4 ways to generate passive income

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Cash flow. Its the ticket to financial independence. However, it can be a challenge to make the shift from an employee minded, work for a paycheck mentality, to a life of independence.

Why live a life where you have to depend on an employer for a paycheck? Are you ready to make the shift from being an employee, to living a satisfying life of financial independence?

If so, here’s 4 proven ways to create passive income. Remember, step one before pursuing any of these options below is to educate yourself first! Never jump into something you know nothing about because someone said it was a good idea. Read, read, and read some more. The best investment, as corny as it may sound is in yourself.

 

1. Rental Properties

Either single family homes, duplexes, or apartments. They are a tried and true path to escaping the 9-5, and could easily be the best choice for you. There are many options when it comes to acquiring these as an investment, and many investors believe they have the “right” way to do it. Whether that is buying multiple properties very quickly and leveraging them, or slowing procuring them, paying cash for each property. I personally don’t really believe there is a right or wrong method, you just have to find a way that works for you, and your risk tolerance. You’ll notice that most people against leveraging, are typically middle class and spatter out things like, “You’re building a house of cards, and when the economy goes down you are going bankrupt.” Maybe, maybe not. There are many benefits to leveraging, which I will save for another article. Just like there are many benefits to paying all cash and being debt free. You just have to find what works for you.

2. Peer to Peer Lending

Its fairly new in the investing world, and might be the right fit for you. What is it? It is basically when you, the investor become the bank to someone that needs a loan. The loans range anywhere from 6-30% interest each, and they are typically for things such as refinancing credit card debt, cars, school, or business ventures. These loans are often bought in small $25-100$ segments. For example, when someone applies and requests a loan, that loan is spread out over 25-100+ people, minimizing total risk exposure and keeping you (the investor) diversified. These work out well for the debtor as well, especially if they can cut their current credit card debt interest, in half. So if you invest $10,000, you wouldn’t just invest in one person’s loan. You would likely invest in hundreds of different small loans, keeping you diversified in case someone does default. (Which unfortunately does happen) My perspective on peer to peer lending is not the best, as I have tried it and not done that well. I had some loan defaults from people, which is just part of the game. Its does and will continue to happen if you decide to invest in this arena. However, there are many people that have done quite well doing so, and make anywhere from 5-12% annually. Who knows, maybe its the right choice for you! Its a great way to diversify and create cash flow. If you are interested, check out these P2P Lending companies. Lending Club, and Prosper.

3. Seek Safety with High Interest Savings Accounts and CD’s

Unfortunately we live in a time where interest rates for savings accounts are very, very low. Somewhere on average of .01%. Which is marginal at best. However, if you crave stability there are some options out there for you. Ally Bank, which I personally use, has a current interest rate of 1.15% for Online only savings, and CD rates of 1.5%. These are definitely not optimal, but they sure beat .01% at banks such as Chase and Bank of America. If you are going to have a savings account, at least get something out of your savings instead of nothing.

4. Start a Website or Blog   I currently run both. I run a website where businesses pay me to list their job openings for a niche industry, as well as advertise their businesses on my website. Its not hard to start up, and I truly believe anyone can make money by building a website and blog, all it takes is educating yourself, whether that is in website development, or writing classes. The options are unlimited, and the money is out there waiting on you to snatch it up. I am hoping to create around $5,000 per month, just from my website. All that cash flow with minimal monthly cost of around $40. It can be done, and you can do it too. Start somewhere like WordPress, and Godaddy, these are great places to get your website started and up and running. Remember, be patient. It typically takes time to start generating money from your blog and website. You will get there! I still believe we are in the dark ages of the internet, and most people who get in at the ground floor, will have the opportunity to make a lot of money. If you’re interested in some different ways you can generate money from your website or blog, check out my post “Ways you can generate money from your website.”

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