Finance

Invest To Have a Passive Income

passive income
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Written by Ralpha

Are you an expert in business? Do you want to have an income from running a business?

One of the known ways to have an income is through passive income. It is an earning wherein an individual earns or receives from a rental property, limited partnership, and other ways in which you are not directly involved. It means it an income wherein it requires little to no effort on earning. It is the case where the earner spends little effort in growing the income. This is why it is also called progressive income.

It simply means that the money flows regularly without the requirement of your time to create it. It is simply making an upfront investment, either money or time, and then once it is already on-going, minimal maintenance is required in moving forward. This is why many businesses are entering the world on how to earn passive income. Now, what are the best passive income investments nowadays?

  1. Index fund
  • It is also called the index tracker. It is an exchange-traded fund that follows certain rules in order for the fund to track specified investments. It means that the mutual funds are tied with a particular index. It may also have policies that will screen for social and sustainable criteria. There are some advantages in choosing index funds, namely:
    • Low costs
    • Simplicity
    • Lower turnovers
    • No style drift
  • If there are advantages, there are also some disadvantages depending on the case of the investor, and these are:
    • Possible tracking error from the index
    • Common market impact
  1. Dividend stocks
  • It is considered one of the easiest ways for investors to create a passive income. When a company has earnings, it is paid back to the investors as a dividend. Then, money can be reinvested. It may commonly result in additional shares and, sometimes, receiving a cash payment. It is because it is a dividend payment made through the form of having additional shares instead of a cash payout. It is said that it is a great way to build long-term wealth for individuals aiming to have a passive income.
  1. passive incomePeer-to-peer lending
  • This is the oldest way of earning passive income. It is abbreviated as P2P lending, wherein lending of money to individuals or businesses is being practiced. Mostly, it is often done through online services. Some of its characteristics are:
    • There is no necessary common bond between lenders and borrowers.
    • It is sometimes conducted for profit.
    • The lenders can choose which borrowers they wanted to invest in.
  • Most of the services of peer-to-peer lending are:
    • The online investment platform that enables borrowers to attract lenders or investors.
    • The processing of payments from borrowers to lenders.
    • The legal compliance of both parties.
    • Providing customer service to borrowers; and finding new lenders and borrowers.
  1. Real estate
  • Nowadays, this is the most preferred of investors who wanted to have a long-term income. One of the common ways is investing in rental property, which is common in different countries. Also, this is best for investors who are not into dealing with the day-to-day handling of concerns about their income.