According to the United States Census Bureau, 20% of families in America earn over $4,000 in passive income. The study found that the dominant vehicles that created this passive income were dividends, interest and rental properties. It’s no secret that passive income is key to building future wealth and bettering your financial position. In terms of retirement savings and long-term financial health, any type of supplemental income with minimal work (aka passive income) will be nothing but beneficial to your future.
Typically, though, the recommended passive income generation ideas or methods point towards some type of rental property or real estate investment – this isn’t feasible for everyone. Given that reality, the top passive income ideas listed and discussed below will not involve any requirement of owning rental homes or being able to afford rental homes!
Whether you’re interested in risking an initial basis of capital or looking to spend minimal money to get started earning passive income, there is certainly a unique idea below for you. Check out the top ideas listed below. Pick one (or multiple) passive income approaches and begin building and planning for your future through additional income streams!
Flip Retail Products
Flipping retail products might seem like a pretty obvious tactic for earning passive income, but many people fail to take advantage of it! With how digital this world has become, you have the luxury of buying, selling and flipping products through platforms like eBay and Amazon.
As you continue to build a profile on the various platforms that you can sell products on, your image will be more and more recognizable and it’ll get easier and easier to sell more products in the future. Flipping retail products is primarily an arbitrage opportunity, requiring pretty minimal work and allowing you to make some steady passive income.
Dividend Stocks
Investing in dividend-paying stocks is a pretty common passive income approach; many investors will purchase shares of different companies that they think highly of and accrue the dividends. Shareholders in companies of dividend-paying stocks receive a payment at a regular, specified interval – this is very beneficial if you prefer a steady and measurable passive income. As you purchase more shares of the stock, your dividends payment will incrementally increase as well.
Unfortunately, there is some risk that goes along with purchasing stock for the passive dividend payments. First and foremost, many of the highest paying dividend companies simply cannot sustain those payments over a long horizon. Beyond that, you’re also betting on the future value of a company; you might make passive income through the stock you hold, but you risk the possibility of that stock’s price going down from your initial basis.
Invest in REITs
A REIT is a Real Estate Investment Trust, a company that owns and manages real estate. These investment vehicles can be purchased on the stock market and they pay out dividends to their holders. The best REITs have a record of continually increasing their dividend on an annual basis, giving you the ability to have a growing stream of dividends over time.
Unfortunately, similar to purchasing a stock for dividends, investing into a REIT comes with the inherent risk of the price of the purchased shares going down in price. During economic hardships an REIT will also be hit with the downturn and will likely have to cut or eliminate their dividend payments.
Advertise on your Vehicle
If you regularly drive on a day-to-day basis, this might be a great passive income opportunity for you. Contact a specialized advertising agency and have them evaluate your driving habits including where you drive and how many miles you drive. Based on the results of the analysis, the advertising agency will reach out to you and potentially offer to wrap your car with the advertisement.
This passive income idea is a great one as you aren’t changing anything from your ordinary life. You’re already driving regularly and do not need to make any changes to your regular route or daily process – the company will pay to have the vehicle wrapped and will pay you for the advertisement placement on your vehicle!
High-Yield Savings Account
Earning passive income through a high-yield savings account is a very viable and common practice amongst Americans; although, it does come with a bit of a trade off. Arguably the biggest downside of this approach towards building passive income is the fact that a high-yield savings account does not earn the same levels of passive income as stocks or other ideas might.
You should view this idea as an option for building up your emergency savings fund – these accounts are typically federally insured accounts that earn interest rates well above the national average. If this is a possible route of passive income for you, you should shop around for the best rate; different servicers will provide better rates than others which is ultimately cash in your pocket.
CDs
CDs, certificate of deposits, are a type of savings account that is used for a fixed period of time. The biggest difference between a CD and a high-yield savings account revolves around the fact that certificates of deposits are used for a fixed period of time and give a fixed interest rate for the duration of the CD.
A high-yield savings account, on the other hand, offers a variable rate that will fluctuate over time. For this reason, a CD is a better option for those looking to create a fixed and measurable passive income schedule over a specified time horizon.
Invest in Fractionalized Pieces
This is a more unique approach to passive income than the other ideas mentioned above. Fractionalized art and real estate property is becoming more and more common given the accessibility that people have through the internet. Platforms like Masterworks allow you to buy shares representing an investment in artwork – you can buy fractional ownership of pieces from artists like Warhol and Banksy.
Yieldstreet is another platform that offers this type of investment into alternative investment vehicles, allowing you to take fractional ownership of the property. You can view these fractional shares similar to a “stock”, you can buy or sell your fractional position in the future and accrue the passive income from your position improving!
