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Financial Planning

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Potential passive income streams

Jobs may be how many people earn their money, but there are other ways to generate income that may not require the level of effort of a nine-to-five gig.

Passive income streams can be a great way to earn substantial amounts of money. Passive income can be earned through investing in stocks, money market funds, real estate, livestock, or savings bonds. Lending money also can provide passive income. Though such income streams are described as "passive," they require an investment of time and/or money to get started.

Passive income streams enable the average person to make some extra money without taking on a full-time job. Unlike active income, where the more you work the more you earn, passive income often generates a flat level of return over time without the same level of commitment.

Passive revenue streams are continually evolving. Modern passive investments are varied, and can include the following ideas.

Home-rental service

Popular sites like Vacation Rental By Owner (Vrbo®) and Airbnb put interested parties in touch with potential landlords. Vacation property owners or people who do not spend a lot of time at a primary residence may find this is a lucrative way to earn some extra money. Properties located in popular tourist areas may garner considerable income.

Digital products

Digital items, such as expert advice guides, books, informational articles, digital photography, digital artwork, and more can be sold online. The product only needs to be created once, and then it can be sold infinite more times to generate an ongoing revenue stream.

Peer-to-peer lending

According to the financial wellness site MyMoneyWizard.com, peer-to-peer lending (P2P) is the practice of lending money to borrowers who may not qualify for traditional loans. P2P is a growing market that removes large financial institutions from the lending process. Lenders serve as the "bank," and the consumer pays interest on the principal. The loans can be handled through an intermediary like The Lending Club, which is regulated by the Securities and Exchange Commission.

Real estate investment trusts

Real estate investment trusts, or REITs, offer the benefits of being a landlord without the hassle of dealing with fixing broken pipes or handling rowdy tenants. REITs are like stocks in real estate market. You purchase a share in a company that owns, manages or invests in various real estate properties. The higher the dividend rates the higher the risk, so investors must weigh REIT considerations carefully.

Passive income streams are another way to earn extra money and can be lucrative for those who take time to invest.

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