Passive Income Ideas – Ways to Make Money Online

Passive Income Ideas

Who would not like to do with some additional income, especially in these days of rising inflation? Yes, you can explore part-time jobs, take tuition, etc. But, these activities involve you putting additional effort to earn more income. Exploring passive income ideas is one way of earning extra money without putting in a lot of effort. This blog discusses some best ways to make passive income, but before that, let us define what passive income is.

Passive Income – The Definition

The English dictionary defines passive as the opposite of active. So, passive income constitutes earnings you make without much active effort. Is it possible to earn money without exerting anything? If you ask old-timers, they would say, ‘Invest your money in a bank or a post office and earn interest without doing anything.’ So, earning interest on your deposits is one of the best ways to make passive income.

However, we will discuss passive income business ideas in this blog. These ideas can help you generate a steady income stream to supplement your regular income without much effort.

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Different ways to earn passive income

Participate in a chit fund

Chit funds are in existence in India much before the development of the formal banking infrastructure. Even today, millions of Indians invest in chit funds. In simple terms, a chit fund is a rotating saving scheme that can help you save, invest, and even borrow, depending on your requirements. People in India use various terms to refer to chit funds. The most common nomenclatures are ‘Beesi,’ ‘Kuree,’ ‘Chitty,’ etc. Though they are known differently, the functioning is similar.

Let us understand how they function. A group of people engaged in similar activities come together and invest a fixed sum of money every month to form the chit corpus. The money distribution takes place either by drawing lots or through an auction. The lowest bidder gets the funds for their use to be repaid in equal monthly installments. The amount forgone by the bidder is distributed amongst the remaining members after deducting the organizer’s commission, generating a passive income stream for all members. The process continues for a pre-determined period. After that, every member keeps contributing monthly towards the chit corpus. As a result, the amount lent during the period is fully recovered by the end of the chit period. It is one of the best passive income ideas, but it has its limitations.

  1. There should be a consensus amongst all the chit fund members about the terms and conditions set for its operations.
  2. Generally, a member cannot borrow or participate in the auction more than once.

It ranks among the best passive income business ideas because of the group’s homogenous nature, with all members practically knowing each other. However, you have chit funds, where you might not know the other members. Today, you have online chit funds like, where the entire operations are online.

Pros of investing in chit funds

  1. The risk of losing money in a homogenous group is practically non-existent.
  2. You have access to funds in an emergency.
  3. Depending on the terms and conditions of the chit fund, you can earn a decent income from your investments.

Cons of investing in chit funds

  1. Unregistered chit funds are not regulated by any authority. So, there are chances of losing your money, especially if the chit fund demands lumpsum investments. On the other hand, the homogenous chit funds where people invest monthly are not risky.
  2. The income you earn monthly might not be uniform throughout the chit term. It depends on the amount the winning bidder forgoes.

Nevertheless, you earn income without practically doing anything. So, investing in chit funds is one of the best ways to make passive income

Participate in Peer-2-Peer lending

Though peer-to-peer lending has existed in India since time immemorial, institutionalized P2P lending is a relatively recent development. Therefore, participating in P2P lending platforms is an excellent way to generate passive income.

A P2P lending platform brings borrowers and lenders together on the same platform where they can mutually decide on the T&C of the finance. The system requires individuals to register with the P2P platform as borrowers or lenders. The P2P platform acts as the intermediary to facilitate easy interaction between borrowers and lenders.

Depending on the circumstances, the interest rate on loan can range between 10% to 30% per annum. Generally, the loan tenure is between three to 36 months. Once the borrower and the lender agree to the terms and conditions, they sign a digital agreement. After that, the loan gets disbursed to the borrower’s account. Then, the borrower has to repay the loan through EMIs over the agreed period.

The RBI regulates all P2P platforms in India.

  1. The rules are strict, with no borrower allowed to borrow more than Rs 10 lakhs at a time across all P2P platforms.
  2. Similarly, lenders cannot invest more than Rs 50 lakhs.
  3. A lender’s exposure to a specific borrower cannot be more than Rs 50,000 across all P2P platforms.
  4. The loan term cannot exceed 36 months.

Pros of P2P lending

  1. Applicants with poor credit ratings can avail of loans on these P2P platforms. However, P2P platforms do their credit checks to ascertain borrowers’ creditworthiness.
  2. Generally, all P2P loans are unsecured.
  3. Lenders can charge high interest rates on their loans.

Cons of P2P lending

  1. The risks of defaults are high. Though P2P platforms assist in recovering the dues from the borrowers, these loans are risky.

Despite the drawbacks, P2P lending offers excellent passive income ideas, especially if the lenders choose their borrowers properly and strictly abide by the regulations

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Online Trading

If you switch on your TVs, you will find many online trading app advertisements flashing across your screens. Online trading is among the best ways to make passive income. Let us understand what online trading is, how it works, and how it is one of the best passive income business ideas.

Online trading is a popular method of transacting financial products online. People can trade stocks, bonds, commodities, ETFs, and futures. The process is simple, with the user placing the order for a specific stock online. The online platform searches the database and displays the best price available. Once the user confirms the order, both parties validate the deal. The user gets three days to pay and complete the transaction. Similarly, users can sell stock online.  

Pros of online trading

  1. Users can search for their preferred stocks across different exchanges and decide on the best trading price.
  2. Transactions are fast, with the settlements usually happening instantly.
  3. It eliminates the role of the intermediary, saving time and brokerage.
  4. There are no time restrictions because users can transact at any time of the day/night.

Cons of online trading

  1. The user should have adequate knowledge of how the markets function.
  2. Though brokerage fees are low, calling a broker for order placement can be expensive.
  3. System errors, like low internet speeds, can affect your trading activity.

Though there are drawbacks, online trading is popular and considered one of the favorite passive income ideas today.

Affiliate Marketing

Affiliate marketing is an excellent mode of earning passive income. This system involves the users helping brands spread the word about their products and influencing buyers to purchase them using the specific affiliate link. Every purchase a customer makes using the affiliate link entitles the affiliate to earn passive income at a stipulated rate.

Ecommerce retailers like Amazon and Flipkart offer excellent avenues to their affiliates to earn substantial passive income by promoting their products on the user’s social media account or a dedicated website.

Pros of Affiliate Marketing

  1. Affiliate marketing does not require much investment. However, the affiliate has to spend a lot of time initially building up a large social media, email list, or website following.
  2. The earnings depend on the number of people purchasing the products using your affiliate link. Hence, generating good content can help influence buyers.

Cons of Affiliate Marketing

  1. Affiliates have to contend with SEO issues, such as following Google algorithms, etc., to ensure their ranking on the first page of Google searches.
  2. The affiliates incur costs to generate good content and engage influencers. Besides, they spend considerable time maintaining their websites and social media accounts.

Affiliate marketing is a booming industry, and users have excellent chances to generate passive income.

Referring customers to online chit funds

Chit funds depend on customers for their business. Therefore, the more members, the higher the income-generating capacity. As an investor, users have excellent opportunities to earn passive income. Besides, reputed online chit fund platforms like offer incentives to users who refer other customers to the forum.

The Money Club Referral program launched by is one of the best passive income business ideas available for users. This program is open to users registered with the platform. Let us see how to invite new customers to the forum.

  1. Users have to access the Money Club app and tap on the Badge icon located at the bottom-left side of the home screen.
  2. Alternatively, users can open the app menu and tap on the Refer & Earn option.
  3. You can invite your friends by sharing your referral code with them. First, ensure that they enroll using your referral code.
  4. You become eligible for earning passive income, depending on the referral’s activities on the platform.

Here are the benefits of the referral program.

  1. Every referral earns you Rs 200 (100 in cash and 100 as credit). Besides, the referred member gets a concession of 50% on the verification fee.
  2. Users get an additional Rs 50 as a recurring bonus when the referral completes a real club in the following 12 months.
  3. Users get one Money Club Partnership token for every three successful referrals. In addition, partners can earn up to 50% of the Money Club commission in every round of the partner club.
  4. Other rewards include a Topper Prize of Rs 1000 every month.
  5. Grand Prizes are also available whenever announced by

Points to Ponder

We have discussed the five best ways to make passive income in India. Participating in P2P lending and chit funds does not require investing much time, but it requires investing money. So, the risks of defaults are omnipresent. Investing in unregistered chit funds can be risky, but your funds are safe if you invest in a homogenous chit fund or a reputed online chit fund platform, like

Besides, investing in chit funds is beneficial because you have access to your funds in times of financial crisis at low interest rates and without formal documentation. But on the other hand, P2P lending enables earning more income because of higher interest rates. But, the risks of defaults are also high.

In contrast, investing in stocks and affiliate marketing can consume your time. But, they are equally good passive income ideas.

Other avenues of generating passive income are available, such as renting out property and vehicles, working as insurance agents, cryptocurrency trading and staking, trading in NFTs (non-fungible tokens), etc.

Before we wind up our discussion of the best ways to make passive income, let us discuss a few significant aspects that beginners should know about generating passive income.

  • Earning passive income is not a get-rich-quick scheme. Though you generate income without much active work, you have to invest your money and time to earn income from your investments.
  • Continuous involvement is necessary to maintain the passive income flow.
  • Finally, passive income is taxable. However, the taxation rates are not the same as your active income.

Final Thoughts

Generating a steady passive income stream is good because it supplements your regular income and helps you tide over a financial crisis. However, it is advisable to do your homework correctly and engage in legitimate activities to generate passive income. The five passive income ideas discussed here can prove helpful.

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