10 Effective Passive Income Ideas for the Modern Filipino

July 18, 2020
Reading Time
15 minute read

As a Filipino wage earner, you are probably most used to paying for your daily expenses with your regular income. But in truth, income from your day job isn’t the only source of capital you can depend on. This is where passive income⁠ — that sort of money that you can “earn in your sleep” ⁠— comes in. With less time, physical effort, and mental effort that you put into your regular job, you can explore passive income opportunities to increase your wealth.

Having passive income allows you to worry less about stretching each peso that you already have. It may also allow some breathing room in your cashflow for your day-to-day expenditures, like food, medicine, transport, and housing. Multiple streams of cash, both from your regular and passive income, will help you save more money and meet your financial goals faster. They’ll also prepare you better for big life changes, such as career shifts, your first car or real estate purchase, or a new baby. And lastly, having both regular and passive income can cushion you against emergencies, like hospitalizations or deaths in the family.

But what’s the best way to supplement your regular income with passive income? Luckily, modern Filipinos have a lot of options. You can pick from among the ten methods below to earn extra cash for yourself and your loved ones, all without the burden of taking on another full-time job. Here are the most effective passive income ideas, estimates of how much you can earn, and tips on making the most of every opportunity.

Rent Out a Condominium or Townhouse

What’s the Philippine real estate market like?

In recent decades, the Philippine real estate market has experienced a tremendous boom, especially with regard to condominiums and townhouses. It is now easier than ever to save up for these residential properties, buy them, and lease them to tenants. Many Filipinos start their foray into passive income earning by buying units from the country’s most trusted land developers. The best time to do so is during pre-selling, when the buyers can get the best value on their investment.

How much can you earn by renting out a condominium or townhouse in the Philippines?

Several factors influence how much you can charge for monthly rent. These include the property’s location, its number of bedrooms, number of parking spaces, and the like. But if you want an estimate of how much passive income you can earn from rentals, check the average rate of rent in some of the Philippines’ biggest cities. According to online real estate marketplace Lamudi, the average rent for a one-bedroom condo in Makati was around PHP45,800 per month in 2017. The figures were PHP 42,000 in Taguig, PHP 32,000 in Mandaluyong, PHP 19,400 in Manila, PHP 17,700 for Parañaque, and PHP 12,800 in Las Piñas. The figures can go significantly higher depending on how many bedrooms a condo unit has, so you pretty much have an idea about just how much money you can really earn from real property rental.

However, don’t forget that as the owner of the property, you are required to pay real property tax, which depends on your local government unit (LGU). But all in all, renting out small residential properties is one of the most lucrative means for Filipinos to earn passive income.

What are the best tips for earning from real estate rentals?

If you plan to invest in real estate for the purpose of renting it out, remember the following tips.

  • To find tenants, identify the market for your property and promote aggressively within that market. For example, if the property is near a central business district, advertise your unit to groups of young business professionals. If it’s near a school, pitch it to incoming university students.
  • It’s best to lease your unit to long-term tenants, or those who will live there for at least one year. That way, you can be assured of a longer period of steady passive income. This will also lessen the time you spend fielding queries about your property and finding new tenants.
  • Foster a good relationship with your tenants so that they will keep renewing their contract. This way, they can be a consistent source of passive income for you.

Invest in Stocks, Bonds, and Other Financial Vehicles

What newbies should know about buying and trading stocks in the Philippines?

Learning about financial vehicles like stocks can be intimidating for most Filipinos. But once you get the hang of buying and selling stocks, you could come away with a handsome amount of money. Moreover, immersing yourself in the market could boost your financial literacy—and ultimately serve as the ticket to your financial freedom. 

The first thing you need to know about earning from stocks is that you can do so in two ways. The first is through capital appreciation, or when your investment capital goes up in value because of the increase of price per share. You can also earn from dividends⁠ — the part of a company’s earnings that is paid out to investors as a reward.

If you’re ready to invest in stocks and other financial vehicles but want more assistance in managing them, you can explore mutual funds. Mutual funds serve as a combination of stocks, bonds, currencies, treasuries, and other assets that you can entrust to a fund manager. You pay the fund manager a fee for their expertise in handling and growing your investments.

How much can you earn from buying and trading stocks?

The passive income you can earn from buying and trading stocks depends on several factors. Among the most important ones are how many shares you buy, your time horizon and, of course, your strategy for buying and selling.

A beginner’s investment of PHP10,000 may already help you purchase 100 or so shares from a company listed in the Philippine Stock Exchange. This is something you can check out for yourself on a platform like 2TradeAsia or COL Financial. When the shares go up in value, you can sell them to earn back the money. But it takes practice, patience, and skill at reading the market to earn big with stocks. 

What are some good tips for making money with stocks?                               

Take note of the following tips for when you start learning about stocks, bonds, currencies, and other assets.

  • When it comes to buying and selling these assets, knowledge is power. The money lies in good timing and good decision-making. The more up-to-date you are about trends in the stock market, the better it will be for passive income earned in this manner.
  • Don’t go into this area of investment without being aware of risks. It’s not always guaranteed that your capital will appreciate in the way you think it will. Keep a cool mind and accept both risk and reward as part of the learning experience.
  • If you want to benefit from someone else’s knowledge with these assets, it’s highly recommended that you explore mutual funds. Simply invest the money you have and let your fund manager apply their knowledge and savvy with the market.

Enroll in a Variable Universal Life (VUL) Policy

How does VUL work?

Variable universal life (VUL) policies are among the easiest and most popular means to earn passive income in the Philippines. Simply put, they’re life insurance and investments rolled into one financial instrument. With a VUL policy, you pay a financial adviser monthly premiums that go into a mix of investments and tax-free living, death, and disability benefits. In permanent VUL policies, once you start investing, you can earn back from them for life.

But like in the discussion of stocks above, VULs come with some risk. The “variable” in VUL means that the investment returns in the VUL’s investment component are not guaranteed. Ultimately, how much you can earn from the investment part of your VUL depends on how well the investment itself is doing. Nevertheless, there are several things about VUL policies that can bolster a Filipino’s passive income. 

How will having a VUL policy benefit your finances?

If you have a capable financial advisor on your side, they’ll help you pool your VUL premiums toward money-making investments. But aside from this boost in your passive income, there’s one big advantage to having a VUL policy. It’s that you can liquidate the cash you’ve put into it at any time.

Those monthly payments of between PHP1,000 and PHP3,000 can add up, and you can withdraw from the funds you’ve accumulated either partially or fully. That means you can supplement big expenses, like schooling or hospitalization, with your VUL funds instead of depending entirely on your regular income.

What are some tips you should remember about getting a VUL policy?

Here are two tips you keep in mind when getting your own VUL policy.

  • First, make sure that you can trust the financial advisor who’ll assist you in crafting your VUL policy. They must be able to teach you the ropes of VUL, help you track your investments, and keep you up-to-date with your premium payments.
  • Once you’ve determined how much your monthly premium payment is, be diligent about it. Set reminders to put away that amount of cash before the payment date.

Open a High-Yield Time Deposit Account

How does a high-yield time deposit account work?

A high-yield time deposit account works like a savings account, but with two key differences. When you open this kind of account, your minimum deposit is “locked in” for a certain time, which means you can’t withdraw from it. But you also accrue interest from this account, which is much higher than a regular savings account. The longer you go without touching the money in your time deposit account, the higher the amount of interest you can earn from it.

As far as passive income goes, this method really fits the bill. All it involves is “parking” your savings for a long time, not thinking about them, and then coming back for the interest much later. To be clear, a high-yield time deposit account will give smaller returns in a short time period compared to other methods of earning passive income. But these returns are stable, dependable, easily calculable, and require little effort—which makes them quite appealing to Filipinos with savings.

How much can you earn from your high-yield time deposit account?

With high-yield time deposit accounts, the principle is that large initial deposits and long lock-in periods give back higher returns. Your earnings also depend on which bank you choose to open your account with, plus the interest rates they offer per minimum deposit. 

You can calculate your earnings for a lock-in period longer than one year with the following formula:

(Bank’s Interest Rate) x (Lock-In Period in Days / 365) x (Your Minimum Deposit Amount)

Say you make a minimum deposit of PHP100,000 with a bank that offers time deposit interest rates of 3.5%, for a yearlong lock-in period. After that one year of not touching your account, you could earn PHP2,800 from your interest. And if you leave the money untouched for ten years, you could accrue more than PHP30,000. All you need to leave room for is 20% withholding tax.

Again, as compared to other methods, a high-yield time deposit account may not reward you with a lot of money in a short time. But you will have the assurance that your money is growing at a fixed rate, and is safely tucked away in your account.

What are some useful tips on opening a high-yield time deposit account?

Here are a couple of things you should keep in mind before you open a high-yield time deposit account.

  • Decide how much money will go into your minimum deposit. This should be an amount of money that you’re okay with not touching for a while. Withdrawing from this account before the lock-in expires could net you hefty penalties from the bank.
  • Different Philippine banks offer different minimum deposit requirements, lock-in requirements, and interest rates in their time deposit account programs. Compare these before deciding which bank to open a time deposit account with.

Try Peer-to-Peer Lending

How does peer-to-peer lending work?

Peer-to-peer (P2P) lending involves matching with a borrower, funding the capital they need, and earning from the interest that you charge them. Nowadays, P2P lenders and borrowers can connect using platforms like Blend PH, UpLoan, MoneyMatch, or FundKo.

Becoming a P2P lender is a great way to earn passive income, as well as to learn about investments for the first time. For sure, it offers easier entry and fewer barriers into investment than, say for example, stock trading. You can already start earning after investing small amounts, and you have the option to spread your investment over multiple loans to multiple borrowers. This helps you diversify your risk.

How much can you earn from peer-to-peer lending?

Your earnings from P2P lending will depend on how much you invest, plus what interest you will charge. You may lend in amounts as small as PHP5,000, but get as much as 5-10% interest back annually. That’s why P2P is growing in popularity among Filipinos that have money to loan others, especially for causes like microfinancing.

What are some tips to get the best out of peer-to-peer lending arrangements?

Here are a few tips that you should keep in mind before you start P2P lending.

  • It’s okay to start loaning small amounts and earning back small amounts in return of passive income. After you have more experience on your chosen P2P lending platform, you’ll become more at ease when it comes to loaning bigger amounts.
  • Don’t forget that P2P lending also comes with a few risks, like borrowers defaulting on your loan.
  • Interest earnings are taxable, so leave room in your projections for the tax you’ll have to pay. Luckily, some P2P platforms will auto-deduct the tax. So that will spare you the trouble of figuring out the amount yourself.

Open an Ecommerce Store

What are the benefits of opening your own ecommerce store?

Ecommerce is very much alive in the Philippines, and it’s given the traditional brick-and-mortar shopping experience a run for its money. Filipino customers love the convenience of 24/7 shopping, quick order fulfillment, and stress-free delivery of goods.

If you make or distribute products that are in demand and you know which markets to tap, you could earn big bucks from ecommerce. The secret is to work smart. If you do so, you’ll come away with a lot of passive income just for dedicating a few hours a day to your ecommerce store. 

How much can you earn from opening your own ecommerce store?

In and of itself, Filipino ecommerce is now a highly lucrative industry. A 2019 survey by Statista showed that ecommerce market revenue in the Philippines totaled up to PHP 44 trillion. This is a good sector to enter if you want passive income, as it’s one that’s sure to be growing for quite a long time.

Your earnings from an ecommerce store largely depend on your products, your monthly sales, and how much is left after regular expenses. But if you play your cards right, additional income from your ecommerce store could total in the thousands or tens of thousands of pesos.

What are the most useful tips on managing your own ecommerce store?

If you’re thinking about opening your own ecommerce store to generate passive income, here’s what you should keep in mind.

  • Even if it’ll take up less time than your regular job, treat your ecommerce business with the same care as a traditional business. Have a business plan in motion, and market your shop aggressively. If you’re not running your ecommerce business in an online marketplace like Lazada or Shopee, find a dependable way to fulfill and ship your orders.
  • Populate your ecommerce store with useful, in-demand, and evergreen products. Calculate how much you need to allot for suppliers, for storage, for usage of an online platform or website, and for delivery. You can start with products that are easy to sell and store, like small non-perishable items.
  • Ecommerce invoicing, checkout, and payment have to be airtight, especially if you’ll be doing it yourself. If that’s the case, you may want to explore great digital payment tools for your ecommerce business, like Maya Digital Invoicing and Maya Checkout. If your customers have a positive experience in their digital checkout and payment, they are more likely to come back to your store. And that, of course, will add to the passive income you can earn from doing ecommerce.

Explore Affiliate Marketing

How does affiliate marketing work?

Affiliate marketing entails earning money from your affiliation with another company. Oftentimes, you can make a commission simply from advertising other people’s products on your website.

Among the affiliate marketing methods that Filipinos use for passive income are banner ads, sponsored posts, or pay-per-click programs like Google AdSense. It’s a relatively simple way to make extra money, and it can be very rewarding if you help drive sales for another company’s product.

How much can you earn through affiliate marketing?

Your earnings from affiliate marketing depend on the flat rates issued by your partner company, plus the product you’ll be advertising for them. Nowadays, you can earn between 6% and 10% of each product that you help sell. That’s why it’s in your best interest to help the affiliate company move as much product as possible.

How can you getthe best out of affiliate marketing opportunities?

The amount of passive income you can earn from affiliate marketing may seem small at first. But there are ways that you can drive the numbers up. Here are a couple of tips to earn as much as you can from affiliate marketing.

  • If you’re pitching to be an affiliate of a particular company, tell them how you can help them get important leads. For example, if your website has a large following within a particular industry that they service, let them know.
  • The best approach to affiliate marketing is a targeted one. Think of the best possible time and place for customers to encounter the product, then lead them there. Pay attention to the placement of your affiliate banner or link, and give customers the right opportunity to discover the product.

Produce Royalty-Based Content

What kind of royalty-based content can you produce?

If you have a knack for photography or digital design, there’s a chance that you can make extra passive income from these. You can sell these yourself or explore freelance photography or design. But if you want a bigger reach for your original stuff and income from royalties, you can sell these on platforms like Shutterstock or Adobe Stock.

Certain sectors, like the restaurant or sports industries, are always on the lookout for good stock images that they can use for their marketing efforts. By making your content available to them on these platforms, you may stand to get some extra cash from royalties.

How much can you earn off royalties?

If you sell your content on a stock photography website that has a big subscriber base, you’ll earn between 20% and 60% from each download. Some platforms also offer tiered earning schemes for big performers. Once you reach a certain earning milestone, like making your first $500 US dollars, you start getting paid a bigger cut per photo.

What are some tips on earning a lot of passive income through royalties?

Here are some tips to make the most money out of royalties. If you pay attention to these, you can monetize your hobbies of photography or design.

  • Think of a niche that needs the content, and as a consequence, which images or designs may be most in demand. Collect a variety of these and offer your would-be customers on the platform a lot of options.
  • Generic photos are all right, as they are the most easily adaptable. But take them with a good-quality camera and make sure the photos themselves are clean and free of distortion.
  • Use keywords to make your images and designs more findable. Again, think of the people who could be looking for your photos, and try to guess what keywords they would use to do so. For example, for a photo of steak, include “steak,” “meat,” and “restaurant” among your possible keywords.

Write Blog Posts

Is there a demand for blogging?

Longform articles, white papers, case analyses, listicles, and how-to articles are among the most sought-after content pieces online. This is because people still like to read informative, useful, and authoritative content before making decisions, such as whether to purchase a product or service.

To meet that demand, and to earn extra income, many Filipinos have turned to blogging. Blogs work as platforms in which the types of content mentioned above can be featured. If you love to write, think you can inspire a large following, and are willing to learn more about blogging, you should try it out. As you get better at it, and as your following increases, so does your passive income potential.

How much can you earn from blogging?

You can make money on your blog through ad placement, sponsored posts, or underwritten posts for another company. It’s possible to get paid per post you write, or to get a monthly commission based on the number of leads your blog generates. In that sense, blogging is closely connected to affiliate marketing. If your blog can help a partner company reach a large audience, it’s possible to make PHP5000 or more in monthly passive income. 

What are some handy tips on writing and earning from blog posts?

Here are some tips that can help you earn from blogging.

  • Polish your writing and research skills. Find a writing style that works for you, and learn how to make a compelling argument. Readers are likely to find you trustworthy and listen to what you have to say if you can show these abilities in a blog post. And of course, brush up on your grammar and spelling!
  • You can start blogging for topics you’re already invested in. This will make it easier for you to write from a place of passion, substance, and authority. For example, if you consider yourself a techie, you can aspire to blog for tech brands. If makeup and skincare are more your niche, then you can blog for the beauty industry.
  • Learn the basics of search engine optimization, or SEO, to make your blog content more searchable to customers. Terms that you should read about before you start blogging for extra cash are keywords, keyword research, link building, and outreach.

Write eBooks

Is there a big market for eBooks?

There is, indeed, a pretty large market for eBooks. eBooks are written and formatted to be readable from eBook readers, phones, and tablets. Many Filipinos now explicitly look for eBooks, as opposed to hardcover books, because they can access and read them from anywhere.

Certain topics also rule the eBook market. Among the most popular subjects for eBooks are self-help, health and wellness, financial literacy, and religion. Novelists, poets, and memoirists are also getting big breaks from publishing their own eBooks. So if you think you can write something of value and sell it in the eBook market, by all means you should do so. You could earn a lot of passive income from the sales and even become an authority in the field you’re publishing in!

How much can you earn by selling eBooks?

Among the factors that affect eBook pricing are the eBook’s length, genre, and complexity. It also matters whether you will sell the manuscript independently or with the help of a publishing company. With the first option, you can earn passive income from direct sales. With the second, you can earn from royalties. There are pros and cons for both options, so think carefully about the method you choose to sell your eBook.

In the Philippines, eBooks are typically priced from between PHP150 and PHP400 per book. Again, pricing is determined by factors like page length and topic. But the great thing about releasing an eBook is that you can keep earning from it even long after you’ve written it. If your book becomes popular, and if the content stays relevant for a long time, you could earn passive income from it for years.

What are the best tips for writing and selling your own eBooks?

Here are some tips that you should remember before writing or selling your own eBooks.

  • Pick subjects that you’re good at. Whether it’s fitness, food, beauty, travel, or something else, it doesn’t matter. If the eBook topic is dear to your heart, and if you have a lot of knowledge on it, your readers will be able to tell.
  • Pick the right platform to sell your eBook on. If you’d like a big reach, see if you can sell the manuscript to a publishing company. If you’d rather handle the process yourself, sell your eBook directly to customers and make it available through a payment wall.
  • Cross-promote your eBook with other services or offer seasonal discounts. Doing these requires no extra effort on your part to drastically change the product while you are marketing it.

Some Last Reminders about Passive Income Generation

Whichever method or combination of methods you choose, remember that they will not make you rich overnight. Indeed, they can help you earn money in your sleep, but how much depends on how well you set them up. The best approach is to put in a little time, money, and strategy into the passive income stream that you’ve chosen. This ensures that you’ll earn the most that you possibly can, and that you can sustain your earnings for the longest possible time.

One last suggestion before you choose a passive income stream: estimate just how much money you want to make in addition to your regular income. Decide where your passive income will go—whether it will fund your everyday expenses, a big purchase like a car, or your child’s schooling. If you can find passive income streams that align with your own personal financial goals, you will earn not only wealth, but true financial freedom.