FIRE: Financial Independence, Retire Early. The concept of FIRE is likely the reason so many of us seek more income, in a way we seek freedom. In order to achieve FIRE, it’s essential to understand that passive income is a necessity, it is essentially impossible to become financially free without passive income. In order to give you investment ideas for passive income, I’ve compiled three of my favorite investments. In no particular order, here goes:
1. Dividend Stocks
This one’s a given, it’s fairly obvious that dividend stocks are commonplace among passive income investors. What’s not to love, right? Getting paid for doing nothing every few months (or even every month…) sounds like a great investment. However, dividend stocks are quite nuanced, in particular, it’s important to keep in mind that dividends are subject to their own tax laws, which may be an advantage over certain forms of income but it’s certainly not the best. In addition, being stocks means that they’re subject to the same market forces and trends as other stocks, therefore despite paying dividends, the actual equity in your investment will likely fluctuate.
Here’s one that’s fairly recent, and still growing explosively! E-commerce is a great way to sell your products online and advertising has never been easier, platforms like shopify make this exceptionally simple. Blogging, similarly, is another option that allows for income through affiliate marketing, advertising and eventually branching into other sectors. Needless to say, WordPress is the gold standard when it comes to blogging. It’s important to note that in order for these two businesses to be passive (and thus producing truly passive income), the regular tasks must be outsourced.
3. Real Estate
Possibly my favorite investment, (rental) real estate holds tons of advantages over other investments, whether it relates to taxes or wealth generation. Renting out properties is a great way to receive substantial passive income every month. Some of the numerous advantages surrounding real estate include tax benefits and the ability to use massive leverage with debt and purchase higher income properties. In addition to regular appreciation, having tenants pay down your loan is a great way to build equity. Among the three investments, real estate likely takes the most work up front since it’s necessary to set up the appropriate systems to render everything passive and each purchase or sale takes a good bit of analysis.
Overall, keep in mind that it’s always great to have multiple revenue streams, there are many more ideas out there. Overall, it doesn’t really matter what you do, but how well you do it. With the internet especially, you can monetize almost anything. Dear reader, you’ve certainly got what it takes to make your dreams a reality, FIRE is not far-fetched, and it’s just a step away!
If you would like to read more about passive income, check out my previous article: Passive Income: How to Be Financially Independent