Passive income is a term that gets tossed around a lot, especially with the continued rise of the gig economy. Often people are looking for ways to make additional money, whether that’s through a side hustle or just a simple way to make a little extra cash. Basically, passive income is anything that you earn outside of your primary job and can provide some extra security in case of emergency, help you save more for retirement, etc.
Many people think of passive income as money you earn without having to do anything — on the contrary, there is still work involved in earning passive income, but it often happens upfront. Here are a few ways you can start earning passive income.
1. High-Yield Savings Accounts
These types of accounts won’t make you thousands a month, but it’s a good step for growing your money for an emergency fund or other savings with little effort. As you put money into the savings account, you will accrue interest which will be added to the balance. High-yield accounts are those that have a significantly higher interest rate than the national average, so it’s important to research your options.
2. Index Funds or Exchange-Traded Funds (EFTs)
Index funds and EFTs are a great way to invest in the stock market without having to choose individual stocks on your own and provides a more hands-off experience than traditional dividend stocks. Index funds hold a wide selection of many stocks, such as the S&P 500. Index funds and EFTs help you balance the diversity of your investment portfolio and eliminate some of the risk of potential high and low swings of individual stocks.
As opposed to buying stake in a company via stocks, bonds allow you to lend money to companies or government agencies and collect interest income. They typically earn a lower return on your investment but are much less volatile than stocks. A lot of investment experts recommend dedicating some of your portfolio to bonds as well as stocks to maintain more diversity and manage risk.
4. Rental Property
If you have the available funds, investing in real estate and renting it to tenants is another great way to earn passive income. There is more work that goes into this type of investment, such as maintaining the property, paying multiple mortgages, and finding a healthy market that makes your return on investment worthwhile. However, long-term rentals provide a consistent source of income in the right scenario.
You can also start by committing to short-term rentals through platforms like Airbnb or VRBO or renting out a room in your current space.
5. Content or Course Creation
Creating an online presence that provides value to viewers can help you earn passive income in a number of ways. While it does take quite a bit of work upfront to build an audience and commit to the creation of the content or course, once you’ve done so you can earn income either through a paid creator fund (such as TikTok or YouTube), or passively sell courses in the background once they’ve been created, tested, and perfected. Remember, creating content or a course is all about selling people something that provides true value their life, business, etc., and not about selling something scammy for a quick buck or “overnight success”.
If you have questions or need help with investment portfolios, savings accounts, passive income ideas, or other ways to increase your income, our expert bankers and financial advisors at Republic Bank are here to help. Give us a call at 800-526-9127 or find more helpful information on our blog.