When looking for new ways to generate income through investing, you might stumble across a term called “passive investing.” This phrase refers to money that you submit for a one-time investment that continues to generate income without you needing to do anything.
Passive investing is an ideal way to assist with cash flow without a lot of investing knowledge. If you’re looking to use passive investing for your portfolio, use these three tips.
Consider index funds. These are exchange-traded funds or mutual funds that are linked to a market index. You can make regular purchases and simply let time do the rest. However, keep in mind that you’ll need the money to sit for a few years before you likely see a substantial profit.
Invest in real estate. Despite fluctuations in the real estate industry in the past few years, real estate remains a favorite of many passive investors since it generates long-term returns. You can pick up a rental property for 20% down and plan for renters’ payments to cover the mortgage.
Contemplate dividend stocks. Another simple way for you to garner passive investment income is to invest in dividend stocks. When public companies generate profits, they have a portion of that money funneled back to investors as dividends. You can decide to either cash out the money or reinvest it.
Passive investing lets you use money to make money by putting that money to work instead of you. This way of investing can simplify your life. However, keep in mind that the amount of money generated from passive income might vary from year to year, depending on the market and industry. For additional information regarding passive income, reach out to a trusted financial advisor.
Sources: Fincash.com, Bankrate.com, Thebalance.com, Investopedia.com
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