What better way to earn money than to do so even when you’re not technically working? With passive income, you could make money while on vacation, out to dinner with friends, and even while sleeping.
Here’s how to make passive income in Canada.
Key Points On Earning Passive Income In Canada
- Passive income refers to earnings generated with little to no effort on your part.
- Unlike earning a regular income through a job that requires you to trade time for money, passive income streams pay you even when you’re not working.
- Some ways to make passive income include renting out a space in your home, investments, peer-to-peer lending, and royalties from eBooks, among others.
What Is Passive Income?
“Passive income” is precisely what it sounds like: income that’s generated without much — if any — ongoing effort. With the right process in place, you can earn a steady stream of income without doing very much on a daily basis.
Instead, you simply check in on your system every so often to make sure it’s running smoothly, and make tweaks as required. All the hard work is typically done upfront when setting up your income-generating system. After that, you simply need to maintain your system.
Benefits Of Passive Income
There are several perks to earning a passive income, including the following:
Less Effort Required
As mentioned, “passive” means you don’t need to put much effort into continually earning an income. Most passive income strategies require a lot of work upfront. But after that, you can sit back and allow the cash to roll in.
No Limits On Earnings
Unlike a traditional 9-5 job, there’s no limit to how much you can earn with passive income. Generally, the more time and money you invest upfront, the more you can earn. Further, you can apply a passive income strategy to several income channels for maximum earning potential.
Less Reliance On A Paycheque
With a passive income stream in place, you won’t have to rely on your regular paycheque to cover all the bills. You always have the peace of mind knowing you’ve always got an extra income coming in that you can fall back on if you need extra cash. Moreover, with the security of your passive income (depending on how much you earn), you can afford to be selective with your employment choices.
Live More Comfortably
Depending on how much effort you put into your passive income streams upfront and how successful they are, you can potentially earn a very comfortable living. Moreover, a steady passive income can allow you to grow your net worth quicker and help you retire early.
Ways To Earn Passive Income In Canada
There are so many different ways to earn a passive income in Canada. Here are a few ideas to help you get started.
Keep Cash In A High-Interest Savings Account
One of the most basic and effortless ways to earn a passive income is to open a high-interest savings account. Granted, you won’t earn much, but you’ll still pocket a few bucks a month, depending on how much you’ve got deposited.
Here are a few high-interest savings accounts and their current interest rates you can earn on your deposited funds:
| Interest Rate | |
| Neo Everyday account | 0.1%* |
| Tangerine Savings Account | 0.30% |
| Wealthsimple Cash | 2.75%+ |
| Alterna Bank High eSavings Account | 1.45% |
| Oaken Savings Account | 3.4% |
| EQ Bank 10 Day Notice Savings Account | 3.5%%+ |
| MAXA Financial High-Interest Savings Account | 2.70% |
| Laurentian Bank Digital High-Interest Savings Account | 2.75%+ |
*Interest is calculated daily on the total closing balance and paid monthly. Rates are per annum and subject to change without notice.
Start Investing
There are several investment vehicles you can start investing in right away with just a few dollars. You can use registered or non-registered accounts such as TFSAs, RRSPs, RESPs, cash accounts, margin accounts and any other investment accounts to invest in various stocks, bonds, guaranteed investment certificates (GICs) and exchange-traded funds (ETFs).
While you can always call a broker to help you get started, you can use any number of online robo-advisors to start investing today. Robo-advisors allow you to invest according to your financial goals and risk tolerance for far lower fees than a traditional brokerage.
The following are just some of the more popular robo-advisors available to Canadian self-directed investors:
| Wealthsimple | Learn More |
| Qtrade Direct Investing™ | Learn More |
| CI Direct Investing | Learn More |
| RBC InvestEase | Learn More |
| Justwealth | Learn More |
| Nest Wealth | Learn More |
| BMO Smartfolio | Learn More |
Invest In Real Estate
Real estate has long been a popular way for Canadians to invest and build wealth over time. And there are more ways than one to make money from real estate. While most real estate investments require significant capital upfront, there are some other ways that lower the barrier of entry for those who don’t have tens of thousands of dollars to invest.
Learn more: Making Money With Real Estate
Real Estate Investment Trusts (REITs)
An easier and more affordable way to get into real estate investing is to invest in REITs, which are companies that own or operate properties that generate income. You don’t actually own any property, which means there’s no maintenance involved.
The profits earned are then distributed to all shareholders in the form of dividends, usually paid monthly. You can buy REITs just as you would buy a stock on major exchanges. REITs can also be added to your investment portfolio for diversification.
Learn more: What Are Real Estate Investment Trusts (REITs)?
Fractional Ownership
Instead of buying a property on your own — which requires a ton of capital upfront — you can still claim partial ownership through fractional ownership.
Addy and BuyProperly are two Canadian companies that crowdfund property purchases by attracting investors. You can claim your stake in a property using these platforms, and the amount you own is directly proportional to how much you invest.
Use Peer-To-Peer Lending Platforms
If you’ve got a few hundred or thousand dollars to invest, you might consider lending it to those who need a loan. As an alternative to borrowing from a traditional lender, individuals can borrow money from regular people like you. This is known as “peer-to-peer” lending, and it can be a great way to earn interest on your capital.
Peer-to-peer lending platforms, such as Lending Loop, evaluate the risk for investors when they loan money to individuals and businesses and establish potential returns based on risk levels. The higher the risk, the higher the interest rate the borrower will be charged, which can lead to higher returns for you, the investor.
Use Cash Back Apps
Why not earn a little money on purchases you’re already making? With cashback apps, that’s exactly what you’ll do.
Cashback apps give you rebates on purchases or coupons for an additional discount. You might also be able to earn points that you can redeem later on. This is a great way to earn extra cash with little to no effort.
Here are a few cash-back apps to consider:
| Rakuten | Earn up to 30% in cash back rebates each week when you shop online with Rakuten. | Learn More |
| Drop | This free app tracks your expenditures and credits your account with cashback. All you need to do is download the app, connect your cards, and shop like you normally would. | Learn More |
| KOHO | With KOHO, you can open a spending and saving account that offers up to 2% cash back on various purchases and up to 50% extra cash back with partnered merchants. | Learn More |
Rent Out A Space
If you own your home, you might have some extra space to rent out. Whether it’s the basement suite or an extra bedroom, renting out part of your home can be a great way to earn passive income. The rent you charge could even help you cover your mortgage payments.
But other than this traditional rental arrangement, there are other spaces you might want to consider renting out if you have them available to you:
Short-Term Rentals On Airbnb
Rather than renting out part of your home on a long-term lease, you might want to consider renting it out on a short-term basis when you’re not using it, such as when you’re on holidays. You can advertise your home on vacation rental sites like Airbnb.ca to earn a few extra bucks.
If your home is located in a touristy location — such as near the waterfront or city center — or has features that travellers might like — like a pool or balcony with a view — you’ll have an easier time booking your home and charging a pretty penny for short-term stays. Just be wary of the potential tax implications of renting your home on a short-term basis on platforms like these.
Rent Out Your Pool
Believe it or not, homeowners with swimming pools can earn a side income by letting others use their pool for a fee. You can use platforms like Swimply to advertise your pool for rent. Just be sure to take the necessary precautions, as allowing others to use your pool could come with potential risks that may expose you to litigation if someone is injured.
Rent Out Your Garage Or Parking Spot
In city centres and suburbs, parking can be a real issue for many residents. The busier and more congested the area, the more problematic it can be for residents to access parking.
If you have an extra parking spot on your driveway or in your garage, you may be able to rent it out. You can charge by the hour in cases where parking is just needed for a few hours, or you can rent it out on a monthly basis for those who are looking for a spot to park overnight on a daily basis.
Advertise With Your Car
If you own a car, you could earn money just for driving around town with advertisements affixed to it. You literally don’t have to do anything except drive to wherever you are already going. The advertisements will do the work for you.
In fact, you could earn as much as a few hundred dollars per month, depending on how much coverage is involved with the ads.
Some of the platforms that can help you get started advertising with your car include the following:
- Wrapify
- Drivertise
- Cavertise
Rent Out Your Car
During times when you’re not using your vehicle, you could loan it out to someone to drive for a fee. Rather than rent out a car from a conventional rental company, people can rent your car directly from you.
Turo is a popular car-renting marketplace to consider. You can list your car for free on the platform, and earn anywhere from 60% to 90% of the trip price. You’ll also get insurance coverage and 24/7 roadside assistance.
Write A Book
If you have some writing chops and enjoy taking pen to paper, perhaps you might consider writing a book. It could be fiction or nonfiction, depending on your skills and interests. Or, you can hire a ghostwriter to tackle the job for you. While this may cost you upfront, it’s a one-and-done fee that you can recoup with the future sales of your book.
And you don’t have to get your copy approved by a publisher, either. These days, you can easily and quickly publish an eBook and advertise it for sale on online platforms like Amazon.
The great thing about writing an eBook is that you create it once, and then enjoy recurring sales and royalties. As long as you have some form of advertising in place, you can expect passive income from your book.
Create An Online Course
Just about everyone has some sort of skill, whether it’s gardening, drawing, advertising, fitness, writing, etc. Whatever skill or interest you may have, you may be able to create a course around it and sell it to those interested in learning this skill set.
Once you’ve created your online course, you can market and sell it on platforms like Udemy, Teachable, or Thinkific. Again, once your course is created, you can enjoy residual income with every sale. You’ll just have to monitor your sales, which you can hire a virtual assistant to do for you.
Mine Crypto
Investing in cryptocurrencies has become incredibly popular among investors. But you don’t necessarily have to buy and sell Bitcoin, Ethereum, or another coin to make money from crypto. You can also mine it.
Mining crypto involves creating new digital currencies. You’ll need to invest in your own mining rig to mine digital coins, which can cost you a few thousand dollars to get started, plus ongoing electricity costs.
Once you have a mining computer or rig, you can create a wallet to store digital coins, then join a mining pool to connect with miners like yourself and combine resources to get more output. The coins created are then divided among users.
Since your device does all the work, you can enjoy a passive income.
Use Your Credit Cards Right
If you use credit cards for the majority of your purchases, consider getting one that helps you earn points with every expenditure. The trick is to maximize these rewards and savings as much as possible. Before taking out a rewards-based credit card, consider the earnings rate and the types of retailers that earn you the highest rates.
For instance, if you tend to spend a lot of money at a specific grocery store chain, consider taking out a credit card that pays out a high earn rate to shop there. For example, the Neo Mastercard® allows you to earn up to 2% cashback on gas and groceries and up to 0.5% everywhere else.
You can earn even more by adding perks to your card to increase your cashback rate for certain categories. Then, you can redeem your points for free groceries and other goods.
Final Thoughts
Consider your strengths, available capital, interests, and the earning potential of different passive income streams before choosing one to invest in. You might start off with one, then gradually work your way up to multiple income streams, all of which can make you money without you putting too much work or effort into them.
