Look inside most of the top ‘get rich quick’ guides and you’re likely to see at least one chapter dedicated to the importance of building a passive income stream.
Passive income is a way of making an income that doesn’t require active work, helping to boost your bank account, bolster your savings and lessen your dependence on your traditional job. So how does it work?
There are a number of different ways to make passive income. Most forms require some investment and some are riskier than others. Below are 4 passive income investment ideas to consider.
Passive Income from Real Estate
Real estate is one of the most popular and accessible forms of investment, earning the investor money through profits made renting out or selling apartments and houses.
To get started with real estate investors either need enough capital to purchase an additional dwelling, or prove the profitability of a property, using tools like property depreciation calculators, so a rental loan can be obtained with a company such as Visio Financial.
Rental loans are granted based on the profitability of the property not the income of the investor. This is a great way for people to finance their first real estate property without much money.
Dividend Stocks as Passive Income
One of the most popular ways to make passive income remains dividend stocks. They are considered to be less volatile than investing in growth stocks.
Dividend stocks earn investors money by paying them a portion of the companies profits, usually on a quarterly basis. Some companies increase their payouts over time. You can be purchase dividend stocks in one of two ways: individually or through exchange-traded funds (ETFs).
For those starting out, ETFs are usually an easier way to invest as they don’t require you to monitor companies individually. Make sure you do your homework and understand the underlying business and risks of your investments.
Peer-to-peer lending
Peer-to-peer lending, often referred to simply as P2P, involves lending money to another person through an online platform such as Prosper or PeerForm. You as the lender earn interest on the loan you provide in the same way banks do.
Interest rates and amounts are determined for each borrower based on credit profiles. The average P2P lender can make returns of between 5-10% on a loan paid back over the course of 3-5 years.
Temporary Rentals as Passive Income
Airbnb has made it easier than ever for people to make a profit from the spare room in their house or from their property as a whole when it is vacant.
Going on holiday? Rent your apartment out while you’re gone and the holiday may even pay for itself. Have a spare room filled with clutter? Earn money from providing someone with a safe place to stay.
It can be daunting at first to let strangers into your home. However, companies like Airbnb have built out processes to help make renting out your property as simple as can be.
Tell us about your passive income investment ideas in the comments below – we would love to hear about them! Looking for more inspiration? Get some tips for renting out your home and see some other ways to make money from home.
