Generating streams of passive income has become increasingly popular in recent years. There are many avenues for investing to increase wealth.
Some require no money down while others require a small financial investment upfront, such as funding a start-up business loan. Each type of investing comes with its own risks and potential to generate a comfortable return on investment.If you are looking to invest but don’t know how or where to start, seek the advice of a financial advisor who can discuss potential risk as well as potential earnings and how to get started.
Always weigh the potential risks with the potential financial gains and have some understanding of the process of investing before diving in.
By definition, passive income refers to making an initial financial investment into something that will continually generate income for the investor. There are four popular investment streams that are generating passive incomes. While we aren’t creating an exhaustive list, these ideas are at the top of the investor portfolio.
I am starting off heavy here with the investment that makes the most sense. Real estate is a preferred constant stream of passive income for the savvy investor.
There are many avenues to pursue real estate investing. The most obvious is investing in rental property.
Purchasing a multi-family duplex or complex or a single-family home generates monthly income. If you buy with cash, there is instant equity in the property in addition to generating monthly income.
Purchasing distressed properties to rehab and sell or to rehab and rent is another avenue. This requires a little elbow grease and additional funds for the actual rehab, but you will have instant equity once the project is completed.Location is so important when considering cost and rent. If your goal is to have your property rented year-round, try purchasing rentals near colleges and universities. You are almost guaranteed monthly income from students not wanting to live on campus.
Vacation homes and condos are another investment stream. Keep in mind that directly owning properties has its tax advantages as well as passive income advantages.
You don’t have to be a genius with computers to become a virtual assistant. Use your skills with certain programs and apps to start a side gig that generates passive income when you need it.
Assist entrepreneurs and small businesses with generating and navigating their business systems. Help them to integrate all aspects of their business systems into the best system for the best price.
Help with online marketing campaigns and social media marketing campaigns. Educate business owners on how they will get the most return on investment of their advertising dollars.
Have you read?
Peer-to-Peer lending is just what it sounds like — granting loans for things like starting a business, home remodeling projects, or refinancing a car. Instead of borrowing from a lending institution, individuals are borrowing from other individuals.
As an investor, finding a group of P2P investors is a great way to pool resources and put your cash to work. The interest generated from P2P lending creates passive income.
This is a great way to get a loan for people with less than stellar credit, but credit does matter.
The terms of a peer-to-peer loan may vary compared to a loan from a lending institution. In some instances, the interest is higher at traditional lending institutions, and the overall cost of the loan is higher.
It is simple to find P2P lenders. Just go online and start shopping. You can find out the terms of the loan, and you can find out fairly quickly if you qualify with P2P lenders which is a huge benefit if you are in need of income quickly.
That’s the draw for investors. The loans are easy and create passive income. Each loan payment from a borrower is reinvested in the business minus a percentage which is divided among the investors, thus creating passive income.
If you have a passion or talent, you can turn it into a business. Now more than ever, working from home is a great way to generate an extra stream of income.
There are thousands of freelance opportunities online that you can work around your full-time job and family obligations.
One way to generate income is through blogging. Starting a blog can generate an ongoing stream of income while allowing you to develop your talent.
There are free and inexpensive online web-hosting sites that will help you to format and add content to your blog without having a degree in computer programming.
If you enjoy writing, look for beginner level freelance writing opportunities or become a Virtual Assistant. With both, you can set your own hours, work as much or as little as you want, and do it all from home.Affiliate Marketing is another great way to generate passive income online. This is the practice of referring people to a particular affiliate/product and making a percentage of the profit. This continues for as long as the buyer makes purchases. It doesn’t stop after the initial purchase.
In essence, you refer once and get paid until the referred buyer discontinues purchasing that product.
Becoming an affiliate marketer is fairly simple and doesn’t require a lot of money but requires time and research. There are online how-to guides available to help you get started.
Regardless of what type of passive income you are looking to invest in, investing is profitable.
It is evident, particularly in this world of uncertainty, that you need to establish some form of passive income to help when times are tough financially.
You have probably heard the saying, “Don’t put all of your eggs in one basket.” That is what it means to diversify – not investing all of your time and money into one source of passive income.
Build your investment portfolio to minimize your risks of loss and create certain protections during volatile markets.
Keep in mind that creating multiple sources of income is not an easy task. It takes time, research, asking questions, and weighing out what is best for you and your family.
If you think building a portfolio is a get-rich-quick kind of investing, you will be sadly disappointed.
In a perfect world, we would all diversify our investment portfolios with sources that produce the highest return on investment in the shortest amount of time. But those generally come with the biggest risk which may not be right for what you are hoping to achieve.
There is no harm in starting slowly and building as you go. Safety first is a great motto for investing!
Robyn Flint writes for Loans.org. She is a licensed realtor, a freelance writer, and a published author. Robyn is also a founding partner of a real estate rehab company.