10 Ways To Make Passive Income In Your 20s and 30s (UK)

Nothing worse than the daily grind, right?

Even those who love what they do for a living can be bogged down by having to clock in day after day. 

For those dreaming of a better way to make money (or simply want a little more of it on the side), there is passive income. In your 20’s, you may have found yourself with the freedom and time to explore different methods of making money. If this is the case, then you’ve come to the right place. In this article, I will fill you in on 10 of the best ways to earn passive income in the UK. 

What is Passive Income?

Passive income is defined as any financial gain that comes without active user involvement. Essentially, passive income is a way in which people earn money overtime without having to do any extra work. Passive income is not a get-rich-quick scheme. It’s a game of compounding results, where slow-and-steady wins the race.

Passive Income vs. Active Income 

Passive income can be defined as a counterpart to active income. Active income is simply a classification for most jobs in which labour, wages, tips, salaries, etc. are exchanged for a paycheck.

Building multiple streams of passive income in your 20s and 30s can set you on the path to financial freedom. Passive income refers to earnings derived from a rental property, limited partnership, or other enterprises in which a person is not actively involved. Here, we explore ten ways to create passive income in the UK, tailored to young adults looking to secure their financial futures.

1. Invest in Stocks and Shares ISAs

What Are Stocks and Shares ISAs?

Stocks and Shares Individual Savings Accounts (ISAs) are a tax-efficient way to invest in the stock market. The returns on these investments are free from capital gains tax and income tax.

How to Get Started

1. Choose a Platform: Select a platform like Hargreaves Lansdown, Vanguard, or AJ Bell.
2. Open an Account: Set up your Stocks and Shares ISA.
3. Fund Your Account: Transfer funds into your ISA.
4. Select Investments: Choose a mix of stocks, bonds, and funds.

Benefits

• Tax-Free Returns: Profits are not subject to UK taxes.
• Compound Interest: Reinvested earnings can grow significantly over time.

For more information, visit the GOV.UK ISAs Guide.

2. Real Estate Crowdfunding

What Is Real Estate Crowdfunding?

Real estate crowdfunding platforms allow you to invest in property projects with a relatively small amount of capital. These platforms pool money from multiple investors to fund property purchases and developments.

How to Get Started

1. Research Platforms: Look into platforms like Property Partner, CrowdProperty, or British Pearl.
2. Sign Up: Create an account on your chosen platform.
3. Browse Projects: Select properties or projects to invest in.
4. Invest: Allocate your funds and start earning a share of the rental income and potential property appreciation.

Benefits

• Diversification: Spread your investment across multiple properties.
• Passive Income: Earn rental income and capital gains without managing properties.

Learn more at the Property Partner website.

3. Dividend Investing

What Is Dividend Investing?

Dividend investing involves buying shares in companies that pay regular dividends. These payments can provide a steady income stream without needing to sell your shares.

How to Get Started

1. Select a Broker: Choose a stockbroker like eToro, Interactive Investor, or Fidelity.
2. Open an Account: Set up your trading account.
3. Research Stocks: Look for companies with a strong history of paying dividends.
4. Invest: Purchase shares and start earning dividends.

Benefits

• Regular Income: Receive periodic payments.
• Potential for Growth: Dividends can be reinvested to buy more shares.

For more details, visit the Dividend.com UK Guide.

4. Peer-to-Peer Lending

What Is Peer-to-Peer Lending?

Peer-to-peer (P2P) lending platforms match borrowers with investors willing to lend money at agreed interest rates. As an investor, you can earn interest on the money you lend.

How to Get Started

1. Choose a Platform: Consider platforms like RateSetter, Funding Circle, or Zopa.
2. Create an Account: Register and complete the necessary verifications.
3. Deposit Funds: Transfer money into your P2P lending account.
4. Select Loans: Choose which loans to fund based on risk and return profiles.

Benefits

• High Returns: Potential for higher interest rates compared to traditional savings accounts.
• Diversification: Spread your investments across multiple loans to reduce risk.

For more information, visit the RateSetter website.

5. Create a Blog or YouTube Channel

What Is Content Creation?

Starting a blog or YouTube channel allows you to share your knowledge, hobbies, or passions with a wider audience. Once established, you can monetize your content through ads, sponsorships, and affiliate marketing.

How to Get Started

1. Choose a Niche: Select a topic you are passionate about and knowledgeable in.
2. Set Up Your Blog/Channel: Use platforms like WordPress for blogging or YouTube for video content.
3. Create Quality Content: Regularly publish engaging and valuable content.
4. Monetize: Apply for Google AdSense, seek sponsorships, or join affiliate programs.

Benefits

• Low Start-Up Costs: Minimal initial investment required.
• Scalability: Potential to reach a global audience and grow your income over time.

For more tips, visit the YouTube Creator Academy.

6. Sell Digital Products

What Are Digital Products?

Digital products include e-books, online courses, software, or any other item that can be delivered electronically. These products can be created once and sold repeatedly.

How to Get Started

1. Identify a Market Need: Research what digital products are in demand.
2. Create the Product: Develop your e-book, course, or software.
3. Choose a Platform: Sell through your website, Amazon, Udemy, or other platforms.
4. Market Your Product: Use social media, SEO, and email marketing to reach potential buyers.

Benefits

• Passive Income: Earn money from sales without continuous effort.
• Scalability: Reach a large audience with minimal overhead costs.

For more information, visit the Udemy Course Creation Guide.

7. Rental Income from Property

What Is Property Rental?

Owning rental property involves purchasing a property and renting it out to tenants. Rental income can provide a steady cash flow and potential property appreciation over time.

How to Get Started

1. Research the Market: Identify profitable areas and property types.
2. Secure Financing: Obtain a mortgage or use savings for the property purchase.
3. Purchase Property: Buy a rental property that fits your criteria.
4. Find Tenants: Rent out the property through estate agents or rental platforms.

Benefits

• Steady Income: Receive regular rental payments.
• Appreciation: Property value may increase over time, adding to your investment return.

For more details, visit the Rightmove Buy-to-Let Guide.

8. Affiliate Marketing

What Is Affiliate Marketing?

Affiliate marketing involves promoting other people’s products or services and earning a commission for every sale made through your referral link.

How to Get Started

1. Join Affiliate Programs: Sign up for programs like Amazon Associates, Awin, or ShareASale.
2. Promote Products: Share affiliate links on your blog, social media, or YouTube channel.
3. Earn Commissions: Receive a percentage of sales made through your links.

Benefits

• Low Cost: No need to create your own products.
• Scalability: Potential to earn significant income with a large audience.

For more information, visit the Awin Affiliate Network.

9. Create an Online Store

What Is E-Commerce?

Starting an online store allows you to sell physical or digital products directly to consumers. Platforms like Shopify make it easy to set up and manage your e-commerce business.

How to Get Started

1. Choose a Niche: Decide what products you want to sell.
2. Set Up Your Store: Use platforms like Shopify, WooCommerce, or Etsy.
3. List Products: Add products to your store with descriptions and images.
4. Market Your Store: Use social media, SEO, and paid ads to attract customers.

Benefits

• Passive Income: Automate sales processes and earn money even when you’re not actively working.
• Scalability: Expand your product range and reach a global audience.

For more information, visit the Shopify E-Commerce Guide.

10. Write and Publish a Book

What Is Self-Publishing?

Self-publishing allows you to write and publish your own book, either as an e-book or in print. Platforms like Amazon Kindle Direct Publishing (KDP) make the process straightforward.

How to Get Started

1. Write Your Book: Create a manuscript on a topic you’re passionate about.
2. Edit and Format: Ensure your book is professionally edited and formatted.
3. Publish: Upload your book to platforms like Amazon KDP or IngramSpark.
4. Market Your Book: Use social media, book reviews, and email marketing to promote your book.

Benefits

• Passive Income: Earn royalties from book sales without ongoing work.
• Credibility: Establish yourself as an author and expert in your field.

For more information, visit the Amazon KDP Guide.

Confused about finance and wondering if a degree in finance is worth it? Click here

Rent Out Your Stuff?

Speaking of your personal property, are you aware that other people may want to rent it out? It’s true! With services like Airbnb, you can rent out your home (or just a room), car, or even bicycle in order to make a few extra bucks.

In what some people call the “lending” or “sharing” economy, residents of larger cities are able to occasionally rent their things in order to earn an additional income stream. If you are 20-something that has been fortunate enough to purchase a large car or truck, there are likely many people in your area that would like it in order to move or simply head out of town for the weekend.

P.S. Feel free to check out our article on how Airbnb has affected the UK’s housing market in recent times.

Create Digital Products?

Although some people do not consider it true “passive income,” the sale of digital products can be a great way to earn money in your 20’s. A digital product can be one of many things. Most commonly they are e-books, a software as a service (SaaS), tutorials/courses, templates, stock media, illustrations, and more.

The reason some people don’t like calling digital products “passive income” is because a significant amount of time (and skill) is required to develop and market your products. Think of it this way, if an author spent 3 years writing a novel and then one year touring the book, you really wouldn’t consider any sales as “passive income.” 

However, there is something to be said about making money in your sleep.

If you have talents, skills, or time,  you can create digital products that other people will happily buy off you. If your digital product is helpful, or entertaining, then you may have the opportunity to benefit from ongoing sales once the item is listed online.

Conclusion

Creating passive income streams in your 20s and 30s can provide financial security and the freedom to pursue your passions. From investing in stocks and real estate to creating digital products and writing a book, there are numerous ways to build passive income. Start exploring these opportunities today to secure a prosperous financial future.

Further Reading and Resources

To dive deeper into the various ways to generate passive income, explore the following resources:

1. Stocks and Shares ISAs
   • GOV.UK ISAs Guide
   • Hargreaves Lansdown ISAs
2. Real Estate Crowdfunding
   • Property Partner
   • CrowdProperty
3. Dividend Investing
   • Dividend.com UK Guide
   • eToro Dividend Stocks
4. Peer-to-Peer Lending
   • RateSetter
   • Funding Circle
5. Content Creation
   • YouTube Creator Academy
   • WordPress Blogging Guide
6. Digital Products
   • Udemy Course Creation Guide
   • Amazon Kindle Direct Publishing (KDP)
7. Rental Income from Property
   • Rightmove Buy-to-Let Guide
   • Zoopla Rental Calculator
8. Affiliate Marketing
   • Awin Affiliate Network
   • Amazon Associates
9. E-Commerce
   • Shopify E-Commerce Guide
   • Etsy Seller Handbook
10. Self-Publishing
    • Amazon KDP Guide
    • IngramSpark Self-Publishing

Tips for Success

• Research Thoroughly: Before diving into any passive income stream, research extensively to understand the risks and rewards.
• Start Small: Begin with small investments or projects and gradually scale up as you gain experience and confidence.
• Diversify: Spread your investments across different passive income streams to minimize risk and maximize returns.
• Stay Informed: Keep up with market trends, economic news, and changes in regulations that could impact your passive income sources.
• Be Patient: Building substantial passive income takes time and effort. Stay committed and be patient to see long-term benefits.

Summary

Earning passive income in your 20s and 30s in the UK is not only possible but highly achievable with the right strategies. By leveraging financial products like Stocks and Shares ISAs, real estate crowdfunding, dividend investing, and peer-to-peer lending, alongside entrepreneurial ventures such as content creation, digital products, and e-commerce, you can create multiple streams of income. Each method comes with its own set of benefits and considerations, so it’s essential to choose the ones that align best with your skills, interests, and financial goals.

Taking proactive steps now can lead to significant financial rewards in the future, providing you with greater financial stability and freedom. Start exploring these passive income opportunities today and pave the way for a secure and prosperous financial future.

For more insights and updates on financial strategies and passive income, follow reputable financial blogs, join online communities, and consider consulting with financial advisors to tailor these strategies to your unique situation. Happy investing!