Passive income: sounds like a dream, does it not? Money rolling in while you sleep, work, or even sip your favorite beverage by the beach. Luckily for you, the good news is, passive income is not just a dream. As a matter of fact, 20 percent of households in the US earn passive income.
There are some solid, low-risk options out there that let you earn passive income consistently. Before you start imagining yourself living in luxury from passive income alone, let’s set the stage.
Passive income doesn’t refer to a magical fountain or tree of wealth that just produces money. It requires a bit of initial work or investment to set up, but once that’s done, you can enjoy steady earnings without constant effort.
If you’re looking to boost your bank account with minimal stress, these options are designed to be low-risk but reliable.
Dividend Stocks
Companies that consistently pay dividends are usually financially stable. They’ve been around, they’ve grown, and they aren’t going anywhere anytime soon. Look for companies that not only pay dividends but often increase the amount they give each year, like Canadian Utilities.
The Canadian Utilities dividend payments are always consistent. Hence, this company’s stock is listed as the topmost one in the Canadian market that can generate reliable passive income over the next decade.
As ValueTrend notes, this company has been known to consistently grow its dividends. It has maintained consistency in paying out shareholders, meaning it’s a reliable dividend stock investment option for those looking for passive income.
Also, over time, if you keep reinvesting those dividends, your portfolio can snowball into something quite delightful. You will, however, always have to be very careful about reinvesting, because do it wrong and you will have lost all your hard-earned money.
Real Estate Investment Trusts (REITs)
Wouldn’t it be great if you could invest in a company that would own, operate, or finance income-generating real estate on your behalf? All you’d have to do is collect the passive income generated through such an investment. A dream come true, right?
Turns out, something like this does exist in the form of real estate investment trusts (REITs).
REITs have this innate beauty in them: you don’t have to buy an actual property yourself. Just invest in real estate through REITs. No landlord headaches as well; just passive income from the properties the REIT manages.
REITs are legally obligated to return around 90 percent of their taxable income to shareholders. This is the law and REITs can’t ignore it, which, in turn, means you get to enjoy regular payments. Not a bad way to generate passive income from real estate, right?
Peer-to-Peer Lending
Peer-to-peer (P2P) is where you get to act the role of a bank. You lend money to individuals or even small businesses through an online platform, and in return, they pay you back with interest.
The best part, however, is the fact that because you’re the lender, you set the terms. You decide how much to lend and to whom, and you can diversify your risk by spreading your money across multiple borrowers.
Now, P2P lending does carry some risk if borrowers default. However, the platforms typically have rating systems to help you assess the likelihood of being repaid. Plus, if you do your research and lend wisely, you can earn solid returns.
High-Interest Savings Accounts
Traditional savings accounts give you a return so small it’s almost invisible. High-interest savings accounts, on the other hand, can provide a reliable, low-risk source of passive income. Sure, you won’t be swimming in cash overnight. But the steady trickle of interest can add up over time, especially if you keep depositing into the account.
Banks and online financial institutions are in fierce competition to offer the best rates, and that works in your favor. The money is liquid. Hence, if you need it, you get to access it immediately, all while earning a good return. Of course, it’s not the most thrilling option, but it’s certainly one of the safest.
There you have it – low-risk ways to earn passive income consistently. The key to passive income is patience and consistency. None of these passive income options will make you rich overnight. However, they do offer the chance to build a stable financial foundation without constantly worrying about risk.
You might be diving into dividend-paying stocks or dabbling in REITs. No matter what, always remember that the best passive income streams are those that let you sleep soundly while still growing your wealth.
