Passive income is always great. It does not require much of your time, and you still get to make money even when you’re sleeping. According to financial advisor Craig J. Ferrantino, president of Craig James Financial Services, LLC in New York, passive income is great because it allows you to increase cash flow and save more money. In some cases effort is minimal but you can still collect money over time. However, some of these passive income schemes come with risks. But, with careful planning and consideration you can lower the risks to increase potential benefits. Here are some passive money making schemes that can be worth your time and effort.
High-Dividend Stocks
When you buy stocks that pays dividends to its stockholders, you can start earning money simply by being a shareholder. If you buy 500 stocks in Company A, and they pay a dividend of 50 cents per stock, you can earn up to $250 annually even while you sleep. Some companies pay dividend quarterly or semi-annually.
The risk to this is share prices go up and down. You can lower risk by investing in an index or low-cost funds. Another option is to look for dividend paying exchange-trade funds.
Rental Properties
Buying properties and putting them up for rent will require a substantial investment from you, but it can also provide lucrative passive income for many years to come. To minimize risk, look for properties that are located in fast growing markets where people are looking for great houses to live in. Before buying a property, practice due diligence, and make sure that you can cover other costs such as insurance, taxes, repairs, and maintenance so that you can turn a profit. You can also hire a property manager so they can assist you in renting your properties.
Bonds
Another good way to earn passive income while you sleep is by purchasing bonds. Even though the money you receive depends on the fluctuating market, you still receive a check for the interest earned in the mail every 6 months. You get the principal back when the bond matures. There are many bonds to choose from like the US Treasury, municipal bonds, and corporate bonds. They have their own maturity dates, interest rates, and minimum amount to invest. For example, T-bonds take 2 to 10 years to mature and pay semi-annually at a fixed rate and are exempt from local taxes. Corporate bonds are subject to federal and state taxes and can mature anywhere from a few weeks to 100 years.
Rent Unused Space
Websites like Airbnb, Liquid Space and Breather can give you a chance to earn money while you sleep by renting unused spaces in your house. If you have an unused bedroom, earn extra cash by joining Airbnb and renting it out to people who prefer to stay in houses rather than hotels. According to Airbnb stats, 81% of their rentals are from renting a bedroom in 2-bedroom apartments.
Peer-to-Peer Lending
If you have money to spare, make it earn more money by loaning money to others in place of a bank or lending organization. Also known as marketplace lending, peer-to-peer lending platforms like Prosper and Lending Club make crowd funding accessible to borrowers and investors. For example, investing your money in Prosper can earn 5-9 percent annually. However, there are also risks involved like when the borrower defaults on the loan. Reduce risk by requiring borrowers to have a higher credit score or by diversifying your investment across many different loans.
