Passive income is the ability to generate ongoing income with a one-time investment, that doesn’t require continuous monitoring or adjustment. One example of passive income is real estate: purchasing a home usually results in a profit when you eventually sell. There are lots of different ways to get those passive dollars rolling in, including:

 

  • Bonds: think of bonds as a way of investing in a company without taking ownership. You lend money in the form of a bond and earn interest income. Bonds are considered one of the safer investments, but that also means you’ll get a smaller return than higher-risk options.
  • High yield savings accounts: these types of savings accounts are located at banks and some investment companies. Top tip: open a high yield savings account at an FDIC-insured bank, to provide more security for your investment.
  • Dividend stocks: stocks are a great way of creating passive income. The way stocks work is that public companies share a percentage of their profits to investors in the form of dividends. Stocks vary in risk and return. It’s wise to do some research with companies who have a solid history of providing dividends to their investors.
  • Rental properties: while less passive than other options, buying a second property with the intention of renting it out is a great way to generate income. In addition to monthly rental payments, you’ll also reap the benefits of the increase in property value over the term of your investment. Make the investment totally passive with a good property manager.
  • Crypto savings: in recent years crypto currency investments have become popular, yielding a higher rate of return on your money. Check out our website links for popular crypto sites (on page 3).

Whichever passive income stream you’re considering, it is critical to examine the risks. If in doubt, speak to an experienced financial advisor about the best options for where you are in life.