You’ll need to have some money available to start this passive income stream and be comfortable with a certain amount of risk. Professional lending platforms, like Lending Loop, help individual investors loan money to vetted Canadian businesses in exchange for monthly interest payments. If you want a unique way to invest extra cash, consider peer-to-peer lending. Consider holding them within a tax-free savings account (TFSA) or registered retirement savings plan (RRSP) so your earnings grow tax-free. If you’re planning on saving the passive income you earn for a long-term goal, park those dividend investments in the right place. You can choose a robo-investing company that will create an investment portfolio for you based on your needs or an even more hands-off approach suitable for investing beginners. Since these types of investments carry a selection of stocks, they tend to balance portfolio risk. If you don’t feel comfortable picking and choosing individual stocks on your own, you can opt for index funds or exchange-traded funds that hold dividend stocks. You can reinvest your dividends, which gives you more cash-generating potential, or take the money as cash. Choose passive income investmentsĮarning passive income from investments is likely one of the most popular and easy ways to make extra cash, though you’ll need some funds before you start investing.ĭividend stocks, which pay company earnings to investors regularly (often quarterly) are an especially good option, as investors make money without needing to sell the stock. Here are six examples of ways to earn passive income in Canada. That’s why it’s smart to generate several other sources of income, so if you lose one, you can still maintain financial independence. Even if you have a job you enjoy, preparing for unexpected circumstances that can interrupt your temporary or permanent employment, is an important money management skill. It may be hard to land steady full-time work in an uncertain economy. Benefits of passive incomeĮarning extra money with little ongoing effort is possible, as long as you can afford the initial investment of money or time required to set up a passive income stream. Depending on what kinds of income streams you develop, you could earn anywhere from a little extra cash flow to enough for retirement. The amount of money you can make with passive income runs the gamut. However, the terms aren’t synonymous: many side hustles, like gig work, require active engagement, whereas the goal with passive income is to continue increasing your net worth while eventually working less. Passive income is sometimes confused with the term “side hustle,” which is money earned on the side of a full-time role. The idea is that eventually, you’ll have a relatively steady stream of funds without the need for much ongoing work. Unlike active income, which you earn as you work, you make passive income after some upfront money or effort - or, more often, both. Passive income is a money stream that you can generate with minimal continuous effort or engagement.
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