal monitoring.

Cons: You need to do research and understand the nature of each financial instrument before investing. Also, you will be charged with transaction and administrator fees since these investments are professionally handled by fund managers.

Capital Requirement: Various financial products have different levels of capital needed.

Time Investment: Depending on the chosen investment vehicle, maturity may be a few months to several years, while some offer monthly or annual payouts.

Potential Income: Has varying levels of interest income.

Tips for Beginners: Perform independent research about financial products before reaching out to your bank or broker. Your discussion will be more productive and efficient if you are already familiar with the investment options and can ask specific questions to aid your decision.

8. Build or Buy Websites

Websites are digital assets that provide value to people. Like any other asset, you can use them to run a business, hold it as an investment, or sell it for high returns. This passive income method involves choosing a niche in the US market, shopping for related websites or building one from scratch, creating content based on low-competition keywords to drive web traffic, building links to improve search rankings, monetizing the website through advertising, affiliate marketing, or e-commerce, then flipping the website for a profit or keeping it as a steady revenue stream.

You can browse existing online businesses for sale at marketplaces such as Flippa, Empire Flippers, and Shopify Exchange. They offer tools and data insights to help find the most suitable website for you. 

Skills: Knowledge of SEO, web development, and content writing

Pros: 

• With multiple ways to monetize the website, this venture has a high return on investment (ROI) and generates recurring gains.
• You can outsource some of the tasks to speed up the process.

Cons: 

• It involves a lot of time and effort before you start earning.
• The process of building or buying promising websites may be costly.
• This may lead to time and financial losses if the website is unsuccessful.

Capital Requirement: Blogs with an existing income of at least USD 1,000 monthly are sold²⁸ for as low as USD 5,000 and may go as high as USD 350,000.

Time Investment: It may take several months to more than a year to achieve significant ROI.

Potential income: Using the valuation multiple²⁹ to determine a site’s worth, a blog with affiliate links, display ads, and part of an affiliate marketing program can be sold at 34 to 46 times its monthly income. For example, a blog earning USD 1,000 a month can have a price tag of USD 34,000. 

Tips for Beginners: A search engine optimization (SEO) audit is a good starting point in evaluating a prospective website. You can also avail of a due diligence report to assess its risks and opportunities before purchasing.

How To Know Which Passive Income Idea Is Best for You

Not all strategies, business ideas, and potential investments above apply to your current situation. To determine the best opportunity for you, think about your realistic goals, valuable resources, and expected time horizon for earning passively. At the center of these factors lies the ideal passive income source for you.

1. Goals

Like any venture, you need to know what drives you to pursue this journey. 

What are your goals for seeking passive income? Is it to augment your current income? Pay off debt? Are you working towards a dream project–a house, car, wedding, or vacation? Do you plan to earn as much as possible to retire early? Do you want to explore if you can make a living with your hobby and interests? Are you considering replacing your full-time job with passive income streams? How much do you expect to earn from passive income to achieve your targets?

2. Resources

Once you have set your goals, determine the resources available to you. 

Do you have certain skills, talents, or expertise you can leverage? Do you have extra cash to put into investment? How much money are you willing to invest without affecting your budget for daily expenses? Do you have the time to learn new skills or do extensive research on a topic? Do you have connections with field experts that can help you fast-track your passive income journey?

3. Time Horizon

You need to set your expectations on when to see the fruits of your labor. 

Is there an urgent financial need you need to address immediately? Are you willing to commit to long-term investment? Or are you comfortable starting with small but recurring earnings?

With these factors in check, you can go back to the list above and choose the opportunities that match your criteria. You can pursue these items first before exploring the others on the list.

BIR Guidelines for Passive Income Earners

Under the Tax Code of the Bureau of Internal Revenue (BIR)³⁰ , all Filipino citizens earning income from any source within and outside the country are generally subjected to income tax. This includes passive income from foreign and local bank deposits, royalties, dividends, and rental property.

According to BIR, an influencer who generates income through posting on social media is classified as a self-employed person engaged in a trade or as a business with sole proprietorship and is therefore subject to income tax, value-added tax, and business tax. The BIR specified several income-generating activities³¹ to be declared by social media influencers, and corresponding taxes³² be paid to avoid being liable for tax evasion. 

The Philippine Cooperative Code of 2008³³ provides cooperatives exemptions from income tax, value-added tax, percentage tax, and documentary tax, among others.

Cryptocurrencies are considered assets and are therefore subjected to taxes when converted into the local currency (PHP). However, BSP is yet to issue specific guidelines for the taxes related to the trading of cryptocurrencies.

Tips and Warnings

• Different passive income streams have varying levels of passiveness. Business ideas usually require a lot of work and planning at the beginning and regular maintenance or updates to keep the income flowing. Investment opportunities require less work but involve large capital and potential risks.
• Beware of passive income streams that are too good to be true. Before engaging in a business or investing, check for the company’s legitimacy. Do your research and do not rely solely on another person’s judgment.
• As an influencer, you not only hold the power to impart knowledge and information to the public but also bear the responsibility of upholding truth in your engagements. You should follow the community standards and guidelines for responsible use of social media.
• If you do not have the specific skills needed for a business, use available tools built especially for amateurs. You can also opt to outsource some of the tasks to accelerate the growth of your business. 
• Remember that the quest for passive income is not the same for everyone. There is no single magic formula for success. Some ventures may work successfully for others but not for you. It takes hard work, grit, and a bit of luck to achieve success.

Frequently Asked Questions

1. What is the easiest passive income source?

The “easiest” passive income streams can be generated using the resources you already have so you can start earning passively as soon as possible. These are usually strategies or habits to save more and investment opportunities with minimal risks. A good way to start is to take advantage of cashback programs and open a high-yield savings account in digital banks.

2. What are the best passive income ideas for students?

Students usually have limited access to funds or equipment and may not have specialized skills or expertise yet. It is best to look for opportunities with minimal capital needed and capitalize on your interests and passion when choosing a passive income business to pursue. 

For example, if you are into photography, videography, or graphic design, you can try selling your works while building your portfolio. If you are a gamer, you can do a live stream while playing online games. These may not be profitable right away, but the earlier you start building an audience, the higher the chance of monetizing these ventures soon.

3. What is the average monthly passive income a person can earn?

Every business idea and investment vehicle has unique features that allow a person to earn a wide range of income.

4. Is it legal to have both a passive income and a full-time job?

Yes. Unless it will result in a conflict of interest or breach of contract, there is no law prohibiting a person from having both an active and passive source of income.

5. Can you live with passive income only?

Yes. There are numerous success stories of vloggers rising to fame and gaining large fortunes, investments earning huge returns, or extraordinary business growth. However, there are also instances of mediocre business performances and failures. 

6. Is there a general rule on how many passive income streams to keep simultaneously?

The advantage of passive income is that you are not limited to the number of sources you can have. Unlike a full-time job where your income is based on the hours of work you put in, passive income allows you to earn even when you are asleep. Passive income earners usually have multiple streams of income at a time.

7. When is the best time to explore passive income streams?

The best time to start is now. Investing as early as possible lets you gain more dividends and earn more through compounding interests. Similarly, building your portfolio and learning new skills early on allows you to develop the expertise you can use in business. The earlier you start working on passive income, the faster you reach your financial goals.

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