Whether you’re tired of working long hours, feel you don’t spend enough time with your family, or maybe the pandemic has made you rethink your finances. Whatever your reasons, passive income is the ultimate way to provide yourself with more financial and time freedom.
But as we head in 2021, what are some of the best ways to obtain passive income? In this article, we’ll show you five of the best ways you can achieve passive income without much effort.
Let’s take a look at the best passive income investments for the new year.
1. Investing in index funds
Investing in broad market index funds is one of the most popular investments out there. An index fund tracks a particular stock market such as the S&P 500 and mirrors the performance. It’s a hands-off investment and a great way to build wealth over the long term. Most indexes return a respectable 10 percent annually, and nearly all index funds pay dividends to their shareholders.
2. AI Trading
Despite being a relatively new way of investing, artificial intelligence (AI) trading has the ability to produce consistent and strong monthly returns. AI trading works by automatically making decisions and taking actions on what financial instruments to buy, hold or sell. AI trading software can be used for a variety of financial instruments, but they are most commonly applied to stocks and forex. Automated AI Investing solutions such as 8topuz produce returns between 2-4% a month.
3. Real estate crowdfunding
Most people are aware that real estate is a great way to build wealth, but most people believe to invest in real estate you need a large amount of capital. However, this is no longer the case, and through methods such as crowdfunding, you can invest with a relatively small amount of money. Investing in real estate through crowdfunding is a very profitable way to create passive income. Websites such as Fundrise.com generate investors around 8.7 to 12.4% interest a year.
4. P2P lending
It might not be one of the first things that came into your mind when thinking about passive income sources, but it can be a profitable investment. Peer-to-peer lending platforms bring together people looking to invest money with prospective borrowers who are looking for a loan. So essentially, you’ll receive interest on money that you lend to others. You don’t have to lend large amounts and you can generate an average return between 6-9 per cent a year.
5. Savings account
A final way to earn passive income is through a high-yield online savings account. When you deposit money into your online account, the bank will then pay you interest on your balance. It can be an ideal way to grow an emergency fund, for example. But don’t expect a savings account to make you wealthy, as the returns are far lower than would you could expect from other forms of investments.
Although these forms of investments do come with their risks, they are a surefire way to start generating that sweet, sweet passive income. The great thing about passive income is it gives you the freedom to do what you want, when you want. And remember, like Warren Buffett says, “If you don’t find a way to make money while you sleep, you will work until you die.”