Effective Passive Income Sources In New Zealand

Date Feb 11, 2021
Blog category Kiwisaver
By Staff Writer

Passive income in NZ is possible. You only need to look at all the opportunities. Here's our beginner's guide.

Making money involves a combination of hard work, and the proverbial blood, sweat, and tears! It’s no easy feat for sure, but have you looked into passive income?

This isn’t often taught in schools, but it’s one of the best ways to make money. And it’s not too good to be true, either. You can actually learn a lot and achieve financial freedom by making money through passive investments.

Here are some of the best passive income sources in New Zealand.

What is passive income?

Passive income is the money you make even if you don’t actively work for it. In its simplest meaning, it can be defined as the money you receive apart from your employment or day job. This often includes a range of different sources, but it usually includes stock market investment, rental property income, microlending, and cryptocurrency, among others.

A big misconception for passive income is, it’s ‘easy’ money! Most people think they can earn money as soon as they start initiating passive income. While this can be true for some people, it’s often not the case for most. Making money from passive income involves time, strategic choices, calculated risks and sacrifices, as well as money management.

To address the elephant in the room, passive income isn’t a shortcut to get rich! One way or another, you still have to work — although not as much — to earn money passively.

What is the difference between active and passive income?

Now that you know its definition, how exactly does it differ from active income? Is one better than the other? Should you completely earn money passively?

Compared to passive income, active income is your compensation for any service you do — be it a full-time, part-time, or side hustle. The money you earn actively can come in the form of salary, wage, and cheque. You have to put in effort so you can get money in return.

On the other hand, passive income is the money you earn even without these services. Best examples of this are rental property, advertisement on blogs, dividend payments, and interests, as little to no effort is needed to make money off of it.

It’s not recommended to fully rely on passive income, especially if you aren’t as experienced in handling your finances. But if your passive income can suffice your daily finances and monthly dues, then rely on it completely — there’s no stopping you!

How to create passive income with no money?

Before we continue, it's best to address the elephant in the room: if you're barely getting by, of course you'll need to work your way up first. If you can, find different active sources of income. This way, you would have something extra to save. Always remember that these little efforts add up. Who knows, you might even have enough money to meet the minimum investment required in the stock market.

That's just one idea. Read on to learn more.


What are the passive income sources available in NZ?

Don’t know where to start? There are a lot of sources, streams, and opportunities. Each one has its own share of pros and cons, as well as risks, so make sure you choose the one that works for you.

Here are some of the most common investments available for Kiwis. 

Rental Income

Rental income is one of the most popular ways to earn "easy money". House prices in New Zealand have been skyrocketing — especially in the cities like Auckland and Wellington — making rental properties a great source of income.

This doesn’t come without setbacks, though. You have to pay for maintenance, and deal with your tenants’ requests. If your tenant pays late, you may have to shoulder the monthly payments yourself. Still, rental property offers big returns.

What you need to know:

Getting started with rental income involves a long-term commitment as you’re essentially buying a home. You have to consider factors such as mortgage, house and contents insurance, property tax, capital gains, and more. 

When deciding for rental prices, you have to consider these factors as well as new policies set by the bank or the government. Research the market and talk to real estate and financial experts to decide on a more comprehensive rental price.

What is the potential income?

Once you’ve settled everything, you can earn between $200-$1,000 per week depending on the property value, location, and demand. This excludes the on-going costs for keeping the house afloat including mortgage and utilities. 

What are the cons and risks?

As mentioned, rental income doesn’t come without risks. If your property doesn’t have any tenants for months, you may have to pay for the on-going and maintenance costs of the house without getting any income in return. But with enough research, you're sure to find a lucrative property at the right location.

Everything adds up. Start saving now. Compare to find the best KiwiSaver for you, right here at CompareBear!

Share dividends

Share dividends are the profit you make for being an investor in a company. The larger the market value of the company, the larger your share dividends become. It’s a great source of passive income when you put your investments in a large company.

On the other hand, you may get small returns if the company you’ve invested in is small. The great thing about investing in small and medium-sized companies is its potential to boom! Once the company has grown, you can enjoy heaps of returns! This will also depend on the money you put in, so make sure you learn the ropes before investing your money into these companies.

What you need to know:

Share dividends are a more common way for Kiwis to make money. Thanks to different platforms like InvestNow and Direct Broking, investing in different companies through shares or ETFs has become much easier and less expensive.

Note that you may have to pay an initial investment of anywhere between $5,000 to $15,000 to get started. It’s also much stable to invest in big NZ companies like Contact Energy and Spark New Zealand, but it pays out smaller amounts too.

What is the potential income?

After a 4% tax cut, you can earn an average of $80-$100 weekly for shares that grew into $100,000 or over. Depending on the company, you’re either paid annually or semi-annually straight into your bank account.

What are the cons and risks?

The biggest risk with share dividends is the possibility of your shares price becoming less valuable. This happens when the company you’ve invested in suffers from several losses.

P2P lending or microlending

Peer to peer lending is the practice of letting other individuals borrow money for a set interest rate in return. P2P lending is becoming extremely popular among New Zealanders because it offers lower interest rates and has fewer requirements than banks.

The risky part of microlending lies on the amount of the money borrowed. The higher the amount, the more likely you can suffer losses in your income. However, there’s always a big chance of returns if the capital and the interest are fully paid. Always read the fine print before committing to anything, especially one that involves your hard-earned money.

What you need to know:

Usually, there are no hefty fees involved to get started with microlending. The great news is, there are various P2P lending platforms such as Lending Crowd and Squirrel Money where you can lend money to individuals.

The most common repayment term for P2P lending is from three to five years, both for secured and unsecured debts. The repayments are deposited directly into your account, so you can always withdraw your money anytime.

What is the potential income?

It’s not as straightforward, as the money credited into your account is often the total amount of the capital and interest. Generally, you can expect at least 5-8% p.a. of the capital before tax deductions.

What are the cons and risks?

Although the risk is mediated on lending platforms, there’s still a considerable amount of risk if you’re lending big amounts of money. To avoid these risks, you may have to double-check the capability of borrowers to ensure they can pay the right amount on time.


Cryptocurrencies are virtual money you can use to purchase goods, trade, and invest online. Like a physical stock market, you can hold onto your money and sell them when they eventually increase in value.

While it may seem like an easy concept, investing in cryptocurrencies can be a challenge even for experienced traders. You have different ways to trade and invest cryptos, so always do your research before getting started.

Read: Where To Trade Bitcoin And Other Currencies In New Zealand

What you need to know:

Some of the most popular ways to trade and invest cryptocurrencies include:

  • Mining
  • Staking
  • Lending
  • Lighting mode
  • Masternodes
  • Forks and airdrops
  • Blockchain-based platforms, and more

Each one comes with its own pros and cons. You can use different platforms such as Poloniex, Binance, and NiceHash, among many others. These platforms may only work with some currencies and wallets, so always know your best options. 

What is the potential income?

Passive income from cryptocurrencies varies greatly from day-to-day. You may experience big losses in the last days only to reap big returns today. It always varies, so expect an always fluctuating income.

What are the cons and risks?

Once you’ve done the right process of trading cryptocurrencies, there’s little to no risk. Since the trading all happens online, you risk your money from some minimal errors, bugs, lockup periods. This rarely happens, luckily.


KiwiSaver is a well-known investment option that's easily available for New Zealanders. It’s a voluntary scheme that relies on monthly and government contributions. It works great for buying your first home, moving abroad, retirement, and paying off your debt. 

The great thing is, you don’t have to do anything to grow your money! As long as you pay your monthly contributions actively, it will mature over time. So if you aren’t a KiwiSaver member yet but are eligible, you just need to find the best KiwiSaver fund for you!

What you need to know:

Unlike other types of passive income where you need a capital to start earning passively, you don’t have to pay anything to get started with KiwiSaver! There are plenty of fund schemes available for New Zealand citizens and permanent residents.

Although some funds may require you to pay for annual fees, it’s no more than $30 for the most part. Your employer and the government also pays contributions in your account relative to your monthly contributions.

What is the potential income?

Your potential income from KiwiSaver varies depending on your monthly active income. Aside from your contributions, you can expect to get another $2,000. Over the course of 30 years, your contributions can account to over $30,000. This is without taking into account the money growth and inflation over time.

What are the cons and risks?

As KiwiSaver is a long term investment scheme, there’s little to no risk at all! You may have to watch out for some occasional drops in value. But generally, your investment is safe and ready for withdrawal for whatever reasons.

To get started with KiwiSaver, make sure you have the best schemes personalised for your needs. There are plenty of providers that offer many different options — be it for retirement, investment, or debt consolidation.

Get the best KiwiSaver scheme for you, using our comparison tool right here at CompareBear!