Welcome to my Passive Income Australia guide. Today, I’ll cover 3 methods that I have successfully employed to generate truly passive income. Unlike side hustles and secondary jobs, these require minimal effort on your behalf and provide consistent revenue streams that accumulate while you sleep. So whether you’re a full-time worker looking to increase your income or simply looking to get started on your wealth accumulation journey, these are all great options.
While less popular than stock investing, cryptocurrency investing is gaining traction in Australia due to its high returns. Cryptocurrencies or cryptos are digital assets that act as mediums of exchange. Popular cryptocurrencies include Bitcoin, Ethereum and Litecoin. Traditionally, coins like Bitcoin and Litecoin were unable to generate interest, meaning that profits came from selling the assets (capital gains). However, crypto earn apps that operate similar to traditional savings accounts have made it possible to receive passive income from these coins without selling them.
When you store crypto on these crypto earn apps, you are essentially lending your cryptos to other investors. This is similar to what banks do when people are looking for loans. By cutting out the middle man and acting as the lender, you can earn generous interest rates ranging from 3-20% depending on the app. Different apps allow you to earn interest in a range of cryptocurrencies, including Bitcoin, Ethereum, Polkadot and Uniswap. This can be a great way to accumulate more of these growth-based assets. However, if you aren’t particularly interested in holding these popular cryptos or don’t believe in the technology, you can still capitalise by utilising stable coins.
Popular crypto earn apps such as Celsius Network, Crypto.com and BlockFi offer rates on stable coins such as TrueAUD and Tether between 8-12%. For Celsius and Crypto.com, this interest is paid out weekly. Whereas BlockFi pays out this interest at the beginning of each month. Compared to regular ‘high interest’ savings accounts (HISAs) that offer 0.1-3%, this is a much more lucrative way of putting your savings to work.
Alternatively, you can earn this interest in speculative growth assets such as ETH and DOT which have both experienced returns above 1,000% in the last 12 months at the time of writing this article. With that being said, there are inherent risks to these assets and they are extremely volatile, so due diligence is required if you plan on investing in these cryptos.
As previously mentioned, cryptocurrencies can experience monumental returns. They are highly volatile, growth-based assets and it is not uncommon for people to experience 10-100x returns on their investments during a bull run. Conversely, stable coins despite not offering capital growth prospects, are providing stable and consistent yields that in some instances, exceed that of ETFs and LICs. The ability to earn consistent interest payments on your savings makes these apps worthy of consideration for anyone looking to generate passive income in Australia.
For people looking to invest in non-stable coins, there is extreme volatility in the market. While this can work in your favour during periods of growth, you can also experience significant drops in the value of your crypto. Drops above 20% aren’t particularly uncommon in the crypto space and if you aren’t ready to withstand these drops, you can end up panic selling at a significant loss.
This can offset any passive income that you’ve made. Additionally, there are minimum deposits for cryptos on these apps and exchange fees and withdrawal fees can further add to the start-up needed. For this reason, you need a moderate amount of start-up capital. However, this is still much lower than the amount of capital needed to invest in stocks, ETFs and LICs.
|Truly Passive (Set and Forget)||Requires Some Starting Capital|
|Significant Potential for Capital Gains (During Bull Market)||Extremely Volatile (Can Drop Significantly in Bear Market)|
|Constant Returns and Rates for Stable Coins||Can be Difficult for Beginners to Navigate|
If you would like to invest in cryptocurrency and generate passive income with this asset class, you will need to sign up to a cryptocurrency exchange. I recommend using either Binance Australia or Swyftx, as they are both Australian-based platforms that provide great utility. You can learn more about these exchanges with the following reviews.
Once you are set up on a crypto exchange, you can then purchase crypto and lend it to receive passive income. BlockFi and Crypto.com are all great platforms that offer a range of different crypto products, including interest accounts. For more information on these platforms and other popular competitors, check out the following resources:
One of the most popular methods to generate passive income in Australia is to invest in Exchange Traded Funds (ETFs) and Listed Investment Companies (LICs). ETFs are diverse funds that typically track market indexes such as VAS which seeks to track the top 300 Australian companies by market cap. Alternatively, LICs are investment companies that pick a variety of different stocks to invest in. While ETFs are predominantly passive and LICs are actively managed, they both cost-efficient methods for obtaining a diversified portfolio of multiple assets.
Popular ETFs include: DHHF, VDHG, IOZ, VAS and VGS
Popular LICs include: AFIC, ARGO, MLT and WHF
For more information on ETFs and LICs, please refer to the following guides:
LICs and ETFs (particularly Australian-based ETFs) generally offer moderately high dividends around the range of 4-7%. These dividends are typically paid out either quarterly or semi-annually, providing a somewhat reliable stream of passive income that well-exceeds inflation. Additionally, some ETFs and LICs offer partial or fully franked dividends, which have some unique tax advantages. This can also occur in conjunction with capital growth (increase in value of the ETF/LIC), resulting in another method for generated added income.
ETFs and LICs are great for passive investing because they are truly set and forget investments. This means that once you have bought them, you don’t have to do any further work to reap profits. Additionally, both ETFs and LICs tend to appreciate over time. This can result in added dividend income and capital gains should you decide to sell your units at a later date. Lastly, they are easy to invest in., If you have a phone and data, you can open a brokerage account or utilise a micro-investing app to begin earning passive income with these investment vehicles.
As with all investments, ETFs and LICs are not without their downsides. Firstly, these investment vehicles require initial capital to invest with. Meaning that you generally need to save a substantial amount to make purchases ($2,500 – $5,000 are common investment sums). While micro-investing apps can offset this and make investing accessible to people with low capital, they also have inherent flaws. Micro-investing apps limit your assets and typically encounter ongoing fees once balances reach a certain level.
|Truly Passive (Set and Forget)||Requires Moderate Starting Capital ($2,500 – $5,000)|
|Easy to Get Started||Limited Investment Options (For Micro-Investing Apps)|
|Capital Growth (Long Term)||Subject to Market Volatility (Short Term)|
You can purchase ETFs and LICs by opening a brokerage account. I recommend SelfWealth, due to it being CHESS-sponsored and offering low flat-rate fees. Once you have your account set up, you can purchase the previously mentioned ETFs and LICs and begin earning passive income. For beginners, VDHG and DHHF are great set and forget options if you have a long investment horizon, as these are diversified ETFs consisting of thousands of assets across multiple markets. If you are interested in pursuing this form of investment, the following guides may help:
If you don’t have much disposable income or aren’t comfortable with opening a brokerage account and picking ETFs and LICs, you can get started with micro-investing apps. These are tailored for beginners and offer a limited range of LICs and ETFs to choose from. Raiz and Spaceship Voyager are the two most popular micro-investing apps in Australia. While both are good, I prefer Spaceship due to its lower fees and better performing portfolios. If you are interested in micro-investing, the following guides may be beneficial:
Affiliate marketing occurs when an affiliate receives a commission from a company for marketing that company’s product/s. In Australia, these most often come in the form of referral bonuses or sign up bonuses. These bonuses are offered by companies to people in exchange for them referring another person to use their service. Such incentives come in the form of credits, discounts and in some instances, actual monetary bonuses. If you genuinely enjoy these apps and companies, it is worth checking whether or not they offer referral bonuses. You can then get financially rewarded either by receiving money from the company or discounts which in turn saves you money.
Most apps in the financial space offer incentives for referring your friends and family to their platform. Crypto apps can reward you with BTC, micro-investing apps can reward you with free deposits to your investments and brokerage accounts may offer credits to offset future brokerage costs. Similarly, banks and discount apps can provide cash payments for referring people to their platforms.
This can also work on the inverse, by looking for attractive signup bonuses to services you aren’t currently affiliated with. For example, a bank offering a $50 sign up bonus for new users can be a great way to net $50 if you’re able to meet their selection criteria.
While being less lucrative than the other options, this approach requires no start-up capital. This makes it accessible for anyone to do. Additionally, this approach can provide both you and your friends and family with financial incentives, which deviates from traditional passive income streams that only benefit the investor. Lastly, as you already use these products, the referral bonuses can often enhance your experience on something that you regularly use. For example, if you sign up a friend to Spaceship Voyager, the company will reward both you and your friend with a deposit bonus to your portfolio. This can increase your portfolio and compound your growth further.
While inputting your code on Ozbargain is relatively passive, this approach can require a lot more active engagement than the previous methods. This is particularly true if you have to walk people through how to sign up or if you plan on making a review-based website such as what I’ve done. Codes can also change and promotions can end, meaning that this income is a lot less reliable than other methods. Lastly, people are natural sceptics when it comes to products, particularly when someone is trying to ‘sell it’ to them. For this reason, you should approach the topic sensitively with friends and family, as some might mistake your intentions.
|No or Minimal Start Up Capital Required||Less Passive Than Other Options|
|Can Reward You and The Referral (Mutually Beneficial)||Inconsistent Returns|
|Optimises Your Experience on the App/Platform||Some People Aren’t Receptive to Referrals|
The simplest way to check to see whether these platforms offer referral and sign up bonuses is to check on Ozbargain.com.au under their ‘Deals’ section. Once you find an app that you use that provides referral bonuses, you can then input your referral code. Whenever someone clicks on the referral page for that app, a list of randomly generated codes will pop up. Despite there being a lot of active users, your code can remain on the website as long as the deal stays active, providing numerous chances for users to sign up with your code.
Once you find a deal that you like on a website or app that you genuinely like, you can begin by telling your friends and family about the platform. As most referral bonuses reward both the referring customer and the new customer, this can be mutually beneficial for you and your friends/family.
Lastly, you can further optimise your earning potential by starting a website and reviewing products that you enjoy or use. This is an approach that I use, which is why I provide sign up links in most of my reviews. They allow me to monetise my website without relying on traditional means such as ads and they provide my readers with a benefit for reading my blog. However, it should be noted that this is a lot less ‘passive’, as there are ongoing costs and time devotion required to upkeep a website and write reviews.
If you would like to start seeing what referral deals you’re eligible for, I recommend starting here: