Passive income is a type of income that does not require you to put much effort into the work to earn money. You can put little to almost no effort and still have the income. Passive income is very popular nowadays. And although there were limited ways to have a passive income in the past, thanks to technology, now you have lots of ways to have passive income. But, in order to have a passive income, you still have to invest in something. We have found the 5 best assets to invest in.
Certificate of Deposit (CD)
CDs are offered by banks and credit unions and it offers an interest rate premium in exchange for the customer if he/she agrees to give the bank or credit union a lump-sum deposit which cannot be touched for a certain period of time. When it comes to comparison, CDs are much more conservative investment than stocks and bonds because they’re safer and although they offer a lower growth opportunity, they also offer a non-volatile and guaranteed rate of return. Usually, the best available CDs are three to five times higher than the industry average.
Real Estate Investment Trust (REIT)
REITs are like mutual funds but they are only for real estates. They are company owning and usually operating real estate that generates income. Most REITs specialize in a particular sector of real estate but diversified and specialty REITs hold different types of properties in their portfolios. REITs offer you a steady income stream if you invest in them but keep in mind that they offer little in the way of capital appreciations. REITs are usually traded like stocks and for that reason, they are very liquid, unlike most real estate investments. REITs are an awesome choice if you want to invest in real estate but don’t want to become a landlord. They payout in dividends.
Gold is a commodity that will be worth more over the years. Investing in gold should be a long term plan. If you want to invest in golds, you can buy jewelry or buy gold bars and keep them in a safe deposit in banks. Golds have always been a luxury item and we expect it to stay that way for the foreseeable future.
Peer-to-Peer (P2P) Lending
Let’s say you want to lend someone money but cut any middleman in the process. This is what Peer-to-Peer (P2P) Lending is. It enables you to lend money to individuals through websites that connect investors to borrowers. The website will have its own terms and conditions and the borrower’s ability to get the loan will depend on his creditworthiness.
This is an age-old practice but it’s still one of the best ways to earn money passively. You buy land, build a house and then rent it. Or, you can just buy a house or apartment and rent it. You can keep a manager if you don’t want to look after the house at all but earn the money.
There are lots of assets to invest in but these 5 are the best. We consider them to stay best at least until this year ends. In case of any ambiguity, you should consult with a good alternative asset management company.