Investing is one of the best ways to your money grow. Yes, there are a lot of risks to it but as long as you know what you’re getting into then you will always have good chances of getting excellent returns. One of the easiest types of investment that you can try out is Passive Investing.
What is Passive Investing? Well, it’s when investors place their money in various passive income strategies to generate a steady stream of cash without them having to constantly put their attention and effort into it.
If you’re an investor who is looking for more ways to earn a steady flow of money on the side then you need to know the best passive investments to try so you’ll get the most out of your money. Lucky for you, this article will be all about the five different passive income resources every investor needs to have.
Check out the MoneybyRamey.com The Ultimate Guide to Building Your Passive Income Portfolio.
But before we get into the specific ideas, here’s a quick refresher of what passive income is:
What is Passive Income?
Passive income is defined as the money you earn that is not a result of your active efforts – i.e. “money you make while you sleep”. Some examples of passive income resources are lending, rental properties, partnerships, content creation, and so much more. Passive investment ideas are highly sought after by investors as they require minimum effort but yield steady streams of income.
Here are some ideas on how you, as an investor, can generate money with passive income:
#1 – Interest/Dividend Income
A great strategy to earn passive income is by earning interest on your money or by purchasing stocks that yield dividends, which is essentially a form of interest income. Interest and Dividend Income can be considered as passive income because after purchasing the shares, all there’s left for you to do is wait for the company’s payments to enter your bank account on an agreed schedule. In fact, dividend investing happens to be one of my most favorite forms of generating passive income.
What’s great about investing in dividend stocks to get a passive income is the more shares you get to own, the larger the return you can expect. Aside from that, company shares also come in different price ranges, you can find stocks that are perfect even for people who are on a budget. With dividend stocks, you will also have a great amount of control as you’ll get to decide just how many shares you are willing to buy.
The trickiest part of this passive income idea is choosing the right shares to invest in. Sure, it’s easy to just invest in a company that promises a high percentage of return on the first payment schedule alone. But the question is, will they?
As an investor, the first thing you need to do if you would want to give this a try is to research companies that offer interest-yielding stocks. Not only will this grant you an insight into the different risk levels of the stocks that you are interested in buying but it will also give you the chance to know just how legit is the company that you get to invest your hard-earned money into.
Check out the MoneyByRamey Dividend Stocks Watchlist for more information.
#2 – Peer-to-Peer Lending
The industry of P2P Lending has only been around for a decade or so, but it has since grown so much that it can now be considered as one of the most popular and effective passive income investing strategies that anyone could try.
Peer-to-Peer lending is a loan transaction that is done between an investor (an individual) and a borrower (individual or business company) through online p2p platforms like Prosper. P2P lending can be considered as a passive investment as you will receive monthly payments for the interest of the loan. All you have to do after granting the loan is sit back and receive the money that will come your way whenever the borrower pays their dues.
#3 – Acquiring/Investing in Businesses
One of the best ways to receive passive income for investors is acquiring or investing in businesses that require financial help. Compared to the previous passive income investment ideas that we’ve shared, this one is tricky because you’re investing in something that is so unpredictably unstable. Yes, it has a lot of risks but your chances of getting outstanding returns are also pretty high.
Acquiring or investing in a business can be considered a source of passive income if you sign up as a silent partner. What is a silent partner? It’s the person in a business whose only job is to provide the capital and other financial needs.
As a silent partner, you are not required to be involved in the daily operations and other things done in the business. All you have to do is provide them with the money you have then just sit back and watch the rest of the staff do all the work for you. This is by far the most challenging passive income source on this list but definitely one worth considering.
#4 – Turnkey Property / Rentals
Turnkey property investing has been a favorite of both active and passive income investors for a long time now. In case you’re unfamiliar with the term, a turnkey property is essentially a house or any sort of establishment that has been fully renovated and is ready to be rented.
Is Turnkey Property Investment worth it even if you don’t have real estate experience? Yes, absolutely. One of the best things about Turnkey Investment is that you can hire a company that can do all the work for you. They will take care of everything starting from figuring out the right place to find a property to renovation and even looking for tenants that will rent out the place.
This is considered passive income because after spending your money on renovations and the turnkey property provider’s services, all you have to do is wait for a monthly flow of income via rent payments. What’s also great about this is that there is a constant demand for affordable properties to live in, so you will always have people looking for places to rent out.
Okay, so what’s the difference between turnkey property and rental? Well, the former only applies to houses and establishments while the latter can be used for literally everything. Having a rental business is an excellent choice for a steady source of income as you won’t need to do much after setting up the whole thing. One way to make this as ‘passive’ as possible is by hiring a company to manage your properties and take care of all their maintenance needs.
The best thing about doing a rental property business as your source of passive income is that you can invest in just about everything. Whether it be houses, a piece of land, cars, or even heavy equipment, there will almost always be a demand for whatever it is that you’re renting out.
#5 – Content Creation
The internet isn’t just a platform for us to search for valuable information and connect with our loved ones but it can also be used for generating content that can add money to our pockets. Investing in content creation is great because there are many ways to do it.
You can create blog articles, write e-books, produce online courses, and even make YouTube videos that showcase your interests. However, you need to keep in mind that the content you are going to make must be interesting enough that it will engage people and make them want more out of you.
It is also worth noting that compared to the other passive income investment ideas we shared in this article, content creation will take the longest time to generate good returns as you must first build an audience and achieve a nice SEO ranking so your work will be more visible on search engines.
You told us the different types of content that we can do, but how could a person earn passive money from content creation? Well, there are three main ways to do it. The first is through ads, if your content has generated enough traffic then you can have advertisements embedded in your site or channel. The terms will vary depending on what tool you are going to use but typically you will earn money out of this whenever someone clicks on the ad.
The second is through affiliates, once your content has gained enough traffic then you can sign up on affiliate programs of different brands. The way you will earn money from this will vary on the terms of the brand(s) that you are going to be working with. But normally, you would earn compensation whenever someone clicks on your affiliate link and buys a product through it.
And lastly is through assets, this is done when you write e-books, online courses, tutorial videos, and other similar content that you can sell straight from your website or through online selling platforms. It can be considered as passive income because the product is digital, so once you are done then you can just wait and collect the money whenever someone purchases a copy of your creation.
Generating passive income by investing is great for investors like you, and the ones that we’ve listed above are some of the best passive investment ideas that we think could yield excellent returns. Yes, there are still risks but as long as you know what you’re getting into, then you have higher chances of seeing your money grow.
If you need more passive income ideas then don’t worry because we’ve got you covered. Read the Passive Income Portfolio, Passive Income Ideas, and other related articles on MoneybyRamey to not just expand your knowledge but also learn at least 50 more ways that you can earn through passive investments.
Matthew Ramey is the owner and operator of MoneyByRamey.com. He teaches money management, investing (especially in dividend-paying stocks), and how to achieve Financial Freedom through developing more active and passive income. He is the author of two books; Simple Budgeting and Simple Investing, which can be purchased on Amazon.