Passive income online Tips
What is Passive Income?
There’s no magic trick that turns your time directly into money. Instead, you plant seeds so your money will grow, even when you’re sleeping or at the park walking your dog. After reading books like Rich Dad Poor Dad and 4 Hour Work Week, I became interested (okay, obsessed) with making passive income.
Passive income might take some work, money, and maintenance, but if you plant passive income seeds to suit your climate (aka your personal preferences and skills), you can bring in quite a harvest.
Make Money With Money
1. Invest in Peer-to-Peer Lending
Lending Club
Enter Lending Club, the web-based peer-to-peer lending platform where investors looking for high-interest opportunities provide the funds for loans. You can earn interest rates in excess of 10 percent a year – about 10 times what you will earn on more conventional interest-bearing investments.
My advice: Per a Lending Club advisor’s advice to me, start out with $2,500. Since you can invest as little as $25 in a single loan, you could buy into 100 different loans. That way, you don’t have to worry about a single loan going bad and ruining your investment.
I have averaged just under 9 percent during the eight years I have been investing with them.
Want to try out Lending Club? You can open a free account here.
Fundrise
If you don’t have the time, skill, or upfront money to flip a house, or if you’d rather not be a landlord, Fundrise is your go-to REIT. With this REIT, you buy shares in the trust, and it uses your money to develop a variety of real estate projects. If the project turns a profit, so do you.
With other real estate investments, you’ll have to have a lot of money saved up to start, but Fundrise lets you get into the real estate business with your Christmas bonus money, as little as $500.
In 2017, the company posted returns of 11.44 percent.
Obviously, these are much higher than you’re going to get with most other investments. What’s more is that you can choose a plan that matches your investment strategy, whether your goal is Supplemental Income, Balanced Investing, or Long-term Growth. You can also look at different real estate projects and choose for yourself which ones to invest in.
YieldStreet
YieldStreet is marketed as an alternative investment platform for accredited investors. In other words, this 2015 startup is going to require a bit more money in the bank.
So what qualifies you as an accredited investor? High income, high assets, and a high net worth.
Once you’re in, you can invest in three classes:
commercial finance,
litigation lending, and
real estate,
all with a $10,000 minimum investment.
While all that sounds great, you may be wondering about YieldStreet’s track record. According to their site, their target return is 8-20%, and they’ve lost $0 in principal.
Vetting investors is an excellent step to ensuring their repayments, but as always, proceed with caution. If you’re financially secure and looking for a quick investment with a high return, YieldStreet could be the company for you.
2. Invest in High-Yield Savings
Savings accounts might be the most boring investment ever invented, but they are also the safest. At 0.15 percent interest or lower, you’d need to exceed the FDIC-insured $250,000 account limit to see any real action.
Online banks provide savings account rates as good as a CD without locking in your money for several years.
Some of the leading online banks average about 1.5 percent interest, which is close to 10 times what you’d get at the bank around the corner. Sure, it won’t make you rich, but it’s safe and easy.
Online banks that offer high-yield savings accounts include:
Barclays, which offers only savings and CDs in the U.S.
Synchrony, which also has limited account options.
Ally, where you can also get a checking account.
Cit Bank, which boasts some of the highest CD rates around.
BBVA Compass, whose Money Market and short-term CDS are competitive.
3. Invest in Index Funds
Index funds give you a passive way to invest in the stock market. For example, if you invest money in an index fund based on the S&P 500 Index, you will be invested in the general market.
This means you won’t have to worry about details like choosing specific investments, rebalancing your portfolio, or knowing when to sell or buy individual companies.
E*Trade is our recommended online broker for buying index funds. They make the research and process of investing in different funds very easy. On top of that, getting your account going is super cheap, and the cost per trade very affordable.
If you are not familiar with E*Trade, check out more details in our Ally Invest review. They have become one of my best accounts for investing. There are index funds set up for just about every market sector out there. You name it.
All you have to do is decide that you want to participate, contribute money, then sit back and relax. Your stock portfolio will be on autopilot.
Pro Tip: I would look at opening a Roth IRA. It will shield your savings from any future taxes and you can withdraw all earning tax-free once you hit 59 1/2. It is one of the best ways to save money for retirement.
4. Invest in High Dividend Stocks
By building a portfolio of high dividend stocks, you can create regular passive income at an annual rate that is much higher than what you get on bank investments.
Just as important, since high dividend stocks are stocks, there is always the potential for capital appreciation. In that way, you can earn passive income from two sources – dividends and capital gains.
You can make this process very easy and affordable by opening an account with Ally Invest. They have one of the lowest fees for each trade and are a long time top brokerage. If you are interested in other brokerage accounts we have
provided a good write up of all the different options.
5. Invest With a Robo-advisor
Letting an algorithm manage your investments is about as passive as you can get. Robo-advisors like Betterment allow you to set your willingness for risk, then sit back and let the income flow. And the fees are much lower than what you’d pay a human account manager. Below is a rundown of a few of the leading robo-advisor platforms.
Betterment
I have been a long-time supporter of Betterment and even did an interview with their CEO in my Betterment investing review. Betterment is great at reducing any taxes you have to pay on your investments, and they work with you to give you the best financial advice through their algorithms.
Unlike other robo-advisors, with Betterment you can actually talk to a human being if you want to. Betterment charges the same fees as Wealthfront, but does not waive the fee on the first $10,000 you invest.
I don’t think you can go wrong with either service, but if I am investing a large sum to create a passive income investment, then I would go with Betterment, as their overall fees are lower.
Blooom
Blooom works very differently from many of the other robo-advisors. It helps specifically with your employer-sponsored accounts (401k, 403b, 401a, and 457 accounts).
Instead of you having to search for the best investment choices for your accounts, Blooom will go through all the investment choices and make adjustments for you.
The service will also automatically rebalance the account as it grows. Blooom is very inexpensive when compared to a traditional advisor at only $10 per month no matter how large your 401k grows.
M1 Finance
M1 Finance comes with 60 pre-designed expert investments referred to as pies, that are curated to help you reach your specific financial goals. Beyond those 60 expert pies, you can create your own custom investments, choosing which ETFs and stocks to invest in.
The platform also allows you to modify your investment selections whenever you’d like, giving you freedom to play a bigger role as an investor. At the same time, M1 does the work of balancing your investments for maximum returns.
Perhaps M1’s biggest standout feature is its affordability. M1 charges no fees, not even trading fees, and it lets you borrow against your account with considerably low interest rates. Read more about M1 Finance in my company review and consider signing up for M1 today.
Cash In On Real Estate
6. Invest in Real Estate with a REIT
With a REIT, all of the money is invested in real estate. Because the REIT owns the property, you don’t have to worry about handling the landlord duties.
REITs typically pay higher dividends than stocks, bonds, or bank investments. You can also sell your interest in a REIT anytime you like, which makes it more liquid than owning real estate outright.
Realty Mogul
If the concept behind Fundrise appeals to you but you’re looking to invest in real estate investment with a little less risk, you need to check out Realty Mogul. This crowdfunded private REIT is targeted towards accredited investors and posts an average return around 8%.
One standout feature of Realty Mogul is its 1031 exchange platform. Based on IRS code section 1031, investors can sell their current real estate, invest the funds gained into a new property, and avoid taxes in the process if they make the exchange within 180 days.
With Realty Mogul, a 1031 exchange is easier than ever. The platform has successfully invested millions in 1031 exchanges. And as Realty Mogul puts it, you get instant passive investing with “No Agents, No Escrow, No Closing Costs.
7. Rent Your Space
If you’re interested in making money in real estate but want more of a hands-on approach, renting out your vacation home, house, apartment, or even a single room can be a stellar way to earn passively.
Airbnb
Airbnb allows people to travel all around the world and to stay in accommodations that are a lot less expensive than traditional hotels. Their site breaks rentals into three categories: private room, shared room, and entire home.
Paula Pant, cubicle renegade at AffordAnything.com, took a stab at making extra money renting out locations exclusively through Airbnb. Her Airbnb experiment netted her an extra $19,000 in revenue and 1 police visit! 🙂
Airbnb charges you 3% on every booking for their services, and you receive payment 24 hours after your guests check in. Wherever you are, you can make money on space in your home that might just be sitting empty otherwise.
VRBO
With over 2 million rental properties, most of which are entire home rentals, VRBO has established itself as a legitimate service for renters and owners alike.
According to their user-friendly website, there are three simple steps to listing: you simple et up your property, get the perfect match, and start earning. If you rent year round, you can pay an annual fee, currently $400, to VRBO.
If you really want to get passive, you can outsource the management of your rental for a slightly higher fee. It’s effortless earning at its finest.
Pro tip: The key to your rental success is reviews. The more 4 and 5-stars you get, the more people will rent your space (and the more money you’ll make).
Put Your Skills To Work
8. Start a Blog
Take it from someone who’s reaping the benefits as we speak — blogs are an unbelievable source of passive income. But there’s more to making bank with a blog than just posting good content.
If you’re looking for an extremely cheap, yet highly scalable way to create a passive income for yourself, you might want to take a moment and consider starting a blog.
Did you know: you can start a blog for as little as a penny for your first month, and just a couple dollars per month thereafter?
Here’s the idea: If you can consistently use your blog and create a lot of value for a lot of people, you can generate an extraordinary amount of passive income. As you post to your blog, more and more, your site will start bringing in traffic whether you put in any additional time or not.
Hour after hour, day after day, your blog is out there doing work for you; it’s the most cost-effective method to creating a truly passive income stream I know of.
What’s the catch? It takes time to get it rolling. That’s it. The sooner you start, the sooner an income stream can begin to grow.
This guide will show how to make your first $1,000 from blogging. You’ll find access to our Make 1k Challenge, which is a free email course that walks through the steps to start your first blog and make your first $1,000.
9. Buy a Blog
Thousands of blogs are abandoned by their owners every year. If you can buy blogs with a reasonable amount of web traffic and demonstrated cash flow, it could be a perfect passive income source.
Most blogs employ Google AdSense, which provides a monthly revenue stream based on ads that Google places on the site. There may also be affiliate programs generating additional revenue.
From a financial perspective, blogs usually sell for 24 times their monthly income. So if the site generates $250 a month in income, you can likely buy it for no more than $6,000. Translation: a $6,000 investment will buy you $3,000 per year in cash flow.
Some sites have good “evergreen content that will continue generating revenue even years after the site has gone silent, so a simple $5,000 investment can net you ongoing passive income.
Bonus tip: If you buy such a site then reinvigorate it with fresh content, you may be able to increase the monthly revenue and sell the site at a later date for substantially more than what you paid for it.
I recommend buying a blog on Flippa. Here are some quick facts on this awesome marketplace:
Includes everything from small sites to ones that garner millions
Currently has more than 2,000 web-based businesses for sale
Based on a bidding system and fulfilled by Flippa Escrow program to ensure your money and business are safely secured.
10. Affiliatize your Blog
Whether you start your own blog or buy a pre-existing one, choosing to affiliatize it is a passive income technique that will serve you well. You can sign up to promote certain products or services on your site, for which you will be paid a flat fee or a percentage of the amount of the sale.
If you think affiliate marketing is too complicated for you, you’re selling yourself short. This strategy isn’t as hard to do as you might think.
You can find affiliate offers by contacting vendors directly or on dedicated websites such as ClickBank.com. It’s always best if the product or service is one that you are either very interested in or one which is highly relevant to your website.
