Jaspreet Singh / Jaspreet Singh
Passive income is not free money — it’s simply money you perform little action to earn. It’s a large contributor to creating wealth and no matter how much you make, an extra source of income with minimal work is a big deal.
In his YouTube video on generating passive income, entrepreneur and money expert Jaspreet Singh said, “Earning passive income doesn’t come from a one-time investment, but rather from consistent investments into cash-flow assets. Especially if you’re looking to earn life-changing money from passive income.”
Here are his six best ways to make passive income.
Real Estate or Rental Income
Real Estate income is one of the oldest means of earning passive income. You buy a property or house and people pay you to use it. Investing in real estate is a good way to make money. If you can afford the upfront costs like the down payment and fees, it’s a profitable choice in the right areas.
With houses, people usually sign a rental agreement for a year, so you have a steady income for that time. For business properties, the rental agreements can even be longer, which means more money for you.
Remember it’s not entirely easy money as you have to take care of things like property upkeep, paying taxes, insurance and other expenses which may come up. You can hire a company to handle some of the tasks, but it’ll reduce your profits.
Real Estate Investment Trusts
If you like the idea of investing in real estate but don’t want to deal with choosing and maintaining properties yourself, Real Estate Investment Trusts (REITs) could be a great option.
Instead of buying actual properties, you can buy shares in a portfolio of properties. This portfolio is managed by professionals. When people rent these properties or they increase in value, you get a share of the profits as dividends.
Each REIT is designed to make you money so you don’t have to worry about its goals. Your investment can include differing types of properties to balance the portfolio. You can also buy and sell shares of these REITs easily if they’re traded on stock exchanges.
Singh advises investors to hold on to their REITs for a long time to see the best results.
Renting Out Your Home
If you don’t mind having strangers in your home, you can rent out your home to tourists or visitors for a few days or weeks and earn income from their stay. If you don’t have enough money to buy a property or commit to long-term rentals, this can be a great option. You can do this with spare rooms in your home or with a property you have in another location that you don’t use often.
According to Singh, “The downside is that you won’t always know when you’ll have tenants, which can make it stressful to cover your mortgage and make a profit. If that uncertainty bothers you, then a traditional rental might be a better choice.”
If you buy a stock from a company that pays dividends, you become a shareholder and are entitled to receive regular payments from the profit the company generates. This is a common way for regular people to invest in profitable businesses and earn passively.
“To maximize your dividends and earn even more, consider reinvesting your dividend into more shares of the same stock,” Singh said. “They’ll mature as the years go by and set you on [the path to] financial freedom.”
Investing In ETFs
Exchange-traded funds (ETFs) are a mix of different stocks from different companies. If you’re new to investing, choosing ETFs with dividend stocks is a good idea. It spreads out your investments, making it less risky. Plus, buying and selling ETFs is easy, just like buying and selling regular stocks.
“You might not get as much in dividends as you would if you invested in just one company, but it’s safer,” Singh said. “It might even be a better option than buying individual stocks.”
High-Yield Savings Account
If you are unsure about investing in stocks or real estate, a high-yield savings account is a good safety net. You can save your money with a bank for long periods and they will reward you with interest. This is a win-win situation for everyone, as your money grows and the bank benefits by using it for business.
Longer periods of saving mean more income generated. However, the income from a savings account is low compared to income earned from investments. So you might want to consider what is more important to you: safety or higher returns.
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