Imagine earning money as you sleep, think it’s a dream? Not necessarily, this is the old money visual, the goal of most people in society.
This is of course, achievable, generating money while doing less is what you call passive income investments. Passive income is a simpler context, which “allows individuals to earn without being actively involved”.
Passive Income Investments
Passive income is generally considered a residual income. Residual income does not mean a second job, but easy money without having to physically participate.
You’re probably curious to know more or probably you’re starting your way through passive income. Don’t worry, this article will help how you can generate passive income and other passive income ideas.
Generate Passive Income
Earn money as you sleep is easy once you get the idea of how to generate passive income. But firstly, you must have your income streams or means of where to get your money.
It is important that you have a monthly income or an active income. You can start your own business like simply franchises, online stores, or open stalls for you to have another means of cash flow.
Whether your job, freelance, or buying an existing business, it’s important that you have means of income that will boost your savings for passive income investments.
By having an income stream, you can easily figure out which type of passive income investments you would prefer.
There Are 3 Types of Passive Income.
1. Investment
Passive investments are usually done through pay dividends. Investing money on the market may be easy, but requires more study before shelling out most of your income. This involved risks such as low, moderate, and high risks.
Passive income in investment is usually done through stock brokers. People who invest in these companies or organizations are called shareholders which earn dividend stocks.
Dividend stocks are simple ways these investors earn. Depending on the company they choose to invest in, the company’s generate profit will be funneled back to the investor in the form of dividends.
Once investors receive their shares, they have the option to reinvest dividends or choose to withdraw from their cash dividends.
2. Rental
Besides dividend stocks, rental income is most common in the country. With the right purchase, it can add to your monthly cash flow.
Rental properties are usually offered by Airbnb, booking.com, and other online rental property listings which can make your property discoverable.
However, there are things to consider when choosing rental income:
- If the property has ROI or return on investment
- The cost, time, and effort to maintain the rental property
- Lastly, the financial risks of purchasing rental properties
Just like other passive income investments, you must consider the risks when choosing to invest to ensure you get your hard-earned money’s worth.
Passive income in real estate also offers minimum investment. That’s why a rental property does not always have to be purchasing millions worth of real estate, earn rental income just by renting out extra space in your home!
3. Online
Online businesses like selling online, affiliate marketing, and online courses are some opportunities for passive income sources. However, online passive income is not as passive. unlike the last 2 mentioned.
Starting up your business online may require some time and stability before you finally start generating income.
Once you established that, you can easily learn how to make that online profit more passive.
Adding passive income streams will allow you to generate income or add a passive income stream to your existing business or passive income strategy.
Now that you have an idea of what type of passive investment you would like to invest money in, here are more detailed passive income ideas based on your chosen type.
Passive Income Ideas
The general idea for passive income is to build wealth. Earn passive income through the ideas listed below.
a. Ad Space
Ad placemat is one of those passive investments that you have to rent out on online platforms for promotion like Facebook or Youtube. Contact ad placers or advertisers looking for advertisement space online.
b. Peer to Peer Lending
Peer-to-peer lending allows the borrower to lend money without going through financial institutions like banks. P2P is much riskier than money market funds or high-yield savings accounts.
A popular method for passive income investments in the Philippines. The borrower pays the lending money with interest rates over the agreed time period.
There are several P2P platforms like LendPH, BlendPH, or Acudeen to help you get started in P2P transactions and see available methods through funding or investing money.
c. Website and Digital Products
Another way to generate income is by building or selling websites. Buying a website or website flipping, is buying a potential website and reworking or improving its overall look. Make the site more valuable to increase its value.
Websites earn passive income in 3 ways:
- Advertisement – Passive income through Google ads or other online ads.
- E-commerce – Earn passive income through selling or buying services or products online even with no inventory.
- Affiliate marketing – Affiliate marketing is most common now among vloggers or influencers when promoting products rather than ordinary blogging.
- Flippa.com and Empireflippers.com are online platforms that market websites for those seeking to buy or sell.
Digital Products on the hand, are passive income investments that allow you to sell Ebooks, online courses, graphic artworks, or anything that you can share your work, skills, or talent that you are passionate about.
You can also earn by affiliate marketing through blogs or vlogs when readers purchase products you mentioned or recommended.
The goal is to generate income streams on your work and at the same time, people will actually take an interest in it.
d. Dividend Investing
Dividend stocks mentioned earlier, are one of the most usual passive income ideas. Choose a company that has a profitable venture. The more dividends, the more money you will earn as a shareholder.
If you earn less than 3%, it won’t generate enough as your passive income stream, especially, if you invested a small capital.
Look for companies that have built are known among investment companies like PSEI or you could look it up with a stock market broker. As mentioned, once the dividend is received you can either cash out or use it on other opportunities in earning passive income
e. Crowdfunding
Crowdfunding is pooling money or capital from different investors to a specific business venture. This passive income is of high risk among investors but if done well, would do good in generating passive income.
Crowdfunding can be invested in small or start-up businesses or even real estate. Despite real estate investors needing more capital, with crowdfunding, you can invest for less.
Companies in the Philippines use crowdfunding to raise capital for their ventures, while investors earn shares from the company gain. Crowdfunding real estate also means having to use the capital to improve these real estate properties.
f. High Yield Savings Accounts
Like money market funds, investing in high-yield savings accounts or the bank may generate less passive income which requires lesser risk.
If you’re not familiar, high-yield savings accounts are time deposits that won’t generate passive income as much compared to other investments mentioned but would still allow your money to grow.
However, if you still want to earn money with interest rates, then consider looking through brochures, banking options, and representatives so that you can compare packages for a high-yield savings account.
g. Mutual Funds
If you’re not interested in dividend-paying stocks, mutual funds in the Philippines are usually offered by banks and investment companies.
This type of passive income pools money to be invested in different securities such as the stock market, bonds, and other assets.
Before investing in mutual funds, know your goals (short vs long term), risk tolerance, and how long you plan to hold your investment.
In the Philippines, there 2 common types of mutual funds, index funds, and actively-managed funds. Index funds track specific funds like the PSEI (Philippine Stock Exchange Composite Index).
While actively-managed funds are managed by professional money managers that outperform the market. Knowing your passive income strategy will help prevent losses to this type of income stream.
h. Treasury Bonds
Another passive income source is treasury bonds. They are maturity bonds from debt securities from the Philippine government.
It is another safe and less risky passive income mostly because it is backed by the government.
You may avail of T-bonds by going to the website of the Bureau of Treasury and see if your nearby banks offer this type of passive income.
i. Real Estate and REIT
Besides rental properties, a real estate investment trust is a real estate investment for those not interested in renting a property but choosing to invest in real estate.
REITs are companies that manage this type of investment much similar to mutual funds. They also pay out 90% of taxable income among dividends to investors.
Real estate investment trusts allow you to buy more shares in real estate without the high risks, however, still exposed to the company’s earns on the real estate returns.
If you’re interested in this real estate investment, just open a brokerage account with a stock market firm. Make sure they have a reputable tie-up broker by going through the bank’s website for a list of partners.
j. Master Nodes
If you’re familiar with the cryptocurrency market, then master nodes are of the same passive income done through the server network.
The master node is the server and the nodes are the client. To get started, lock a specific amount in your crypto wallet. Set up a storage space to house your blockchain. After which, just set up a server for your IP that can host 24/7.
You earn money by keeping a certain amount, rewarded, and then paid by the network.
Like most online network passive income streams, it requires research to understand the modern way of investing.
You can look into DASH, one of the popular cryptocurrency websites in the market today to learn more about these methods to create passive income.
k. Cryptocurrency
Cryptocurrency is very much popular among today’s young investors like millennials. Just like Bitcoin and altcoin, it is an online network that generates passive income opportunities.
Unlike the stock market investment, these require digital wallets to store and lock in investments or also called, “mining”
l. Fixed Income Securities
Lastly, this type of passive income offers a fixed rate among its investors. It provides more steady stability compared to the stock market.
Mostly backed by the government and in the event of bankruptcy, offer higher asset claims.
But, like passive income through savings accounts, requires a certain time to increase interest rates or depending on contract length.
Because of its lesser risk, the return may be lower. These are types of fixed-income securities to make you familiar:
- Treasury bills (T-bills)
- Treasury bonds
- Treasury notes
- Corporate bonds
- Dollar Sovereign bonds
- LTNCD (Long term negotiable certificate of deposit)
While there are other possible passive income ideas, consider a strategy that would best suit your interested capital, business, and trusted broker to help build your wealth.
Why Earn Passive Income?
Passive income streams are monetary investments that would generate future income that builds wealth into money you worked hard for.
Not only does your money work for you, but adds ways for interest income to your cash flow.
Besides this, these passive income ideas will help make you more financial security. Although it does not happen overnight, you know your hard-earned money grows.
With the right patience, timing, and continued research, you can successfully utilize your passive income streams as your source of financial means.
The Best Passive Income Ideas
As mentioned in this article, rental income or real estate is one of the most common types of passive income investments.
If you’re looking into real estate investing, then consider the best properties available in the market that is secured and would also generate an interest income.
Secure a rental property that is world-class in architecture, secured living, and offers convenient amenities while being nearby establishments.
Want a hassle-free and secure rental property? These condo for sale in Tagaytay should be first on your list.
Properties in these areas offer the best view and convenience which would make it easier for you to look for interested occupants and easier to list on online rental income streams like Airbnb.
There are different passive income strategies from real estate investments or through your own savings account, these are some of the ways to start earning passive income.
The more you learn about how to make your money grow will surely help you attain financial freedom and allow you to enjoy more of your time.
Read more: Different Types of Real Estate You Should Invest In
