If you’re a woman in midlife looking for realistic passive income ideas, there are plenty of options out there. You can use this list to find the perfect way to bring in a steady stream of income set on autopilot.
I worked in special education for 13 years before accepting the fact that I was totally burned out. Yes, I got a few weeks off in the summer but for the 9 months I was in the school building it was intense. I love my students dearly, but my home life and mental health were definitely suffering. Something had to give!
Fortunately, my husband and I had been working on building up passive income since we first got married. It got us to a place where I can comfortably quit my job in education and start exploring a career transition.
It’s exciting to think I can work a few hours a week, take care of my youngest to avoid daycare costs, and still make a great living on my terms. As of right now, I’m bringing in about $1500 in passive income with #2 and #5 on this list.
If that sounds pretty great to you, then read on!
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But first, what is passive income?
The key characteristic of passive income is that it continues to generate income even when you are not actively working or putting in the effort. Making money while you sleep sounds pretty great, doesn’t it?
However, it’s important to note that passive income typically requires significant upfront effort and investment and may not be completely hands-off in practice.
If you’re willing to put in the initial effort, the reward can be pretty great. Do you like the idea of having a flexible schedule? How about retiring early?
Those were the exact reasons I decided to make a huge midlife career change and explore other options for generating income.
What are the Benefits of Passive Income?
Here are some of the fantastic reasons midlife women should look for ways to generate passive income:
- Passive income streams provide flexibility in terms of how, when, and where you work. You could be generating income while traveling the world!
- Passive income allows you to diversify your income without relying on a single income stream. This provides a safety net in case of unexpected work changes or life challenges.
- With passive income, there is absolutely no limit to how much you can earn. As your investments grow, so does your income.
- The traditional 9-5 job can be a huge source of stress and burnout. If you have passive income, you have peace of mind that you are making income without actively working all day, every day.
- The main word that comes to mind when I think of passive income is freedom. Who wouldn’t love to have more time to pursue other interests or spend time with family without stressing about taking time off from work?
Things to Keep in Mind with Passive Income
After reading the benefits above, I’m sure you’re thinking passive income is an incredibly attractive idea. It is! That being said, there are a few things I want you to consider, before moving forward.
You will often have to make financial and/or time investments when you get started. Nothing really happens for free. There is also some level of risk involved. Investments can decline in value and businesses can fail. It’s the ugly truth. You will have to carefully consider and manage the risks associated with your chosen passive income stream.
Passive income can also be a “long game.” That means you may have to commit to a long-term strategy and stick with it in order to succeed. It may take some time before you see income but will likely be worth it in the end.
You’ll never know if you can live the life of your dreams, unless you give it a try!
1. Invest in Stocks and/or Bonds
Investing in stocks can provide passive income through dividends, which are payments made by companies to their shareholders. Women can invest in individual stocks or exchange-traded funds (ETFs) that focus on dividend-paying stocks.
The value of a stock can go up or down based on many factors, including the company’s financial performance, industry trends, and market conditions. When you buy a stock, you hope that its value will increase over time, allowing you to sell it for a profit. However, there is always the risk that the stock’s value could decrease, resulting in a loss.
One way to reduce your risk is to invest in a diversified portfolio of stocks, which spreads your investment across multiple companies and industries. This can help reduce the impact of any single stock’s performance on your overall investment returns.
Want more info on stocks? Here are a few books I would recommend:
A bond is a type of investment that represents a loan made by an investor to a borrower, typically a corporation or a government entity.
When you buy a bond, you’re essentially lending money to the issuer of the bond. In exchange for your loan, the issuer agrees to pay you interest at a fixed rate for a specific period of time. At the end of the bond’s term, the issuer repays the principal amount of the bond to you.
Bonds can be a good option for investors who are looking for a relatively safe and stable investment that generates income. Because bonds are typically less volatile than stocks, they can provide a source of stability in a diversified investment portfolio.
Bonds can be issued by corporations, governments, and other organizations. Government bonds, such as U.S. Treasury bonds, are considered to be among the safest investments because they are backed by the full faith and credit of the government. Corporate bonds can be riskier, as the financial health of the issuing corporation can impact its ability to repay the bond.
2. Index Funds Investing
An index fund is a type of mutual fund or exchange-traded fund (ETF) that aims to track the performance of a specific market index, such as the S&P 500 or the Dow Jones Industrial Average. When you invest in an index fund, you’re essentially buying a small piece of a portfolio that represents the entire index.
For example, if you invest in an S&P 500 index fund, your investment will be spread across the 500 largest publicly traded companies in the United States, in proportion to their market capitalization. This means that you’ll be investing in a diverse range of companies across multiple industries and sectors.
One of the main benefits of index fund investing is that it can provide broad market exposure with low fees. Because index funds are designed to track a specific index, they require less active management than other types of mutual funds. This means that they can be more cost-effective than actively managed funds, which charge higher fees for the expertise of the fund manager.
My husband and I both benefit from index fund investing and I highly recommend it if you have low-risk tolerance when it comes to investing. It’s one of the most realistic passive income ideas on this list and can definitely help you build wealth.
Looking for more info about index fund investing? Here are a few books I would recommend:
3. High-Yield Savings Accounts and Certificates of Deposit
High-Yield Savings Account
A high-yield savings account is a type of savings account that typically pays a higher interest rate than a traditional savings account. Banks and financial institutions offer high-yield savings accounts to attract customers who are looking to earn more on their savings.
One of the main benefits of a high-yield savings account is that it can help you earn more interest on your savings. This can be especially helpful if you’re saving for a short-term goal, such as a down payment on a house, and want to earn a higher rate of return than a traditional savings account.
However, it’s important to note that high-yield savings accounts may have some limitations, such as minimum balance requirements or withdrawal restrictions. It’s important to carefully read the terms and conditions of any high-yield savings account you’re considering to make sure you understand any potential fees, limitations, or requirements.
Certificates of Deposit
A Certificate of Deposit, or CD, is a type of savings account that typically offers a higher interest rate than a traditional savings account. Here’s how it works:
When you open a CD, you agree to deposit a certain amount of money for a fixed period of time, usually ranging from a few months to several years. In exchange for locking up your money for this time period, the bank agrees to pay you a fixed interest rate that is typically higher than what you would earn in a traditional savings account.
At the end of the CD’s term, you have the option to withdraw your money and interest earned or renew the CD for another term. If you withdraw your money before the CD’s term is up, you may incur penalties or forfeit some of the interest earned.
Overall, CDs can be a good option for those looking to save for a specific goal, such as a down payment on a house or a child’s college education, and want to earn a guaranteed rate of return.
Additional Thoughts on Investing
Did you know there is a gender investment gap? This article from Everygirl definitely got my attention. There is still a gender wage gap (how is this still true in 2023?!) which means women end up investing less. This is unfortunate considering we tend to outlive men. It’s up to us to educate ourselves on investments and make sure we are adequately prepared for retirement.
Although women tend to invest less, their investments typically outperform men’s investments. Why is that? We are less impulsive and keep a level head when the market gets volatile.
So, let’s get investing, ladies!
4. Peer-to-Peer Lending
Women can invest in peer-to-peer lending platforms that allow them to lend money to borrowers and earn interest on their loans. This can provide a passive income stream with relatively low risk, as the loans are typically spread across many borrowers.
When you participate in P2P lending, you lend money to a borrower, who typically uses the funds for a specific purpose, such as consolidating debt or starting a business. In exchange for your loan, the borrower agrees to pay you interest over a fixed period of time.
P2P lending platforms typically charge a fee for connecting borrowers with lenders and servicing the loans. The platform may also assess the creditworthiness of borrowers and assign them a credit rating to help lenders make informed decisions.
However, it’s important to understand the risks and limitations of P2P lending before participating. P2P loans are not insured by the government and are not backed by collateral, so there is a risk of default. Additionally, P2P lending may not be available in all jurisdictions, and there may be legal and regulatory risks associated with participating in P2P lending. Make sure to do your research!
Two popular peer-to-peer lending companies are:
- LendingClub: One of the largest P2P lending platforms in the United States, offering loans to individuals and small businesses.
- Prosper: Another well-known P2P lending platform in the United States, offering loans to individuals.
5. Real Estate Investments
Women can invest in real estate through rental properties, REITs (Real Estate Investment Trusts), or crowdfunding platforms. Rental properties can provide long-term passive income through monthly rental payments, while REITs allow investors to earn dividends from real estate portfolios without owning property directly.
This is a form of passive income that my husband and I both enjoy. While there is an initial financial and time investment, this has become almost completely passive since finding renters for our two properties.
We have been lucky to find amazing renters and we use Avail to collect rent online. Aside from checking in once in a while, it’s pretty hands-off and brings in about $950/month in additional income.
We are huge fans of the Bigger Pockets website and podcast when it comes to educating ourselves about real estate investing. If you want to get into a real estate investing mindset, I recommend this book:
Real Estate Investment Trusts (REITs)
A REIT (Real Estate Investment Trust) is a company that owns and operates income-producing real estate, such as apartments, office buildings, shopping centers, or hotels. REITs work by pooling the money of multiple investors and using it to purchase and manage properties. In exchange, investors receive a share of the income generated by the properties, as well as any appreciation in the value of the properties.
REITs are popular among investors because they offer several benefits. For one, they provide a way to invest in real estate without having to buy and manage properties yourself. They also offer relatively high yields, as they are required by law to distribute at least 90% of their taxable income to investors in the form of dividends. Additionally, REITs can provide diversification to a portfolio, as they can own properties in different locations and sectors.
It’s important to note that there are different types of REITs, including equity REITs, which own and operate properties, and mortgage REITs, which invest in mortgages and other real estate debt. Additionally, not all REITs are created equal, and some may be riskier than others, depending on the properties they own and the management team running the company. As with any investment, it’s important to do your research before investing in a REIT.
If you’d like more information, the National Association of Real Estate Investment Trusts (NAREIT) is a good place to start. They provide a wealth of information on REITs, including news and research reports, as well as a directory of publicly-traded REITs.
Here are some book recommendations if you’d like to do further research:
Real Estate Crowdfunding
If you want to invest in real estate but don’t have a lot of funds to get started, crowdfunding is a great option.
Real estate crowdfunding is a way for individual investors to pool their money together online to invest in real estate projects. This allows investors to participate in real estate deals that they may not have had access to otherwise, and it allows developers to raise funds for their projects without having to go through traditional lenders like banks.
Here’s how it works: a real estate developer will create a project on a crowdfunding platform, providing details such as the location of the property, the type of project, and the expected returns. Investors can then browse the platform and decide which projects to invest in. Investors typically invest relatively small amounts of money, with the minimum investment varying depending on the platform.
Once the project is fully funded, the developer will use the money to acquire or develop the property. Investors typically receive a return on their investment in the form of interest payments, dividends, or a share of the profits once the property is sold.
PeerStreet is a platform you can use to get started with crowdfunding.
6. Rent Out Your Assets
Rent Out Your Home
If you have a spare room that nobody is using, why not rent it out? If the thought of a stranger being in the house with you at the same time makes you feel uncomfortable, you could also rent out your home while you’re away on vacation.
Airbnb is one platform you could use to rent out your home. Just make sure you check your city or HOA’s regulations on short-term rentals.
Make sure the space is clean and comfortable for your guests, take photos, and start advertising! It’s fairly easy to see what the competitive rates are in your area.
Rent Out Your Car
This is one form of passive income my husband and I tried for a while. It was pretty successful while it lasted. We were making about $500/month with our car until our city become oversaturated and we could no longer stay competitive.
We used Turo to rent out our car on the weekends. We bought a special lock box so that renters could access the car while we were away, but that was really our only investment aside from the car wash after each use.
Just make sure your vehicle meets all the requirements! The great thing is, once you’re set up you are protected with $1 million in liability insurance.
If you’re worried about the risk, start out renting to individuals who have already used Turo and received a positive rating.
Rent Out Unused Equipment
Do you have baby gear collecting dust in your storage room? An old camera that never sees the light of day? Before you consider donating, why not try renting it out?
Fat Llama is one platform you can use to rent out everyday items to people in your area. Here’s how it works:
- Post your item.
- When someone is interested in the item, Fat Llama will verify the user using a risk algorithm.
- You can accept the offer and arrange a meet-up.
- Take pictures of the item and then hand it over to the renter.
- Receive earnings in your account after 24 hours!
I’m actually really excited to look into this passive income opportunity. We still have some baby gear in our garage that isn’t being used, like strollers and car seats.
7. Create Content Online
There are many bloggers out there who have found huge success by posting content online. Their passive income is generated a variety of ways:
- Bloggers earn by displaying ads on their site via Google Adsense or Ezoic. Both are very beginner friendly.
- They can also earn by providing affiliate links and images that are relevant to their blog niche. Amazon Associates, Share-A-Sale, and Flex Offers are all examples of beginner-friendly affiliate programs.
- Some bloggers end up selling courses, eBooks, or instant download products.
The only up-front investment would be your web hosting server. BlueHost is the web hosting provider I use. I was able to get a free domain and very affordable hosting. You really only need the basic package when first signing up.
Pinterest is the easiest way to drive traffic to your blog and it’s completely free to set up a business account for your blog. This is where 80% of my traffic comes from. Use Canva to design beautiful pins that make people want to read your posts.
The more traffic you drive to your blog, the more money you make.
8. Earn Money on Your Phone
This form of passive income in midlife won’t make you a millionaire, but it will definitely add up over time and help you save a lot of money.
How to Keep Track of Your Income
If you want an easy way to track all of your income and check out your net worth, I personally use and recommend Empower (formerly known as Personal Capital). It’s a free way to link all your accounts and see your ENTIRE financial story. I can’t recommend them enough.
By choosing the right passive income stream for your skills and interests, you can generate a steady stream of income that requires little ongoing effort.
For midlife women, generating passive income can provide financial stability and freedom. We can help close the investment gap, rent out our assets, create online content, or earn cash back while doing everyday activities.
Even if you don’t plan on quitting your day job, passive income can help you build wealth in your 40s, 50s, and beyond.
Which of these realistic passive income ideas will you pursue? Let me know in the comments!