5 Passive Income Ideas You Should Avoid

You can use various methods to passively earn and increase your wealth passively. However, not every passive income method is suitable for you.

This is why, in today’s post, we’ll discuss some basic and advanced passive income ideas you should try to avoid. 

Moreover, we’ll also go over the alternatives for these ideas. 

Without further delay, let’s get you started. 

5 Passive Income Methods to Avoid

As you already know, passive income methods include a variety of different ways to earn money. It ranges from dividend stocks to something simpler like an online website. 

Each of these methods has a unique range for earning as well. Some pay more than others. But that doesn’t mean you should just jump right into it. 

Why should I avoid specific passive income methods?

To put it simply, the intricacies can get you to lose more than you earn. As an individual, a passive income source is something you can rely on. 

Now, let’s check these passive income ideas and why you should avoid them: 

Dividend Stocks

Let’s discuss the elephant in the room first. You might have come across many individuals who suggest that the stock market is a gold mine for passive income. 

Even though this statement is partially true, there are many basic and advanced things you need to learn beforehand. Otherwise, you can end up losing a lot of money. 

Why should I avoid investing in stocks?

Firstly, the market is highly volatile. Even with the most stable stocks, you are never sure when the stock prices will drop. 

Secondly, you have to invest a lot of money before the stocks start to act as a passive income source. In some cases, you might have to invest thousands of dollars. 

What is the average payout time for stocks?

It depends on the policy of the company. Some companies pay quarterly dividends while some work on a yearly basis. 

So, unlike other passive income ideas, you’ll have to wait a long time before the income reaches a substantial point. 

Crypto Investments

Cryptocurrency and crypto mining has gained a lot of traction since the popularity of Bitcoin. You can earn money through various means in this market. 

However, it is not as straightforward. Crypto itself is a fairly new idea with its inception only being a decade old. So, naturally, that leaves room for loopholes and shortcomings. 

What are the disadvantages of the Crypto market?

Apart from being a volatile market, the entire system of crypto is highly sophisticated. You have to learn and understand many technical aspects before investing in it. 

Moreover, the entire market is unregulated by an official body. This allows scammers to easily blend in with legit crypto traders. 

Without proper knowledge and understanding of crypto, you might not be able to earn a single penny. 

Cashback Sites

Cashback is an interesting concept when it comes to earning passively. You can save money on online purchases and various other activities. 

It is an automatic process that is carried out with the help of websites or browser plugins. 

However, once you get down this road, you’ll understand that the cashback money is nowhere enough to support you financially. 

What is the income rate from cashback sites?

There aren’t a lot of cashback sites, to begin with. The ones that do exist don’t have a good payout rate. 

Generally, they pay around 2%-5% cashback per purchase. So, for example, on a $50 purchase, you’ll only get $5 as cashback. 

Is cashback applicable on all purchases?

Not exactly. Many cashback websites only allow cash returns on specific purchases. In some cases, it even has a price limit for items. 

Even if you make multiple purchases in a month, your passive income will only be a couple of hundred dollars. Compared to other passive income methods, it is quite low. 

Selling E-books

Sale of books online, especially e-books, is a convenient way to earn passively. You can list your book on websites like Amazon and earn from the sales. 

But that’s not all. There’s a lot more you have to do before the sales actually start piling up. 

What do I have to do for the sales?

Firstly, you’ll have to find an appropriate topic for your e-book. This involves a lot of research time. Moreover, your choice of topic might not be popular after some time. 

Secondly, you have to market your books across various platforms. It involves physical and digital marketing. This also demands a lot of time and research of your target audience. 

Affiliate Marketing

As you already know, affiliate marketing is one of the main passive income sources. It has the potential to even turn into a full-time job. 

But it isn’t that easy to get into. You can get some referral sales here and there but it requires a lot more effort than that. 

Why is affiliate marketing not a viable option?

Well, the simple answer would be the income rate. The effort to payout ratio is quite low. You have to devise multiple marketing and sales plan to reach your monthly goal. 

Even then, the affiliate commissions will only be a couple of hundreds of dollars. It may be pursued as a part-time venture but in the long run, it is just not worth it. 

Important Things to Keep in Mind about Passive Income

There are some basic things you need to keep in mind before getting into any passive income stream. Let’s check them out one-by-one:

• A passive income idea/method should be entirely passive. It should only require an initial effort and then earn you money in a repetitive cycle. 

• Do your research. Any method has the potential to earn you large sums of money if your understanding of it is clear. 

• Always keep an eye out for market trends. Some ideas might be outdated by the time you decide to pursue them. 

Wrapping Things Up…

With this, we come to the finish line of our post on passive income ideas you should avoid. There is no hard and fast rule when it comes to the selection of such ideas. 

However, it is good practice that you do your research beforehand in order to learn and understand the target method. This way, you can save a lot of time and precious resources.

If you have any questions, feel free to reach out to us in the comments below.