For example, if you have $1,250,000 worth of stocks that yield 4% annual dividends, you would be making around $50,000 a year in passive income. Investing in the stock market can be risky—there’s no guarantee that you’ll make this income, or any income at all, from your investments. However, stocks that consistently issue dividends tend to be among the most stable. They’re also going to have a higher price tag per share.
You can buy bonds from any broker that sells stocks and other investments and they’ll sit in your portfolio until they mature. You could potentially sell them before then, but that’s usually not going to be in your best interest. When the bond matures, you’ll get back the money you initially invested, plus interest. You can then turn around and reinvest all of that money, or keep it to live off of. Pay attention to the bond rating. The higher the rating, the more likely that the bond will be paid back. Bonds with lower ratings may potentially pay more, but they come with a lot more risk that the company or government behind the bond will default.
Make sure the interest you earn from your savings outpace inflation. You typically can’t withdraw from these accounts for several years after you open them, so don’t use one for your emergency fund or money you might need to access quickly. The nice thing about these accounts is that the income is guaranteed—even though you might have to wait several years to get it.
You can get started with real estate crowdfunding online through sites such as Fundrise and Roofstock. Real estate investment trusts (REITs) are another option. You can buy shares of these through your stock broker, just as you would shares of stock. [6] X Trustworthy Source Investor. gov Website maintained by the Securities and Exchange Commision’s Office of Investor Education and Advocacy providing free resources about investing. Go to source
House-sharing services, such as Airbnb or HomeAway, allow you to market short-term rentals relatively easily. You can block off times when you want to use the property yourself.
Keep your eye open for good deals so you can jump on them quickly. Being fast and flexible is an important part of buying investment real estate. Stay in contact with real estate professionals, including brokers, agents, and attorneys, so you’re ready to go when a potential deal catches your eye.
If you don’t use a property management service, you’ll likely find that you don’t have enough time to manage your rentals properly—especially if you also have a day job. Check reviews of property management services before you pick one. Stay away from those that get consistently poor reviews from tenants. While it’s no secret that many tenants have a less-than-friendly relationship with their landlords, consistent negative reviews indicate this company will likely do more harm than good for your business.
If your property is being managed by a property management company, it shouldn’t require a lot of day-to-day work on your part. However, it will still require your attention from time to time. Periodically (such as whenever tenants move out) inspect your property and see what needs to be repaired or what can be inexpensively upgraded so you can increase the rent you’re getting from the property.
For example, if you’re a CPA and passionate about personal financing, you might start a personal finance blog to help people straighten out their money situation. This works for creatives too! If you’re passionate about doing Renaissance-style oil paintings of cartoon characters, you can turn that into passive income online. Make sure your niche is something you’re passionate about so you’re consistently curious and excited about it. Excitement and enthusiasm about a topic are contagious and will bring more people to your site.
A basic website is relatively inexpensive to put up (think less than $100, including domain registration and hosting) and can serve as your launching pad for all of your online endeavors. But you can also launch from a social media platform, such as a Facebook page or an Instagram account.
Display ads are usually set up through networks. Once you sign up for the network, you don’t have to do anything (other than sit back and watch the money roll in). The advertising network pays you based on the traffic to your site. Display ads are potentially earning you money 24/7 and you don’t have to do a thing—the definition of passive income.
You don’t necessarily have to start a blog to build up a steady stream of passive income with affiliate links. You can use social media as well, including platforms such as Instagram or YouTube.
Some blogging platforms, such as Medium, allow you to put content behind a paywall to generate passive income from subscribers. It doesn’t require a lot of effort on your part and you’ll earn money every time a subscriber pays their monthly fee. If you don’t have a blog, you can also use a service such as Patreon to pick up money for additional content. For example, if you have a YouTube channel, you could offer bonus videos through a Patreon account for subscribers only.
When it comes to social media, each platform caters to a slightly different user. Facebook and Twitter are nearly universal, attracting a broad mainstream. LinkedIn content is primarily professional, based on industry issues, politics, and economics. For more creative and entertaining content that appeals to younger users, try Instagram or TikTok. You don’t have to post on social media as much as you post on your main account or website, but keep it predictable. For example, you might tweet 3 times a week. You can curate posts from others that fall in line with your own niche and personal branding to fill in the gaps of your own content.
The number of followers or subscribers you have online gives you a general idea of how many books you might sell—but don’t expect all of those people (or even most of them) to buy your book. The ones who interact with your posts on a regular basis are most likely to buy it. If you have a particular area of expertise, you might also think about writing a “how-to” book that falls into your niche. For example, if you’re great at organizing and de-cluttering, you might write a book that teaches people some of your favorite tricks.
