Passive Income Ideas: 12 Ways to Make Money While You Sleep

Last Updated on – Apr 6, 2024 @ 11:26 am

Quick Take

What’s the best way to earn passive income in the Philippines?

If you want a hassle-free way to earn money without much effort, renting out real estate is the ultimate thing to do. You can rent it out on platforms like Airbnb or lease it long-term. If you don’t have the capital to buy real estate, you can simply sublease.

Earning money while you sleep. That’s the DREAM, right?

Too good to be true? You better believe it. Just ask the people around you who achieved financial freedom through grit and improving their financial IQ. Who are they?

It’s your neighbor who started selling homemade siomai 5 years ago and now have kiosks in Trinoma. It’s your colleague who funded his kid’s insurance by hawking chicharon at work. Your aunt who leases her backyard for parking space. Your lola who bought a piece of land in Mindoro to lease to farmers and fishermen.

These folks have it all figured out.

They are the John and Jane Doe’s of the world who can confidently say they can quit their jobs today and still have income to support their needs and then some.

Forget about counting sheep. This list can earn you money even while you sleep.

What is Passive Income?

Passive income is earnings generated through investments in which the investor is not actively involved – such as income derived from rental property, limited partnership, or other ventures that require minimal supervision and/or effort.

Scratch the technical terms. Here’s our version:

“Earnings derived in which a person is not actively involved.”

There, much better.


Types of Passive Income

Passive income is often seen as a way to generate income with minimal day-to-day involvement. Here are some common types of passive income:

Investment

Allocating money or capital into a business or an investment vehicle for the purpose of future potential earnings. A great example of this are dividend-earning stocks.

Shareholders get paid from the profits earned by the positive performance of their investment picks.

Related: 11 best investments for Filipino Millennials

Rental

Earnings or payments obtained from leasing a piece of property. It’s important to identify early the following key metrics in order to gauge if renting out properties will be a profitable venture for you.

  1. Estimated ROI
  2. Costs, time, and effort for maintaining property
  3. Potential financial risks of owning rental properties

Being realistic and clear on your rates and earnings targets are crucial to the success of your rental venture.

Interest

Earnings from lending money, either directly or through vehicles like bonds, CDs (Certificates of Deposit), or peer-to-peer lending platforms.

Royalties

Income from licensing the use of your creative works (like music, books, patents) or intellectual property.

Online

With businesses and consumers flocking the internet by the billions everyday, it’s hard to pass up on the earning opportunities available online.

From Affiliate marketing to drop shipping, selling e-books, online courses and others, the internet offers a trove of business opportunities for your taking. Granted, most are not “as passive” when compared to the first two.

Still, the potential is too great to ignore and there’s a high chance of making money from something you are passionate about. Once running, you can automate some tasks to make it more passive either through using dedicated services or outsourcing.

Check out this guide as well: 20 high paying home-based jobs in the Philippines


12 Passive Income Ideas in the Philippines

Here are 12 of the best sources for passive income in the Philippines:

1. Rental Properties

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A Filipino investment vehicle favorite. My grandmother built and leased apartment units as her main source of income. And it worked damn well.

Nowadays, you will see folks buying condominium units and then leasing them for rent income. You’ve probably heard of AirBnB, which is an online service that allows property owners to rent out units for a specified time.

It’s steadily gaining usage locally because it’s relatively cheaper versus staying at a hotel.

Did you know: You can also invest in hotel rooms & units for passive income in the Philippines

Most folks, when the discussion of rental property comes up, dismiss it prematurely. Why? They think that it’s only for individuals who have large pools of capital.

Absolutely false.

Ever noticed those meat and fish stalls at your local wet market? You can own one and then rent it out to sellers.

WIll you need millions?

No.

How about that extra space within your home’s garage? If you’re living near a high-foot traffic area, you can rent it out to a food cart owner. It’s not always about shelling out tons of money.

Sometimes, it’s about being resourceful and finding solutions to another person’s problems.

Others go the commercial route and rent out to businesses. From your favorite fast food chain to niche stores, renting out commercial space can be a highly lucrative business.

Others cater to a specific market, like freelancers and remote teams. Co-working spaces offer these individuals a place to work with all the amenities of a normal office and even more.

When deciding on a rental venture, several factors should be taken into consideration:

  • Available capital
  • ROI
  • Time and Effort
  • Projected rental earnings
  • Location
  • Estimated total expenses
  • Appreciation of rental property
  • Your ideal/target tenant

Here are the primary types of rental income you can earn:

Residential Rentals

Income from renting out properties such as houses, apartments, condos, or rooms. This is one of the most common forms of rental income, appealing to individuals looking for long-term living arrangements.

Commercial Rentals

Earnings from leasing space to businesses, including office spaces, retail locations, warehouses, or industrial sites. Commercial leases are typically longer and may include more complex terms compared to residential leases.

Vacation Rentals

Short-term rentals of furnished properties to tourists or travelers, often facilitated through platforms like Airbnb or Agoda. This type of rental can yield higher income per day but may require more hands-on management and can be subject to seasonal fluctuations.

Ad Space Rentals

Brands and companies never run out of ideas for promoting their businesses. And choosing an avenue to promote it is crucial to the success of their ad campaign.

These can range from the typical billboard ad to lighted sign boards propped on top of taxis. Online, you can post banner ads on your website and put affiliate links for commission.

You can create a YouTube channel and then promote the actual product in your videos or post product page links on the description. And you can also rent out Facebook Fan Pages (for sponsored posts), especially if you own a page that has strong engagement with its audience/community.

If you have a physical or online space that’s feasible for ad placement, contact advertisers or look for takers online. It’s a truly passive way of earning money with minimal investment.

I remember years ago when one of the members of an FB group I joined talked about how he got offered a deal by a popular local car accessories store. In exchange for monthly discounts and freebies, he agreed to placing the store’s name and emblem on his car (via car wrap sticker). So pull out your thinking hats and get creative! Who knows, you might just land a sweet deal.

Mixed-Use Rentals

Properties that combine commercial and residential spaces, such as a building with retail shops on the ground floor and apartments above. These can offer a diverse income stream but may also involve complex management needs.

Parking Spaces

Renting out parking spaces, particularly in high-demand urban areas, can provide a steady income with relatively low maintenance compared to other types of property rentals.

Storage Units

Leasing spaces for personal or business storage. This type of rental typically requires less maintenance and has lower turnover rates compared to residential rentals.

Equipment Rentals

Renting out equipment, such as construction machinery, party supplies, or audio-visual gear. While not a “property” in the traditional sense, it represents a significant investment and offers rental income potential.

Event Spaces

Properties rented out for events like weddings, conferences, or parties. These spaces can command high fees for short-term use but may require more intensive management and marketing efforts.

Subleasing

Subleasing involves renting out a property you lease to a third party for a higher amount than you’re paying in rent, keeping the difference as income.

This strategy can be applied to both residential and commercial properties but requires careful planning, clear communication with the original landlord, and adherence to the terms of your lease agreement.


2. Fixed Income Securities

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Put simply, Fixed Income Security is a type of investment that pays the investor a fixed amount of interest at a regular schedule.

Let’s say you are thinking of starting a small business and need the capital to get started. Your friend agrees to lend you the amount as long as you’ll also pay him a certain amount of interest (called coupons) on a quarterly basis (on top of the actual borrowed amount, which is called Face value).

This is essentially how fixed income securities work.

Pros & Cons of Fixed Income Securities

Pros:Cons:
Can provide a steady stream of incomeDue to its relatively safer risk value, the returns tend to be lower than other types of investments
Provides more stability than stocksMoney is locked in for a certain amount of time
In the event of a bankruptcy, they offer higher claim for assetsCan be susceptible to interest rate risk
Are mainly backed/guaranteed by the government

Types of Fixed Income Securities

There are several types of fixed income securities available which mainly vary according to their term length (how long the contract is). 

1. Treasury Bills (T-Bills)

Treasury Bills (“T-bills”) are short-term secure investments issued by the Philippine government through the Bureau of Treasury (BTr).

The most common tenors (length of maturity) for T-bills are 91 days, 181 days, and 364 days.

These are sold at a discount from their face value but the investor will get the full amount upon maturity (works like a zero-coupon bond)

2. Treasury Notes (T-Notes)

It comes in maturities of between two and 10 years and pays a fixed interest rate. At the end of the maturity, investors are repaid the principal but also earn semi-annual payments of interest each year they hold the note.

3. Treasury Bonds (T-Bonds)

Bonds that have tenors of more than 1 year. The most common maturity lengths for T-bonds are 2-year, 5-year, 7-year, 10-year, 20-year, and 30-year bonds.

4. Retail Treasury Bond (RTBs)

Retail Treasury Bonds (RTBs) are medium to long-term investments issued by the Philippine government with the goal of making securities available to smaller investors.

5. Corporate Bonds

Bonds issued by public and private companies. They feature potentially higher returns vs gov’t-issued banks and highly liquid though at the cost of being more risky compared to gov’t issued bonds. 

6. Dollar Sovereign Bonds

Dollar Sovereign Bonds are medium to long-term investments issued by governments denominated in US Dollars.

7. Dollar Corporate Bonds

Dollar Corporate Bonds are medium to long-term investments issued by corporations denominated in US Dollars.

8. Certificate of Deposit

A certificate of deposit (CD) is a fixed income investment that are offered by financial institutions like banks. These typically have maturities of less than five years.

9. LTNCD

LTNCD stands for long term negotiable certificate of deposit. The typical minimum investment term is 5 years.

It’s liquid and tradeable in a secondary market prior to maturity. You’ll be paid with a certain interest rate at a schedule in exchange for holding it until it matures.

Related: Income Investing: 13 Best Income Generating Assets


3. Content Publishing

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There are several ways how content publishing can earn money (passively):

Advertising Earn money through payments from Google and advertisers by posting their ads on your website (via Google Adsense).
E-Commerce Earn money by selling products or services (or through dropshipping – selling products without the need of having inventory).
Affiliate Marketing Earn commissions and referral money by putting product links (example, link of a product page on Amazon.com, Lazada, or Shopee) on your website.
Sponsored ContentCompanies pay you to create content that promotes their products or services. This can include blog posts, videos, social media posts, and podcasts. It’s important to disclose sponsored content to your audience for transparency.
Subscriptions and MembershipsOffering premium content, exclusive access, or additional benefits to subscribers or members for a fee can generate recurring revenue. Platforms like Patreon, Substack, and Memberful can facilitate these services.
Selling Digital ProductsE-books, online courses, guides, webinars templates, audiobooks, and software are examples of digital products you can sell directly to your audience. These products can complement your free content and offer in-depth information or tools.
Donations Platforms like Patreon, Facebook, and YouTube enable content creators to receive donations or crowdfunded support from their audience. This can be a good option for creators with a dedicated fan base.

Earning passive income from content publishing involves creating and distributing content that continues to generate revenue over time with minimal ongoing effort.

Here are several strategies for turning content publishing into a source of passive income:

Build or Buy a Website

Now that you know how a website generates revenue, it’s time to ask, “Build or Buy?”

Should you wish to build it yourself, I highly recommend checking out this guide for a primer.

But what about those who don’t have the chops or time to start from scratch?

Online services like Flippa.com and Empireflippers.com serve as marketplaces for those looking to buy or sell a website.

Why do it?

Like buying and selling physical businesses, there are several ways to make profit from applying the same concept for websites.

Let’s start with a simple analogy, a fishball stand. Let’s say the proprietor no longer wants to sell fish balls due to personal reasons. He offers to sell it to you.

You ask him about the details: how much is spent on raw fish balls, where he gets them, how much is the markup for each one sold, how much is the net earnings in a day, what time of the day it sells fastest, and more.

After carefully analyzing all data, you decide it was a feasible venture. You buy the business from him, hire someone to man the stall and voila, you now have cash flow. After a few months, you realize that while the earnings are decent, managing the whole thing takes more time and effort than you’re willing to give. So you decide to sell it.

In the same vein, buying a website either for the purpose of running it or making income then later selling it are both possible online.

Building, buying or selling a website are legit ways to earn money.

No matter which route you take, do your due diligence. Be extra careful when buying websites as there are plenty of scams out there.

Take the time to know more about the whole process. Check out forums, read guides and real-world examples, review rating and feedback, and know how to properly scrutinize a website being sold.

There’s a learning curve to these things and if you put in the time and effort you might just score a nice passive income source.

Learn More: 6 Proven Ways to Make Money Online in the Philippines

YouTube Channel

Produce and upload videos to YouTube. Once your channel meets YouTube’s monetization criteria, you can earn money through ad revenue, channel memberships, super chats, and affiliate marketing in your video descriptions.

Online Courses

If you have expertise in a particular area, create online courses and host them on platforms like Udemy, Teachable, or Skillshare. You earn income for every student who enrolls in your course.

Publishing e-books or guides on platforms like Amazon Kindle Direct Publishing can also earn royalties for every purchase or read through Kindle Unlimited. Topics can range from fiction to how-to guides in various niches.

Podcasting

Start a podcast and grow your listener base. Monetization can come from sponsorships, advertising, premium content, donations, and merchandise sales.

Subscription Content

Platforms like Patreon or Substack allow creators to offer exclusive content to subscribers for a monthly fee. This can include newsletters, video content, podcasts, or any other type of digital content.


4. P2P Lending

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Peer-to-Peer (P2P) lending involves individuals lending money to other individuals or businesses via online platforms that facilitate matches between lenders and borrowers.

Why lend money via P2P? Simple–P2P lending services that operate online, like Blend PH and SeedIn, run at lower overhead costs versus traditional sources, like banks.

This allows them to offer higher returns to their lenders and lower interest rates for their borrowers. They serve as the middle man for pooling money from different lenders and connects them with borrowers. As an investor, there are several reasons why this looks promising:

  • Potential higher ROI on your money versus keeping it in banks
  • Simple process
  • You can automate it then treat is as passive investment
  • You get to help people in need

As with most ideas on our list, there is risk involved.

Mainly, the borrowers not being able to pay the money they borrowed. Make use of the tools and advice that these services offer to develop your strategy through risk assessment.

You can choose to lend all your money to one person or spread it among several borrowers, similar to picking stocks. This provides some flexibility on how your money gets managed.

How about Microlending?

Microlending or Microfinancing was originally designed as a financing system geared towards offering loans to small businesses and financially challenged individuals.

In this set up, loans are usually distributed among borrowers, vouching for each other through a co-signer system which lessens the risk of a default.

Unlike P2P, you won’t be pooling your resources with other investors in Microlending. Also, loans in Microlending in general are taken for kickstarting small businesses versus personal needs.

As the owner of a Microlending business, you’ll assume the full risk versus P2P’s structure where the risk is distributed among the lenders.

Still, it’s a viable passive income option through interest gain if you have enough resources and a strong community or group system supporting your endeavor.

Read Next: Top Online Lending Platforms and Banks to Get Online Cash Loans


5. Dividend Stocks

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With this strategy, your goal is to pick and invest in stocks that yield dividends. Dividends are money that shareholders (you) receive from the company for investing in them.

Think of it like a little cash reward.

There are potential gains involved if you choose to reinvest dividends over the years. Compound interest works wonders which can result to you ending up with more shares.

More shares = more money.

Through reinvesting, you’ll have a larger pool of capital in the future which can be a whole lot profitable than to simply cash in the money when dividends are released.

One thing to note though is that you may require a considerable amount (read: a lot) of funds to get worthwhile results from dividend investing.

If a dividend yields only 2-3% then you should not expect it to provide you with meaningful recurring income if your capital is relatively small. Best to look at it as another tool for building up your money for the future.

Below are some of the top dividend-paying stocks in the Philippines that are known for their consistent dividend payouts and strong financial performance:

StockAnnual Dividend Yield
PLDT Inc. (TEL)7.06%
Manila Electric Company (MER)5.6%
Ayala Corporation (AC)1.07%
SM Investments Corporation (SM)0.8%
San Miguel Corporation (SMC)1.33%
Globe Telecom (GLO)5.7%
Ayala Land, Inc. (ALI)1.3%
Bank of the Philippine Islands (BPI)2.85%

Useful resources:


6. Crowdfunded Real Estate & REITs

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Earning passive income from crowdfunded real estate and Real Estate Investment Trusts (REITs) allows investors to gain exposure to the real estate market without the need to directly buy or manage properties.

Here’s how each works:

What is Crowdfunded Real Estate?

Similar to P2P’s concept, Crowdfunded Real Estate allows for the pooling of money from different investors and then using that money either to buy or improve real estate properties. Like P2P, your gains will come from the interest on the money that you have lent.

We all know that real estate investing requires a ton of capital. Through Crowdfunded Real Estate, however, you can get good returns on your capital than to simply have it sit at the bank.

Not all investments are guaranteed winners though, so your due diligence is required here before you put in any money.

What is Real Estate Investment Trusts (REIT)?

Real Estate Investment Trusts or REIT, on the other hand, is a company that invests in real estate. They finance and operate real estate properties and even own them.

The idea is to open the gates to real estate investing to common folks by allowing them to invest in its portfolios. It’s similar to how Mutual Funds work. If you’re a REIT shareholder, you can earn the share of the earnings produced of these real estate investments.

This means you get to invest in real estate without the hassles of owning a physical property. Everything will be managed through the REIT.


7. High Yield Savings Accounts

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Putting money in the bank is perhaps the easiest way of saving and growing it.

Note though that “grow” might not be the best word to use if we’re discussing actual performance. Let’s face it, banks in general yield less-than-satisfying output for you money.

What to do?

Answer: Research.

Before putting your hard-earned money in the bank, it’s a good idea to exert effort in finding which one suits you best not only in terms of convenience but also based on interest rates.

Sure, the difference among their interest rates might be small. I would argue though that these “small” differences matter when your money starts to grow. It could mean the difference of netting several thousands of pesos more on your money after one year.

And since we’re talking about banks, this is quite a considerable sum.

Check out their websites, ask for brochures, talk to reps, and compare their packages. It’s an easy way to ensure better returns for your money.

Below are some of the top high-yield savings accounts in the Philippines:

BankTypeInterest Rates
CIMB Bank (GSave)Digital Bank2.6%
Tonik BankDigital Bank4% – 6%
Maya BankDigital Bank3.5% – 14%
SeaBankDigital Bank3% – 4.5%
GoTymeDigital Bank4%
UNOBankDigital Bank4.5%
Union Digital BankDigital Bank3% – 4%
OwnBankDigital Bank6%

Here’s a great rundown of the best savings account options in the Philippines.


8. Cryptocurrencies

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Earning passive income through cryptocurrencies has become increasingly popular, offering several methods to generate earnings without the active trading of digital assets.

Keys to succeed in this form of investment:

  1. Invest in cryptocurrencies and technologies you truly believe in (or you would personally use).
  2. Don’t just believe what we’re saying here. Do your own research! Research thoroughly before investing. Look into the project’s fundamentals, the team behind it, the problem it solves, its community support, and its long-term viability.
  3. Don’t put all your eggs in one basket. Diversification can help manage risk in your investment portfolio. Consider spreading your investments across different cryptocurrencies, blockchain projects, and passive income methods.

Here are some of the most common ways to earn passive income with cryptocurrencies:

Cryptocurrency Mining

While not passive for everyone, cryptocurrency mining can become a passive income source with the right setup.

After the initial investment in hardware and setup, miners can earn cryptocurrency rewards for validating transactions and adding them to the blockchain.

However, mining efficiency and profitability depend on several factors, including electricity costs and network difficulty.

Caveat: it’s important to set proper expectations regarding what you can get from Cryptomining.

With countries like China operating dedicated centers with ultra-powerful mining computers, a novice miner simply can’t compete using consumer-grade equipment. It’s probably best to look at mining as “trickle income” rather than a steady cash flow stream.

Nowadays, it seems to make more sense to look at it from a hobbyist standpoint versus that of a serious enthusiast. This is because of the significant financial investment required to do some hardcore mining.

Aside from due diligence to researching and deciding which coin to mine, you may need to shell out some cash to buy the gear (rig) to get you started. Here’s what you’ll need.

  • Custom Desktop PC (specced for mining)
  • Good internet connection
  • Mining Software (free or paid)
  • Coin Wallet
  • Membership in a “Mining pool” (community of miners) and online currency exchange (for exchanging your crytocoins for real cash or vice versa)

Electricity also plays a big role in this as mining consumes a lot of power.

Essentially, the more hashing power you can lend to the network, the more money you can earn. But building a powerful mining rig (or farm) could also be an expensive endeavor (cheapest one can cost around P80,000).

Master Nodes

Running a master node involves operating a full node computer that keeps a real-time record of a blockchain’s transactions.

Master nodes require a significant initial investment and technical knowledge but can generate income by validating transactions, securing the network, and other services.

A Masternode is essentially a server within a decentralized network. It can perform more advanced functions compared to regular nodes (Node = a computer connected to a cryptocurrency network).

If you think about it, this concept is similar to a regular network of computers, where the Masternode is the server and the nodes are clients.

Masternodes are needed in order to perform specific tasks that utilize the blockchain process. And since they require more resources to set up, owners are paid for “leasing” their Masternodes.

Masternode operators get rewarded depending on how a coin’s network operates. Some get paid once a day while some receive multiple payouts.

Here are the basic steps to become a Masternode operator:

  1. Lock a significant amount of coins in a crypto wallet. The minimum varies depending on the cryptocurrency.
  2. Set a storage space to house the blockchain.
  3. Setup a server and dedicated IP to host the wallet 24/7

By keeping a certain amount (and locking it in within the network), you get rewarded and paid by the network (on a daily, weekly, or monthly basis).

Where to find Masternode Coins:

Staking

Staking involves holding funds in a cryptocurrency wallet to support the operations of a blockchain network.

Essentially, you “stake” a certain amount of your cryptocurrency holdings, locking them up in exchange for the opportunity to validate transactions and earn rewards on networks that use the Proof of Stake (PoS) consensus mechanism or one of its variants.

What Cryptocurrencies can you stake?

Here are some of the top cryptocurrencies you can stake (ranked by market capitalization):

  1. Ethereum
  2. BNB
  3. Solana
  4. Cardano
  5. Avalanche
  6. Polkadot
  7. Polygon

You can find more coins available for staking via CoinMarketCap and CoinRanking.

Where can you stake cryptocurrencies? 

There are many platforms that allow their users to stake. These include:

The difference in staking in the platforms mentioned above are the fees, cryptocurrencies that are available for staking, and the locking period.

How much can you earn from staking cryptocurrencies?

The earning potential in staking can be generous. The annual percentage yield (APY) for most cryptocurrencies ranges from 2% – 10%.

How much do you need to stake cryptocurrencies? 

The minimum amount required for staking cryptocurrencies can vary widely depending on the blockchain network and the platform you’re using to stake.

Network-Specific RequirementsSome blockchains have their own minimum staking requirements if you’re participating directly on the network. For example, Ethereum, after its transition to a Proof of Stake (PoS) mechanism, requires 32 ETH to run a validator node. However, this amount can be prohibitively high for individual investors.
Staking PoolsTo make staking more accessible, many investors participate in staking pools, where multiple stakeholders combine their resources to meet minimum requirements and share in the rewards. Staking pools often have much lower minimum staking requirements, sometimes as little as the equivalent of $10 to $100 in cryptocurrency.
Crypto Exchanges and PlatformsMany cryptocurrency exchanges and platforms offer staking services that allow users to stake with even lower minimums. Platforms like Binance, Coinbase, and Kraken have their own staking programs with varying minimum requirements, often making it easy for users to start staking with small amounts of crypto.
DeFi PlatformsIn the decentralized finance (DeFi) space, staking can sometimes be part of yield farming or liquidity mining strategies. The minimum amounts in these cases can vary greatly depending on the protocol and the current market conditions. Some DeFi platforms allow for staking with very low minimum amounts, although the specifics can change rapidly.
Yield Farming

Yield farming is a more complex form of earning through DeFi (Decentralized Finance) platforms. It involves lending or staking cryptocurrencies in exchange for interest or fees in return.

This can offer higher returns than traditional staking, but it also comes with higher risks.

Lending

You can lend your cryptocurrency to others through a platform or protocol and earn interest on the loan. Several platforms facilitate crypto lending and borrowing, setting the terms and interest rates.

Here are some of the top crypto lending platforms on the web:

Liquidity Mining

Similar to yield farming, liquidity mining involves providing liquidity to a DeFi platform. Users deposit pairs of tokens in a liquidity pool to facilitate trading on the platform and earn rewards in return. The rewards often come in the form of the platform’s native tokens.

Dividends

Some cryptocurrencies offer dividends to holders, similar to traditional stocks. By holding these tokens, you can receive a share of the profits or revenues generated by the project or platform.

Popular coins that pay dividends:

  • KuCoin
  • VeChain
  • NEO
  • Bibox
  • Komodo
  • AscendEX
Cloud Mining

This allows individuals to participate in cryptocurrency mining without managing the hardware themselves. By purchasing a cloud mining contract, you rent computing power from a provider to mine cryptocurrencies.

This can be a more accessible way to enter mining, though it’s important to research providers thoroughly to avoid scams.


9. Royalties

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Royalties are payments made to individuals or entities for the use of their intellectual property (IP) or creative work.

The amount you can earn from royalties for passive income depends on several factors, including the type of intellectual property (IP), the industry, the demand for your IP, the terms of your licensing agreements, and how you market and manage your IP rights.

Art and Photography

Artists and photographers can earn royalties through licensing their work for use in advertising, product design, and digital media. Royalties can be structured as a percentage of sales or as a flat fee per use.

You also don’t have to be a professional photographer to sell your photos. Online services like Shutterstock and iStock allows you to upload your photos and get paid in royalties for each download.

Related: How to Invest in Art in the Philippines

Books and eBooks

Authors can earn royalties ranging from 5% to 15% on the retail price of physical books and up to 70% on eBooks sold through platforms like Amazon Kindle Direct Publishing, depending on the pricing and distribution options chosen.

Music, Audio, & Sound Effects

Musicians and songwriters earn royalties from various sources, including streaming, sales, synchronization (sync) licenses for TV and film, and performance royalties from radio plays and live performances.

These can vary widely; for example, streaming royalties might range from $0.003 to $0.005 per stream on platforms like Spotify. Performance and sync royalties can be much higher but depend on the usage and licensing agreements.

As for sound effects, you can sell your premium copies to sites like Pond5.

Video Footage

Pond5 also allows video content creators to earn money from their works by making it available to filmmakers, as well as digital & traditional advertising agencies looking for footages they can use.

You can also sign up at Patreon to sell your work to monthly paid subscribers, whether you’re creating music, videos, games, written stories, podcasts, animation, paintings, and even comics.

Patents and Inventions

Patent holders can license their inventions to companies and earn royalties typically between 2% and 10% of the net product sales. The exact percentage depends on the industry, the invention’s novelty, and its importance to the product.

Software and Technology

Software developers can earn royalties by licensing their technology, with rates varying significantly based on the software’s utility, uniqueness, and the licensing terms.

Rates can range from a small percentage of sales (1%-5%) to higher percentages if the software is a critical component of the product.

Video Games and Apps

Creators of video games and mobile apps can earn royalties through direct sales, in-app purchases, and advertising.

The earnings can vary widely based on the popularity of the game or app and the monetization strategy employed.


10. Digital Products

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An online product or service that others find valuable can be a source of income for its creator. If you have some background in programming, you can make an app for addressing something that have always bothered you or find inconvenient.

Chances are, you’re not the only one and creating an app that solves this problem can be a great way to earn and help at the same time.  

If you want to discuss or share your knowledge about something you are passionate about, why not create an eBook or Audiobook about it? You can sell it on your website (or on Amazon) and earn from each download.

Online courses offered by Udemy is a framework for selling services. You can sign up for sites that serve as a platform for teaching then create video tutorials discussing topics you know a lot about. If you have background in website design, you can create WordPress templates and sell it to newbie site owners.

There’s a lot of options here. The key is to find your niche and create a valuable product or service that people will actually use.


11. Small Business Equity Financing

Capital: 
Time: 
Risk: 
Gain: 

Small business equity financing involves investing capital in a startup or small business in exchange for partial ownership or shares in the company. This form of investment is an alternative to traditional debt financing, where a business borrows money and is obligated to repay it with interest.

For investors, equity financing presents an opportunity to be part of a company’s growth journey by acquiring a stake in its potential success, rather than merely acting as a creditor.

Becoming a silent partner

Simply put, you’ll invest money into a business venture but will not be participating in its day-to-day operations. This reduced responsibility provides a passive income avenue since you generally just need to help in funding the business.

This does not mean that you are safe from any financial risks, however. It’s advisable to have an official agreement or contract with your business partner to set clear terms and agreement on the partnership.

Acquiring an existing business

You can also choose the other route wherein you can buy an already established business that has its own process in place and has a proven history of making profits.

Places where you can find businesses for sale:

However, it’s crucial to understand how the business works, because you always have to expect for the worse to happen when you have your own business.   


12. Low Maintenance Business

Capital: 
Time: 
Risk: 
Gain: 

OK, this one’s not entirely passive and may require a lot of work at the start. But when set up correctly, it can provide a good source of income with minimal activity on your end.

Vending machines is one example.

Types may range from coffee dispensers to charging stations. Once up and running, you just need to schedule its maintenance and restocking depending on the machine.

If you think about it, you can apply this same low-maintenance framework even to regular business ideas.

How?

Through Outsourcing or Drop Servicing.

By hiring contractors to do the bulk of the operations, you free yourself from the time and energy required from running your own business on a daily basis.

Yes, it can still be a hassle hiring and managing contractors. But if you figure this part out and build a solid team, they can run on autopilot and you’ll only need to check the reports and conduct regular meetings to set goals and review performance.

And by “contractors” I do not necessarily mean groups of people to run the business. It can be as simple as hiring a building manager for rent collection and other tasks.

Hiring your neighbor to make sure your three vending machines are working properly and well maintained. These are simple examples but I know you get my point.

Read Next: Complete Guide to Business Process Outsourcing to the Philippines

Business Franchising 

Putting your money into an established franchise business could also be a great source of passive income.

Seeing that this type of investment offers a built-in process, wherein and they will mostly help you out in getting started and in its inner workings – even in finding a good location for your business.

This allows you to have more free time as an owner.

Referral Source or Lead Generation

A lead is information on an individual. How can you earn from it? Through referrals.

Ever recommended someone to your company’s HR for a job position? That’s basically how this works. Most companies give out incentives to the employee who referred someone successfully.

You get to earn just by simply referring someone.

Online, the same core principle applies. Let’s say you have a website about dogs that have a strong local following. As a dog owner yourself, you know of a great pet grooming store and visit their shop regularly.

You can pitch to the owner to exclusively promote their store in your website. Or you can ask your website visitors to sign up to your newsletter (where you can send out recommendations on good pet products or stores) so you can gather their contact info upon signing up.

Using this info, you can generate leads on people who are pet owners that the store you tied up with can use for targeted marketing.


Passive Income FAQs

Is passive income really “passive”?

In a way, yes. However, a lot of time, capital, and energy is needed to initially set up your business/investment and you need to regularly monitor it to make sure it’s still running well.

How much passive income can I expect to make in the Philippines?

How much you can earn depends on what you want to do and how much capital you want to put in. Most people earn P10,000 to six or seven-digit figures through their passive income.

That said, some forms of passive income in the Philippines like rentals can give you a lot of money but it also requires a huge upfront investment. Meanwhile, other passive income methods like selling digital products heavily rely on marketing. 

Are there any risks associated with passive income?

For example, if you decide to have rental properties, you might face additional costs due to property maintenance.

Yes. There are certain forms of investment that can go south if you’re not careful. You’ll need to always weigh the pros and cons of your decisions and do adequate research before investing your money.

How is passive income taxed in the Philippines?

In the Philippines, passive income is subject to specific tax rates, which may differ from the regular income tax rates applied to employment or business income. Passive income sources such as interest, dividends, royalties, and rental income are taxed differently.

Here’s an overview of how these are typically taxed:

Interest Incomefrom bank deposits, deposit substitutes, trust funds, and similar arrangements are subject to a final tax of 20%. However, interest income from long-term deposits or investment certificates (with a holding period of five years or more) is exempt from tax.
Dividendsreceived from a domestic corporation are subject to a final tax rate of 10%. However, this rate may vary for foreign shareholders depending on tax treaties between the Philippines and their respective countries.
Capital Gainsfrom the sale of shares of stock not traded in the stock exchange are taxed at 15%. For real property, the capital gains tax is 6% of the gross selling price or current fair market value, whichever is higher.
Rental Incomeis subject to income tax under the graduated income tax rates if it’s part of a business operation. If it’s not part of a business, it can be subject to a final tax of 5% on the gross rental income if the annual income is not more than PHP 3 million. Otherwise, it’s subject to the regular income tax rates.
Royaltiesare subject to a final tax rate of 10% for books and other literary works and 20% for other types of royalties.

The Philippines’ Bureau of Internal Revenue (BIR) oversees tax collection and enforcement. Tax laws and rates can change, so it’s advisable to consult with a tax professional or refer to the BIR’s official website for the most current information.

Learn More: Types of Income in the Philippines (and how each is taxed).

What’s the easiest & simplest way to earn passive income in the Philippines?

This can vary widely depending on your resources or capital, skills, and interests. However, some forms of passive income are generally considered more accessible due to lower barriers to entry, minimal initial investment, or ease of management.

Here are our top 3 picks that might be seen as easier options for generating passive income in the Philippines:

High-Yield Savings AccountsPlacing funds in a high-yield savings account or a time deposit account can be an easy way to earn passive income through interest, although the rates may vary.
Dividend-Paying StocksInvesting in stocks that pay dividends can provide a passive income stream. The Philippine Stock Exchange has several companies known for their regular dividend payments. This requires some initial research and investment but can be managed relatively passively afterward.
Rental Income from PropertyIf you already own property, renting it out can provide a steady stream of passive income. With platforms like Airbnb, even renting out a spare room can be relatively hassle-free.

Parting Words

We hope you found this guide useful.

Passive income can be major game changer for everyone. From funding your dream vacation to preparing for your kid’s college, saving for retirement to saving up capital for that business you’ve been planning for years.

As always, do your due diligence before venturing on any business idea.

The key is to be well-informed and minimize risks whenever you can. Goodluck!

Other Useful Resources: 

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About Amiel Pineda

Amiel Pineda is the Head of Content at Grit PH.

He started freelance writing in 2010 doing product reviews and tech news. In 2018, he became a full-time freelancer, writing in the financial space and creating content for clients in various niches.

Prior to freelancing full-time, he worked 7 years in the financial services industry for a Fortune 500 company.

He also writes on his personal blog, Homebased Pinoy (https://homebasedpinoy.com/), where he shares tips and guides as a work-from-home freelancer, along with NFT-game guides.

Education: Technological Institute of the Philippines (Bachelor of Science in Electrical Engineering)
Focus: Freelancing, Entrepreneurship, Financial Products, Investing & Personal Finance

Reader Interactions

Comments

  1. Judy says

    I think the holy grail of financial freedom is having so many passive income. This way you will never worry about your financial needs because everything is taken care of your assets. You will have all the your time in the world and visit all places you dream about. You have your time and money. This is the dream of most people which only few ever achieved.

  2. Yesh says

    Question about your rating system – it’s quite confusing. For example on the Build/Buy websites. Is Money being 2 stars a good thing or a bad thing? Is it 2 stars because the needed capital is high (as in you’re not rating it high, because the capital is big)? Thanks

  3. Yesh says

    Hello. Just a question about the rating system because I’m confused. On flipping/buying sites, you gave it 2 stars for Money. Does this mean you gave it a lower rating because of the relatively bigger capital needed to invest in this?

  4. Hannah Lagdameo says

    Thank you for sharing this very detailed article. It is indeed helpful and timely. I learned something out of this article.

  5. Ezaz Shaikh says

    Hey Amiel,
    It’s a very informative and in-detailed article. This is what everyone must read and especially the one who is finding hard to create passive income. I have also written extra points on the best passive income ideas. You can have a look to get some more ideas. Anyways, Good Job! Keep sharing such good content. I will come back to read your other contents. Thanks.

  6. mn roi says

    Hey Amiel, this is a highly informative and in-depth article. This should be read by everyone, particularly by the one who finds it difficult to make passive income. I also wrote additional items on the best thoughts about passive income. You can look for a few more thoughts. Good Job, nevertheless! Continue to share useful content like that. To read your other ingredients, I’ll come back. Thank you. Thank you.

  7. swindled says

    Please revisit this blog. I was enticed to try MoneyMatch as it has been advertised by your website. It so happen that MoneyMatch is a fraud. Please do proper research before recommending anything to your readers.

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