Passive Income NZ: Your Path to Financial Freedom

For a lot of Kiwis, passive income is making money while they sleep. It sounds like a dream come true. What is passive income, anyway? It’s money you make with little effort to keep it. Think of it as setting up a system that generates cash flow on its own, freeing up your time and giving you greater financial security. 

This guide will show you some of the best ways to make money without working in New Zealand. We’ll look at real-world ways to make money, from real estate to digital products, that will help you learn how to make money that lasts. These ideas can help you get started on the right path, whether you’re just starting out and want to make some extra money or you want to be completely financially free.

Understanding Passive Income 

Before we look at the examples, let’s make sure we know what “passive” means. Most passive income streams require significant upfront work.  You may need to spend time building a blog, saving money for a down payment, or making a digital product. The “passive” part comes later, when the money starts coming in without you having to do anything every day.

You also need to know what taxes you have to pay. In New Zealand, most of the money you make, even if it’s from passive sources, is taxable. It’s a good idea to keep good records and talk to a professional if you’re not sure what the rules are for your income type. The Inland Revenue Department (IRD) has different rules for each type of income.

Real Estate: A Classic in New Zealand:

Property has long been a popular investment for New Zealanders, and for good reason. It gives you a few ways to make money without doing anything.

Properties for rent

One of the most common ways to make money without working is to own a rental property. You get regular rent payments once you have a tenant.

• How it works: You buy a home and then rent it out to people who want to live there. The money you make from renting can pay for your mortgage, insurance, taxes, and maintenance, leaving you with a profit.
• To start: This path needs a lot of money for a down payment and the ability to get a mortgage. Under the Residential Tenancies Act, you will also need to know what your legal duties are as a landlord.
• Pros: Possible regular cash flow and long-term growth in value.
• Cons: The downsides are that it costs a lot to get started, you have to keep it up, and you might have to deal with difficult tenants or empty periods. Because it needs management, it’s often more “semi-passive.”

Real Estate Investment Trusts (REITs) 

If you can’t afford to buy a whole property, REITs are a good way to get into the real estate market.

• How it works: REITs are businesses that own and run a group of properties that make money, like shopping malls, office buildings, or apartment complexes. You get a share of the rental income as dividends when you buy shares in a REIT.
• To get started:  You can buy shares in NZ-listed REITs like Kiwi Property Group or Argosy Property through platforms that let you trade shares.
• Pros: It’s easy to get into, you can own shares in many different properties, and it’s easy to buy and sell shares.
• Cons: You can’t directly manage the properties, and the value of your shares can change with the stock market.

Crowdfunding for property

Property crowdfunding is a newer option in New Zealand that lets you pool your money with other investors to buy a stake in a property.

• How it works: Platforms link investors with either new property development projects or rental properties that are already available. You can invest a relatively small amount to own a fraction of the asset. 
• Getting started: Sign up with a licensed crowdfunding platform in New Zealand and browse available investment opportunities. 
• Pros: The cost of entry is very low, you can get to projects that you couldn’t afford on your own, and it’s completely passive.
• Cons: Your investment is not liquid (you can’t easily sell your share), and there’s a chance that the project won’t make the money you expect it to.

Starting an Online Business

There are endless ways to make passive income in the digital world, and you don’t need a lot of money to get started.

Blogging and Marketing Through Affiliates

Starting a blog can be a great way to make money without having to do much work if you are passionate about or know a lot about a certain niche.

• How it works: You make a website and post high-quality content about a certain subject on a regular basis. You can make money from your audience by using display ads, sponsored posts, or affiliate marketing once you have built it up. With affiliate marketing, you recommend products or services and earn a commission for every sale made through your unique referral link. 
• To get started: Pick a niche you know a lot about, make a simple website using WordPress or Squarespace, and start writing useful articles.
• Pros: You can start with very little money, make a lot of money, and work from anywhere..
• Cons: Building an audience takes a lot of time and work, and you can’t be sure you’ll make money.

Make an online class

Is there something you know that other people want to learn? You can turn what you know into an online course.

• How it works: You create video, audio, or text-based lessons on a specific subject, from coding to cake decorating.  You can then sell access to this course on your own website or through a site like Teachable or Podia.
• To get started: Outline your course curriculum, record the content, and choose a platform to host it.
• Pros: Write down the content of your course, choose a platform to host it, and make a plan for the course.
• Cons: You have to do a lot of work up front to make a good course, and you have to market it well to get students.

Investments from the past and the present

Putting your money into investments is one of the best ways to make passive income. Your capital does the work for you. 

Bonds and Stocks

Putting money into the stock market is a sure way to make money over time.

• How it works: When you buy stocks or shares, you own a small part of a company. An organization’s profits are distributed to its shareholders as dividends You can make passive income from these payments. When you buy a bond, you’re basically lending money to a government or business and getting interest on it.
• How to get started: Micro-investing platforms like Sharesies or Hatch let you start investing with just a few dollars. You can buy individual stocks or funds (like ETFs) to quickly spread out your investments..
• Pros: There is a good chance of making money, it is easy to get into, and it is very liquid.
• Cons: The value of stocks can be volatile, and there’s a risk of losing your capital. 

Lending Between Peers (P2P)

P2P lending connects you directly with individuals or businesses looking for a loan, cutting out the bank as a middleman. 

• What it does: You lend money through a P2P platform and make money from the interest the borrower pays. You can often choose which loans to fund based on how risky they are.
• Getting going: Sign up with a licensed P2P lending service in New Zealand and start funding loans.  You can lower your risk by investing in a variety of borrowers.
• Pros: They may pay more interest than regular savings accounts or term deposits..
• Cons: There is a chance that borrowers won’t pay back their loans, and your money is tied up for the length of the loan.

Making and selling digital goods

Similar to an online course, digital products are assets you create once and can sell an infinite number of times.

eBooks

If you like to write, self-publishing an eBook is a great way to make money without doing anything.

• How it works: You can write a book on any subject, such as a novel, a how-to guide, or a collection of recipes, and then publish it on sites like Amazon Kindle Direct Publishing (KDP). You get a royalty for each copy sold, and Amazon takes care of the sales, payment, and delivery.
• To get started:  Write your manuscript, design a cover, and upload it to a publishing platform. .
• Pros: Complete creative control, global distribution, and zero startup cost if you do everything yourself. .
• Cons: The market is full, and you need to market your book to make sales.

Photos and videos that are for sale

You can sell your photos and videos on stock media sites if you are good at taking pictures or making videos..

• How it works: You can upload your photos, drawings, or videos to sites like Adobe Stock or Shutterstock. You get paid every time a customer downloads your content.
• How to get started:  Build a portfolio of high-quality images or videos and submit them to various stock platforms. 
• Pros: Turn your creative hobby into an income stream.  One popular picture can make money for years..
• Cons: You need a lot of good content to make a lot of money because commissions per download are usually very low.

Your Way to Passive Income

Building passive income streams is a marathon, not a sprint.  You need to be patient, do your research, and be ready to put in the work up front. The most important thing is to start small, pick a plan that works with your skills and money, and then build on that.

Try out a few different passive income ideas without being afraid. You might find that using more than one strategy, like getting dividends from stocks and royalties from an eBook, is the best way to reach your financial goals.

Our team at Business Kiwi is here to help you if you’re ready to move forward but need help figuring out how to structure your new business or understand the business side of things. Schedule a meeting with us to talk about how we can help you reach your goal of financial freedom.

Questions that are asked a lot (FAQ)

What is the simplest way to make money passively in New Zealand?

For beginners, one of the easiest ways to start is to buy dividend-paying stocks or ETFs through a micro-investing platform. It doesn’t take much money to start, and once it’s set up, it runs itself most of the time. If you want to build an online presence, affiliate marketing is another low-cost option.

How much money do I need to make passive income?

It changes a lot. You can start investing in stocks or peer-to-peer lending with as little as $100. Making digital goods like an eBook can cost you nothing but your time. On the other hand, putting money into a rental property requires a large down payment, which can be tens of thousands of dollars.

In New Zealand, is passive income taxed?

The IRD does think that most kinds of passive income are taxable. This includes money you make from renting out a property, dividends, interest from peer-to-peer lending, and profits from an online business. You must report this income on your tax return.

Can I make enough money from passive income to quit my job?

Yes, but it will take time. A lot of people start by making a second income to help pay for their main job. Over the course of several years, they can increase their passive income to the point where it pays for their living costs. This lets them cut back on their work hours or even retire early.