In the previous article series (“How Can I Make Passive Income with No Money?”), we discussed a lot of the possibilities to generate passive income from scratch. When you have time but have no money. What if it’s the opposite, you have the money, but you don’t have enough time? In this article, we will discuss how to utilize and optimize your idle cash: making the money work for you while you are sleeping!
- Open a High-Yield Savings Account
You’re not alone if you have excess money in your bank account. In 2018, the average American checking account balance reached a new high. If you have money put aside, even if you may need to take it at some time, a high-yield savings account can provide a greater APY (annual percentage yield). Many of the greatest savings accounts are also free of fees and have minimal or no minimum balance requirements. - Investing in Stocks
You can invest your money instead of putting your money in the bank. You can even get dividends if you invest in some blue-chip companies. If you need help picking the right stocks for you, I highly recommend subscribing to The Falcon Method . The owner, David will not only provide excellent stock recommendations, but he will also support your journey with educational content in his highly regarded newsletter. - Get into Index Funds or ETFs
An index fund is a collection of stocks designed to match or track a market index, like the S&P 500, while an ETF is like a basket of stocks, bonds, and other assets. The greater diversification offers less risk, and taxes and fees are lower as well. And because index funds and ETFs are hands-off, your investment can truly be considered passive income. You’ll be able to sit back and watch the returns pour in overtime. When you invest in an index fund, let’s say $1,000 in the S&P 500, that basically means that your $1,000 is distributed amongst the top 500 biggest companies in the US, weighted by how big they are. If you wish to start, you’ll need a good broker. Although there are hundreds of options, right now we believe Interactive Brokers provides the highest quality service with reasonable fees. - Build a Bond Ladder
A bond ladder is an investing strategy that consists of a broad portfolio of bonds with varying maturities. “Laddering bonds may be appealing because it may help you manage interest rate risk, and to make ongoing reinvestment decisions over time, giving you the flexibility to invest in different credit and interest rate environments,” says Richard Carter, vice president of fixed-income products and services at Fidelity. However, if your objective is diversity, you’ll need a large amount of cash to begin, since bonds are often issued in minimum quantities of $1,000 or $5,000. Building a passive income stream requires some risk and work upfront, but it is a terrific method to generate money without losing what is most valuable to you: your time! - Real Estate Investing
If you have enough money saved, real estate investing might be one of the best investments you can make. You may purchase a building and employ a property manager to run it for you, or you can purchase a duplex and rent out one apartment while living in the other. A typical passive income approach is to generate rental revenue. While monitoring the property and finding tenants may be time-consuming, there are real estate investment organizations that make it easy to search, buy, and manage investment properties. - Become a Real Estate Crowdfunder
If you don’t have enough money to buy an entire building, you can still invest in real estate. All you need to get started with online real estate investing company DiversyFund is $500, and you can own your share of a real estate investment trust (REIT). Other real estate crowdfunding sites include Prodigy Network, Fundrise, RealtyShares, RealtyMogul, Crowdstreet. - Own Digital Real Estate
Digital real estate is emerging as a result of the advancement of blockchain technology. You may now own and benefit from digital property in the same way that you can own and profit from physical property. This may seem to be a far-fetched passive income notion, but consider Facebook’s rebranding as “Meta”, the corporation is relying significantly on the digital world’s development (i.e., the metaverse). As a result, it could be an excellent moment to dabble in this interesting field. - Buy Music Royalties
If you appreciate finding new musicians and enjoy listening to music, this may be the enterprise for you. Royalty Exchange allows you to bid on a percentage of an artist’s royalties. When royalty-paying organizations, such as radio stations and streaming services, utilize the piece of music, you’ll get a return on your investment. You may look at the song’s revenue history to see how much you could make over time. Furthermore, since royalties are not linked to the global financial market, there is less danger that prices may fluctuate. - Vending Machine
If you put a vending machine for feminine products in a very busy public restroom, chances are a lot of women will gravitate towards it. Or you can set up a soda or snack machine at a busy junction, there’s a good chance it will be popular. The point is, if you have the right products and the right location, you could be generating income. You can buy an existing business or a franchise opportunity, like Kytch’s Frobots, which require very little upkeep. Some management will be required the owner to stock and maintain the machines, so you may also want to consider hiring someone to help. - Build an App
Building an app is a difficult process that will take a large amount of time. However, after you’ve delivered your final product, this business needs little to no work to continue making money. There are even businesses that will develop your app for you if you have a fantastic concept but don’t know how to code. You will, however, require some money to explore this alternative. - Buy Equity in a Small Business
When you purchase stock in a small firm, you are giving cash in return for a portion of the earnings or losses. There might be a lot of risk involved, so make sure you’re as confident in a company’s future as possible before investing. It is probably wise to invest in multiple companies at the same time to ‘spread out your bets’ and increase the chances of ‘hitting a home run’. - Peer-to-Peer Lender
Peer-to-peer lending is a method in which an online platform allows individual investors (like you) to lend money to individual borrowers. The borrower then repays the loan with interest. There is a risk that the borrower would default on the loan, but you may discover that you will earn a higher return than with other investing possibilities. Furthermore, you will be able to assist someone in need in avoiding the financial pressure of high-interest credit. Some websites enable you to finance loans in increments, allowing you to invest a modest sum or lend money to a large number of individuals. Platforms such as Upstart, Prosper, and Peerform are examples. - Franchise
To generate passive (or mostly passive) revenue from your franchise, you must be an absentee or semi-absentee owner. This simply implies that you are not engaged in the day-to-day operations of the company. Semi-absentee franchises are intended to be managed by a manager. Although the semi-absentee owner must check in on a regular basis and assist as needed, they still have plenty of time to explore other employment and possibilities in the workforce. The executive/absentee owner, on the other hand, is the least hands-on style of ownership. Keep in mind that most smaller franchise operations are not handled in this manner. - Buy Some Parking Spots or A Storage Facility
Renting out a parking place in a high-traffic city, such as Chicago, New York, or Washington, DC, may be tremendously profitable and has a cheaper initial cost than owning a rental apartment. That’s what Chicago, IL resident Moustafa Mohamed, 28, discovered when he started looking into purchasing a home. His location earns him an additional $250 to $300 every month, and he’s trying to acquire more. “It will take me 4.5 years to recoup the $15,000 I paid on it,” he added, adding that the work required was modest. “I’ve probably spent a few hours a week researching and completing the paperwork for the deed.” His ambition is to acquire four to five rental properties before moving on to condominiums. Storage facilities have the same income profile. The required time to invest will be higher than in the case of rental apartments, but so as the yield you can expect from such an investment. - Own Cloud/Ghost/Virtual Kitchen
A ghost kitchen is a professional food preparation and cooking facility that is set up to prepare meals for delivery alone. Some ghost kitchens have permitted takeaway or even drive-throughs. They lack a storefront and indoor seats for consumers. Cloud kitchens allow restaurateurs to launch a virtual brand or expand an existing restaurant at a low cost.
Final Thoughts
According to the IRS’s widely cited report, “Over the Top: How Tax Returns Show That the Very Rich Are Separate from You and Me,” millionaires had an average of seven different income streams. Capital gains, earned income, interest income, investment income, profits (from a company that you own), rental income, and royalty income were the top seven sources. Having several income sources (a combination of active and passive revenue streams) is one of the keys to accumulating true wealth. It not only provides additional options, but it is also a far less risky method than having just one active revenue source. Regardless of where you are in your financial path, each of these ideas may help you generate actual passive income, whether it’s a few hundred dollars per year or money that can someday let you leave your current empoyer.