What Are Good Passive Income Investments?
Let’s face it, who wouldn’t agree that it is easier to spend than to save? Saving is kind of painful and the process seem to be never-ending.
More to that, we are living in an age where there are so many budding entrepreneurs, people are living their 8 am – 4 pm work schedules to follow what they truly love. However, getting the money to start what you feel inspired by life to do is the problem. Therefore, an investment loan is one of the preferred options by investors.
There are so many reasons why people save. The motive from person to person may differ but at the end of it all, all these motives seem to correlate. For example, one may save to buy a property that will be generating his income. Another one may save to invest the money perhaps in the stock market. Therefore, people save to get money through their investment.
Our investment loan calculator can help you to understand whether a loan is a good move – but you should have to combine it with ongoing saving if you aim is financial freedom.
What is Passive Income Investment?
Perhaps before we get to the main topic, you may be wondering what passive income is. In facile lay man’s language, passive income is that income that you earn without being actively involved in something. This, therefore, means that you will continue earning money with little to no effort which both in the short and long term will maintain a steady cash flow.
It seems like a golden idea but achieving it may not be as easy as you think. If there is a formula, that would have made the work a little easier but unfortunately, there isn’t one.
However, investment loan it’s not the preferred option – saving is the first step towards attaining a financial freedom. You may have found yourself in a situation where you already have the money but you have no idea what to do with it, awkward right? Therefore, saving is just but the opening step.
Where do you begin?
Assuming that you can be able to max out your 401k or the IRA and still be able to save an additional 20% or more of the remaining money, then count yourself halfway to financial freedom.
Here are some of the ideas that will help you generate income:
Investing in dividends is easy and for many investors, these stocks represent one of the perfect balance in an investment. They provide a reliable and a regular income to the shareholders and therefore it makes it possible to draw income from a portfolio.
However, before getting started, there are some rules of dividends investment that you need to be familiar with. These will help you invest systematically to rank as one of the best in dividends investors.
You have to remember that dividend yields are never fixed. This simply means that the yields will fluctuate from year to year and what’s even more interesting is that they can fluctuate significantly depending on the performance of the company. Therefore, pray hard and play your cards right.
If you are unsure of the stock to invest in, just stick with the one with the dividend aristocratic label.
Fixed income/ Bonds
If you are a key investor, you probably have realized that the rates have been declining for the last 30 years. For the bond prices, on the other hand, have been accelerating. A lot could be said about these two.
Bonds particularly offer the investors with a defensive allocation to an investment portfolio and the advantage with it is that assuming that you hold a government bond till maturity, you will get all your coupon payment and the principal back.
Just like in the stock market, there are so many different types of bonds that an investor can choose from.
Experts say that the federal fund rate is going at 1.5% which they speculate that it is going to rise higher and beyond this year. With this, investors can be sure that the rates will not be going down.
Real Estate Property Investment
Whenever something about real estate investing is mentioned, probably the first thing that comes to your mind is your home. You will find those physical properties to play a significant role in building your investment portfolio.
Although the industry has had some impediments it still remains to be one of the best options to make passive income. You will find that so many investors globally prefer real estate investment to generate long-term returns.
In the beginning, you will be required to make a 20% down to purchase the property. There are some investors who’d rather invest without concerning themselves with the day-to-day management if you happen to be one of these, REITs presents a good option.
REITs (Real Estate Investment Trust) pays out 90% of the taxable income to the investors and this comes in terms of dividends.
For those who are hearing this for the first time, Mutual funds basically is an investment vehicle which is made of pools of money collected from many investors. Multiple companies offer the investors with the products customized to bring sufficient monthly incomes.
If you are considering mutual funds investments, you will have to check the fund’s stock-bond ratio. Most of the stock that you will find in today’s’ market will include the stocks and the bonds in their portfolio.
There are instances when the fund leans heavily on the stock side than on bonds, this presents a much riskier event. Regardless, you will find that the bonds with more stocks will produce higher returns than the funds with more of the bonds.
Certificates of deposits (CDs)
Certificate of deposit was at one time a gold mine as they would produce a decent 4%+ yield. Nowadays, if you can stumble upon a 5-7-year CD that pays anything at or over 2.2%, count yourself lucky because there will be your small treasure trove.
The CDs will remain to be the most simplistic investment you can make as there is no net worth or annual income to meet. Most of the other vehicles of investment there is require investors accreditation before investing. More to that, CDs can be fully covered by the insurance.