The phrase “passive income” or “passive investment” gets thrown around a lot these days. This usually means setting something up, then letting the asset work for you. Your money builds itself without you having to pay much attention to it.
Below, I’m going to show you some great opportunities for true passive investing. I’ll teach you a little more about it. Then, I’ll go into each one a bit and show how you can take advantage of these opportunities this month.
What Is Passive Investing?
When you engage in passive investing, you are applying a true “set it and forget it” strategy.
Your money works for you, instead of you working for money. In other words, the money you invest does the work. It brings you more money to reinvest or use on things like vacations, gourmet food… dream of fun things to do and fill in the blank.
You use your money to set up a system, buy a stock or a piece of real estate. Then, if you’ve purchased a valuable asset, it can build more wealth over time. Many assets will even give you yearly, quarterly or monthly payouts. After setting it up, a passive investment is one that you don’t need to think about for months, sometimes even years.
Active vs. Passive Investing
Passive investing is one of the best ways to build wealth because it’s low maintenance. It costs way less time and money to maintain. It can also give higher long term returns, and can be less risky than active trading.
Plus, it’s tough to find good active portfolio managers. The moolah they bring you is a measure of their worth. It isn’t easy to find active managers who keep bringing a lot of it.
How to Passively Invest
Start with research. Don’t randomly pick an investment, especially stocks.
Random buying is how investing gets a bad rap. It’s the exact reason my cousin looked at me funny and asked, “You mean like gambling?” when I asked her whether she invests.
Look into all kinds of things. Research types of passive investments, industries and individuals. By individuals, I mean a stock, a house, a particular bond, etc.
You’ll find the type of passive investments that work well for you. But, if you have even a little bit of cash to invest, the passive investments below can get you started. You don’t have to put in much money, and you can get started this month.
Top Passive Investing Opportunities
No. 1 Stocks
Stocks are a solid basic investment if you want to grow your portfolio passively. They can be tricky, though. You should do your own research or get some professional guidance before buying stocks.
Choose one that has a history of solid growth, strong leadership and strong sales. Future company growth is important, as well as how much you’re willing to pay for it. It’s easier said than done, so don’t get discouraged.
To get started, you can put a little bit of money into a few stocks. This can give you a taste of what it is like to passively invest in them. And as you’re learning, make sure the money is something you can afford to lose.
There are also investment research subscriptions you can get. Professionals do the research for you and suggest companies to invest in. For example, Liberty Through Wealth is a free e-letter that’s packed with investing tips, tricks and opportunities. And you can sign up for that below. Or check out these other free investment newsletters.
These are nice because you can invest while learning about what to look for in a company.
No. 2 Dividend Stocks
When it comes to passive investing and income, dividend stocks are a favorite. I love them because of the payouts. You buy a system that’s already in place and get paid. There are even some dividend stocks that will pay you monthly.
Plus, with free investing apps like Robinhood, you don’t need much money to get in on the action. Larger brokers such as Charles Schwab have also lowered the barriers to entry.
With dividend stocks you should also be wary of high payouts. Sometimes the companies can’t sustain their dividends. One metric that helps on this end is the payout ratio. And overall, dividends can be a nice incentive to buy.
You can start small but to see higher passive income, you’ll need to invest more. Even so, dividend stocks are a nice alternative to rental properties if you want reliable cash.
No. 3 Commercial Real Estate ETFs
You might also see these as REIT ETFs. There is a difference between REITs and REIT ETFs, though.
REIT stands for Real Estate Investment Trust. This is a company that invests in real estate, then offers their stock to you. These companies pay dividends in the form of payouts from the rental income they receive.
ETFs are Exchange Traded Funds, which are a group of companies combined into one stock. Some ETFs also pay out dividends quarterly.
The great thing about REIT ETFs is that they pay high dividends. The underlying companies are required to payout a large portion of their income. And if you can find some commercial REIT ETFs in particular, you do very well in the years ahead.
No. 4 Crypto
I know. You’ve already formed your opinion on cryptocurrency. If you haven’t invested yet, I urge you to taste a little.
Cryptocurrencies are being adopted by large companies like Visa, Tesla and Starbucks. They’re becoming more common.
Even if they don’t replace fiat currency, there’s tons of potential in a long-term investment. Besides Bitcoin, there are thousands of other altcoins to choose from. Some can make you a LOT of money with a small investment.
But, the risk is high and as with any other passive investing, do your research. Don’t invest more than you’re willing to lose.
No. 5 Real Estate
So, let’s be clear. This takes a lot of work, time and capital at the beginning. It’s going to take longer than a month to follow through with this one. But it has amazing pay-offs.
If you find a management company, you don’t have to deal with fixing toilets and other maintenance directly. This does come at a cost but can make real estate a more passive investment.
There are so many amazing advantages that can only come from real estate investing. These include tax benefits, the novelty of owning a physical piece of land and having control over your net worth.
You could invest in a piece of land for commercial or recreational use. You could hold it and see capital appreciation, as well as collect rent income from it.
There’s a reason so many people have become filthy rich from real estate. Get some help at first, and make sure the person who’s teaching you has done what you want to do.
A great first step for this month is to find someone who does a lot of real estate investing. Ask to go “hunting” with them. See what their process is, and why they do or don’t like a piece of property. It can be lots of fun and give you some invaluable insight.
The Last Word and More Passive Investing Opportunities
Passive investing takes less work than active investing. You can grow your portfolio and net worth with little-to-no work. Then with your free time, you can focus on other leisure or wealth-building pursuits.
Knowing and researching the above opportunities can give you a great edge. Don’t be afraid to reach out for help.
It takes some grit, and you’ll likely lose money at first, but keep improving your skills. You’ll be bringing in that passive cash soon!