My Passive Income Journal

Investment Ideas For Passive Income

Investment Ideas For Passive Income

In my books, passive income is the preferred method of supplementing your earnings without having to devote a lot of time and effort (not an exhausting side hustle). There are many different types of investment ideas for passive income, and some may be more appropriate for you than others depending on your skill set, your financial goals, risk tolerance, and available resources.

In this article, we will explore five investment ideas for passive income to get you started on doing your own research.

1. Dividend Stocks

Dividend stocks are stocks of companies that pay regular dividends to their shareholders. These dividends are typically paid out quarterly or annually and should ideally provide a steady stream of passive income. Companies that pay dividends are often well established and have a stable financial position, which can make them attractive investment options for time-poor investors.

To invest in dividend stocks, you can open an account with a brokerage firm that offers access to the stock market. You can then purchase individual stocks or invest in a dividend-focused mutual fund or exchange-traded fund (ETF).

When selecting dividend stocks, look for companies with a track record of consistent dividend payments and a history of increasing dividends over time. Increasing dividends year on year is the gold standard here.

2. Real Estate Investment Trusts (REITs)

Real Estate Investment Trusts (REITs) are companies that own and operate income-generating properties, such as apartments, office building and shopping centers. When you invest in a REIT, you become a shareholder and are entitled to a portion of the income generated by the properties in the REIT’s portfolio.

REITs typically pay out relatively high dividends to investors, making them a popular choice for those seeking passive income. In addition, REITs can offer exposure to the real estate market without the hassle of actually owning and managing physical properties.

To invest in REITs, you can purchase individual REIT stocks or invest in a REIT-focused mutual fund or ETF. Some popular REIT-focused ETFs include the Vanguard Real Estate ETF (VNQ), the iShares U.S. Real Estate ETF (IYR), and the Schwab U.S. REIT ETF (SCHH).

When selecting REITs to invest in, consider factors such as the type of properties the REIT owns, the geographic location of the properties, and the REIT’s dividend history.

My Passive Income Journal

3. Peer-to-Peer Lending

Peer-to-peer (P2P) lending involves lending money to individuals or small businesses through online platforms. P2P lending platforms connect borrowers with investors, allowing investors to earn interest on their investments while providing borrowers with access to capital.

P2P lending can offer higher returns than traditional savings accounts or bonds, but it also carries higher risk. Borrowers may default on their loans, which can result in a loss of principal for investors. To minimize risk, it is important to diversify your P2P lending portfolio and invest in loans with a low risk of default.

Often P2P lending platforms will pay their interest monthly, which is great if you are looking for steady cashflow.

Some popular P2P lending platforms include LendingClub, Prosper, and Upstart.

4. Exchange-Traded Funds (ETFs)

Exchange-traded funds (ETFs) are collections of stocks or bonds that trade like a single stock. ETFs can offer diversified exposure to various sectors and markets, and some pay dividends.

There are many different types of ETFs available, including those focused on specific industries or sectors, those that track specific indexes such as the S&P 500 or the Dow Jones Industrial Average, and those that invest in bonds or other fixed-income securities.

To invest in ETFs, you can open an account with a brokerage firm and purchase individual ETF shares or invest in a diversified ETF portfolio through a robo-advisor such as Betterment or Wealthfront.

When selecting ETFs, consider factors such as the expense ratio, which is the annual cost of owning the ETF, as well as the ETF’s investment strategy and performance history.

Some popular dividend-focused ETFs include the iShares Select Dividend ETF (DVY), the SPDR S&P Dividend ETF (SDY), and the Vanguard Dividend Appreciation ETF (VIG).

Some popular standard index ETFs include the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index and is one of the largest ETFs in terms of assets under management, and the Vanguard Total Stock Market ETF (VTI), which provides exposure to the entire U.S. stock market.

We have already discussed specialised Covered Call ETF’s for maximising passive monthly cashflow in our previous article.

5. Rental Properties

Owning rental properties can be a solid way to generate passive income, although it requires much more upfront investment and management than some other options. When you own rental properties, you collect rent from tenants each month, which can provide a steady stream of income.

To invest in rental properties, you will need to purchase a property, either with cash or through financing, and find tenants to rent the property. You will also need to manage the property, which includes tasks such as maintenance and repairs, collecting rent, and dealing with tenant issues ….. sometimes this is hardly passive income.

When selecting rental properties to invest in, consider factors such as the location of the property, the demand for rental properties in the area, and the potential for positive cash flow.

Ideas For Passive Income – Summary

Passive income can be a great way to supplement your earnings and achieve your monthly cashflow goals.

There are many different types of investments that can generate passive income, including dividend stocks, REITs, P2P lending, ETFs, and rental properties.

When selecting investment options for passive income, it is important to consider factors such as your risk tolerance, financial goals, and available resources. In addition, it is important to diversify your portfolio to minimize risk and maximize potential returns. Of extreme importance is to do your own research and fully understand what you are investing into – eyes wide open please.

By investing in these types of passive income opportunities, you can build a diversified portfolio that provides a steady stream of monthly income without requiring a lot of time and effort – hence passive income.


Hugh Walker