Best Passive Income Sources: The 7 Practical Ideas to Generate Residual Income (2018)

The 7 best passive (residual) income opportunities in 2018. Using these best passive income ideas (sources) will help you escape the rat race and eventually become financially free.

In this article, we will cover the following:

(1) what passive (residual) income is, (2) what are the best passive income sources to use in 2018, (3) the reason why the rich get richer and the poor get poorer, and, (4) how to quit the rat race using the ideas shared here.

Take advantage of the 7 best passive (residual) income opportunities presented to you in 2018 and start enjoying your financial freedom at last!

If you are interested in the “make money” topic, then it is likely that you are familiar with the concept of “passive income”.


The dream of many people is to not to work, and still make money.

If you are one of those people, then this article is for you!

Today people create this type of income and, for what it’s worth, the easiest way to build it is on the Internet.

All the methods described below to be considered as kind of a review. Which one to choose for building your financial freedom is totally up to you.

Let’s get started.

What Is Passive (Residual) Income?

what is passive income and what are passive income sources

Generally speaking, there are two kinds of income: linear income and passive (residual) income.

Linear income involves trading time for money.

For example, lawyers, doctors, or teachers do their job and they earn their wage/salary. If they stop working for whatever reasons, then they stop receiving income.

Simple as that.

Passive income is a totally different story.

Passive income is a kind of income that comes to you all the time in the form of stable cash flow, even if you are sleeping, for the work you have done only once.

This income doesn’t depend on daily activities, and it is an integral part of the financial independence.

For example, you can earn on selling your knowledge in the form of a training course, on a topic in which you are well versed. Given that it is repeatedly bought, it will bring you passive income.

Probably you heard about people who haven’t worked anywhere for YEARS and live on income from property or investments.

They are called “rentiers“.

Rentier is a person who lives on interest or dividends, usually from financial assets, renting out property or products of his intellectual labor.

Passive income is the best way to start living the life of your dreams, to travel and be completely flexible in terms of time.

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The Rich Get Richer and The Poor Get Poorer

Why do the poor get poorer and the rich get richer and how to build passive income to achieve financial freedom.

If we look at the average 30-40 year old person, we will see that he spends more than he makes and has a lot of debt.

And all this is because he doesn’t focus on building assets that would help solve his financial problems.

Financial slavery in the 21st century flourishes, despite the fact that physical slavery has long sunk into oblivion.

The famous American magnate, John Rockefeller, couldn’t have said it better:

“He who works all day, has no time to make money.”

Indeed it is so.

Theferore, it is important to understand that our main asset is time, and rich people are good at using it.

The ordinary day of an ordinary person follows the same routine: leaving to work in the morning and after work stop by the local bar, get home, watch TV.

At the same time, the progress of such a person in the long term is minimal, especially if we take into account the fact that the majority of population don’t like their work and their income doesn’t grow from year to year.

(I personally worked at an office in my early 20s and I hated it!)

The rich differ from the poor in what they do in their spare time.

The proper use of time is the key to achieving wealth and building passive income as one of the tools of financial freedom.

After all, in order to create residual income, you need to work very hard (yet smart). Most often for a few months or even years.

But once you have stable (positive) cash flow, you can quit your job and become a wealthy person.

According to the famous businessman, investor and financial literacy specialist Robert Kiyosaki: 

Wealth isn’t determined by the size of one’s bank account, but by TIME, during which a person can not work, and still maintain his comfortable standard of living.

In order to understand how you can turn your time into a source of permanent passive income, escape the “rat race” and gain financial freedom, I highly recommend that you play the world’s famous financial board game called “Cashflow”.

I will soon write a separate article on it, in the meantime, check out Amazon reviews by clicking here.

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Generating Passive Income:

Sources & Types


I am sure you are anxious to find out what passive income sources are and what you can do to start building your wealth.

Below, you will find answers to these questions.

You just have to choose the one that suits you best and work on it.

Surprisingly, most people say: “But spending a few months or years is a very long time, I’m not ready to wait that long.”

That is a psychological trap.

But think about it, do you really want to work for someone else for 30-40 years, and then receive a pension only, and this “donation” becomes their only source of existence.

Where is the logic?

We can work for 30 years straight but can’t have enough patience to take care of our financial future and retire early?

Don’t deceive yourself – if you really decided to build passive income and have more free time, then you need to take decisive action to change your life.

This was an introduction, and now to the tools and types of creating passive income. 🙂

There are 4 main types of passive income:

  1. Investing
  2. Intellectual
  3. Marketing
  4. Legal

Let’s overview each of them and see what sources allow you to receive passive income within each category.

And then I will go into further details in the next section.

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1. Passive Investment Income


This is when we invest money in various financial instruments, receiving dividends in the form of profit or interest.

Its passive income sources:

  • the property;
  • bank deposit;
  • securities;
  • your business (when you buy it);
  • equipment for lease.

2. Your Intellectual Property As A Passive Income (Royalties)

royalties as a passive income stream

Intellectual property is the product that has been created by the human mind (your intellect).

Literary works, art, music, images, names for businesses are all examples of Intellectual property.

That’s the principle that info-business on the internet is built on – you create a training course once and you get commissions many times this course has been sold.

Its passive income sources:

  • royalties for a published book, song, or role in the movie;
  • patent for invention (technology).

3. Passive Income from Marketing


This passive income comes from the created marketing systems, for example, from a commercial Internet site, your structure in network marketing (MLM) or renting out a personal brand.

A personal brand is a collection of a person’s social achievements that are associated with his persona and can serve as a reason for using his name (reputation) for commercial purposes.

For example, many stars of show business, sports and cinematography are shot for the purpose of advertisement and this way they become the “face” of that company.

For example, Neymar Jr being featured on poker-related app or Christiano Ronaldo in men’s underwear advertisements.

As a result, they are getting paid a high fee for using their name/face.

(You can tell that soccer is my favourite sports, no? Lol).

Same thing with social media influencers, except you don’t have to have millions of followers.

Its passive income sources:

  • own developed structure in the network marketing (MLM) company;
  • commercial companies that use your personal brand;
  • your website on the Internet;
  • business, the profit from which is formed from the work of the marketing system (often it is the information business).

4. Legal Passive Income

Canadian government programs

Almost everyone talks about the aforementioned 3 types of passive income but almost no one even mentions a word about the fourth type of passive income, that is actually allowed by law.

Not only that but it can become the most easily accessible of all.

This kind of passive income you can get if your life situation allows you to officially receive financial incentives from the state at the legislative level.

Have you guessed what it is all about?

Naturally, the most well-known type of such passive income is a pension. Students have scholarships.

But the working part of the population in most cases is deprived of such bonuses.

Its passive income sources:

  • pension due to age, disability, or military pension;
  • subsidies (compensation) for payment of utilities;
  • subsidies for the opening or development of a business;
  • government grants/benefits for (single) moms;
  • welfare assistance to people with little or no income.

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How to Build Passive Income – 7 Best Ideas

There are different options for creating passive income, and let’s now consider the most popular ideas of how you can ensure a regular flow of money, without having to work for it all the time.

Passive Income Idea #1:

Building your own profitable website


Creating passive income on the Internet is becoming very popular today.

If you are familiar with the principles of marketing and you are good at computer, then you can create such income even from scratch, having only proper guidance, a great desire to learn new and a certain amount of free time.

Usually, to start regularly earning on your site from $1000 a month, you’ll need from 6 months to 2 years of regular work on your project for several hours a day.

For example, my friend’s income from his second website was like this:

Click on the screenshot to read Dylan’s online journey.

Believe me, just like Dylan, you can start making money online with Amazon too.

For some reason, some people think that it is very easy to make money online and that they can quit their jobs right after they create a website without any work on their part.

Well, let me tell you that it is a great misconception.

Especially in the beginning, you will have to work very hard on your website and the most difficult part here is to not to break down or burnout, but keep moving forward to achieve a regular passive income of at least $100-200 a month.

After that you will just need to keep developing your website for it to become a real money-making machine for you.

Once you built and developed your website, you have the following options:

  • you can either keep it as a profitable website bring in residual income, OR
  • you can sell your website if you don’t want to work on it anymore. 

(I keep learning a lot from my friend Garen, the owner of – so go ahead and check his site out if that option interests you).

If you decide to sell your website as a ready-made business, then you can sell it for amount 20-24x the amount of its monthly passive income.


For example, if you website is making a stable $100/month, then you can sell it for $2,000-3,000.

This way, you can create profitable sites for sale and build your own business on it.

It’s like animal husbandry.

You raise a cow which will eventually give you milk that you can sell regularly and make a profit. And if you need a large sum of money immediately, you can sell the cow itself.

There are different ways that you can use to make money on a website:

  • Advertising within a post
  • A sponsored blog post
  • Banners
  • Affiliate marketing
  • Selling your own digital products (information business)

Just to name a few.

My #1 Recommendation ↓

When it comes to my top recommendations, there’s only ONE program I really recommend. 

It helped me get started online and create profitable websites from scratch. Thanks to this training platform, I am able to lead a laptop lifestyle and have a business that travels with me.

Click here for the exact blueprint I followed.

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Passive Income Idea #2:

Earn passive income from your intellectual property

If you possess the talent of an inventor, writer or musician, then you can create an intellectual product – a technology, a book or a song.

So you can receive royalty checks every months (in the case of a book or song) or off your copyright (in the case of technology that can be patented).

intellectual property royalties as one stream of passive income

For example, according to Forbes, the net worth of the famous writer JK Rowling in 2017 was $650 million – thanks to residual income from her intellectual property (that is, Harry Potter books).

This means that by creating an “invention”, “novel design” or “utility model”, you can create sources of passive income. After all, it will be your intangible assets *

An intangible (intellectual) asset is a product of intellectual labor that does not have a material form, but is capable of making a profit for a person or a company.

These assets can include patents, trademarks, original software, unique possesses and so forth.

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Passive Income Idea #3:

Lease your property: real estate, car, equipment

Building passive income with real estate is the most popular out of all rental options.


But there are other ways.

You can lease almost everything that has value: cars, construction/industrial/commercial equipment and even things worth more than one average salary in your city.

Sometimes the income from real estate is less than from the equipment.

For example, there are whole types of business, where construction equipment and expensive tools are bought and then they are being leased out.

So a drill that’s worth, for example, $500 can be rented for $5-10 a day. In this case, the payback period of the equipment can take less than a month with numerous customers.

That’s an approximate idea of how you can use your property to create positive cash flow.

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Passive Income Idea #4:

Income and benefits from government programs

If you fall into the category of socially unprotected citizens (a disabled person, a large family, a senior etc), then you can can apply for income or benefits from a government program (which will be a form of passive income).

To do this, you need to carefully study the social programs that are offered at your place of residence.

For example, federal programs in Canada include the following:

  • Old Age Security (OAS),
  • Guaranteed Income Supplement (GIS),
  • Spouse’s Allowance, Canada Pension Plan (CPP),
  • as well as provincial programs (for example, Ontario Disability Support Program).

Just do some research and see if you qualify.

Canadian government programs

Thanks to these programs, you may receive several hundreds dollars per month. Do not neglect such an opportunity.

I am aware that some citizens even purposely falsify documents to receive this kind of government benefits.

Now, by no means do I encourage you to improve your financial situation using dishonest ways, but if you have a legitimate reason for lawful financial support, then why not take advantage of it?

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Passive Income Idea #5:

Investments in mutual funds, stocks, bonds etc.

Investments in various financial instruments are also a rather popular way of obtaining passive income.

Although they have their advantages, they are not without drawbacks. For example, in a bank, income will be minimal and barely save your money from inflation.

In terms of mutual funds and stocks, in most cases your income will be unstable (excluding bonds), and will not exactly have a passive character.


When it comes to investing, the tricky part is making a good portfolio that does bring you passive income. And in order to create a portfolio, you have to learn how to make it best.

You will seriously have to gain proper knowledge if you want to become a successful investor.

At point in time in life, I still don’t invest but I read a lot of books on investments and all the financial matters to be truly successful in this sphere.

One of my #1 book recommendations, especially for young adults, is Ramit Sethi’s IWT book (see Amazon reviews here).

When you invest in certain financial instruments, you can get a speculative profit, but losses are also possible.

So, be careful!

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Passive Income Idea #6:

Network Marketing (MLM)

MLM – multi-level marketing or online/internet marketing- involves a promotion of the products and services, from the producer to the consumer through the web of independent distributors.

These days people don’t have a very good opinion about MLM, which is understandable given a whole bunch of scams that are out there.

Full disclaimer: personally, I am NOT a fan of MLMs at all.


Generally speaking, network marketing is one of the most affordable ways to create passive income by investing your time, since in most network companies you do not need more than $100 to start.

If you have the talent to find a common language with different people, you are friendly and full of energy, then you can try yourself in this industry and in a few months your passive income can be compared with the average salary of a provincial city.

A parable of pipeline illustrates very well the way one can build passive income through network marketing.

This story is about two friends, Pablo and Bruno, and how they acted upon to create their living and achieve financial freedom.

A parable that shows hard work vs. smart work.

Check out the 10-minute animated story of their adventures below:

The most important thing is to not fall prey to financial pyramid schemes that are disguised as network marketing companies!

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Passive Income Idea #7:

Your own entrepreneurial project/business

An excellent way to create a passive income is to organize your own entrepreneurial project.

If you don’t have sufficient funds to open your business offline or simply don’t want to risk a lot of money, the best way to start generating residual income for you is to do business on the Internet.

Yes, today thousands and thousands of people earn lots of money on the Internet.

It’s not a lie.

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How to Achieve Financial Freedom:

Advice, Tips & Recommendations

Now you know the definition and examples of passive income, and what you can do to quit your job, gain financial freedom and be able to travel the world.

Here are my financial freedom tips.


Tip 1: Find the time to create assets

Remember the story of the pipeline? Don’t just think about getting your salary for the work that you’ve done, think regularly about how you can repeatedly get paid for the work that you’ve done once – and replicate your efforts!

After all, you do not want to be among the people who live on one beggarly pension.

Or are you?

Tip 2: Strive to have multiple sources of passive income

If you can create multiple passive income streams, then your financial independence will be under reliable protection. What I am trying to say is that if you lose one source of income, the other will always help you out.

I recommend that you read Robert Allen’s book “Multiple Streams of Income”.

It will help you to better understand the importance of the principle of not putting all your eggs in one basket.

Tip 3: Practice self-education and increase your financial intelligence

Investing in yourself is the most important asset of all!

Robert Kiyosaki’s Rich Dad Poor Dad series are among my highly recommended books. (See the stuff I highly recommend by clicking here).

These books are considered fundamental for understanding how money works and how what ways you can use to generate residual income.

As you can see, there are no special secrets to gaining financial freedom.

Potentially, everyone can create a passive income, but this requires proper guidance, time and your efforts.

My #1 Recommendation ↓

When it comes to my top recommendations, there’s only ONE program I really recommend. 

It helped me get started online and create profitable websites from scratch. Thanks to this training platform, I am able to lead a laptop lifestyle and have a business that travels with me.

Click here for the exact blueprint I followed.

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Do you have any passive income stream?

Do you agree that the aforementioned examples are the best (online) passive income opportunities?

Which residual income idea you liked the most?

Any experience you’d like to share? I’d love to hear from you in the comments below

Best Passive Income Sources: The 7 Practical Ideas to Generate Residual Income (2018)
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