(STL.News) Passive income is one of, if not the easiest, ways to make money. It’s a great way to supplement your income, and it can allow you to retire early or simply step back from your current job to pursue other interests. Passive income is any type of investment that generates returns without requiring much work from you. But if you’re new to the game, you might not know which types of passive income are best. That’s where this guide comes in. Read on to learn five of the top passive income ventures you can get started with today.
Dividend Stock Investing
Dividend stock investing is a great option for generating passive income for yourself. Dividends aren’t the same as interest income, which comes from the government. This means they’re taxed at a lower rate than interest income. Because of the lower rate, dividends can be an easy way of earning passive income, just as long as you invest in high-quality companies with a strong history of paying dividends. Dividends are usually less liquid than bonds. They’re typically smaller and can’t be sold easily on an exchange like you can sell certificates of deposit (CDs).
By far, real estate can be one of the most profitable, low-maintenance ways to make passive income. While you do need to understand the real estate market, how to invest, and understand how paying the property tax works, you can still make money without really having to work. It’s important to note that if you choose this route, you really need to understand the overhead costs of a rental property. Property taxes can add up quickly if you buy in an area that’s considered a hot commodity. That’s why it’s better to do your research and buy in a location that has comparatively low tax rates. You’ll still make a profit but won’t be saddled with a higher-than-average property tax that eats up your profits.
You should also weigh the pros and cons of the property, in addition to the amount of rehab it may need prior to buying. New construction properties are usually a better investment; however, they cost more to acquire. Rehab homes or those sold in foreclosure cost less but might need a lot of work to get them up to code. If you go this route, you need to have the property inspected and make sure that there’s no structural damage or faulty electrical or plumbing systems. The last thing you want is to invest in what you thought was a diamond in the rough, only to end up with a money pit you can’t get rid of. Look for those that only need a fresh coat of paint, flooring, and at the most, a mini-facelift to look showroom new.
Online Savings Accounts
An online savings account is another way to earn interest on your money while you save for the future. It’s similar to a traditional brick-and-mortar bank account but with more flexibility and an easier sign-up process than having to go into a physical branch. To get started, you’ll need to pick out one of these accounts and open it. There are several things to consider when choosing an online savings account:
- How much interest will I make? This varies by provider. Some banks offer higher rates than others, so take the time to research before making a move.
- What are the fees associated with this type of product? Different products might have fees that go along with them.
Peer-to-peer lending is another great way to make money. In essence, you lend money to others and earn money by the interest they have to repay. It can be risky, however, when done correctly, it can be quite profitable.
Bonds are considered a debt type of investment. They’re backed by the promise of a payout once it matures at a later date. While some investors might consider bonds to be a boring type of investment, they’re far safer than investing in the stock market, especially if you’re just starting out.