Passive income is an extremely appealing idea to many investors, new and old. The simple thought of making money while you eat, sleep and watch Netflix is, with reason, very attractive.
However, of course, this isn’t exactly the case. Passive income is generally the result of direct effort in creating systems that produce income with little to no upkeep. This obviously involves much more work than many previously anticipate, this article is for those people. Those who want to find investments that require little to no time investment from the get-go. Do note, however, that taking the time to learn about your chosen investment is essential.
The following three investments, ranked in no particular order, provide generally sub-par yields, but require little effort if any, without further ado, here are three truly passive investments:
Bonds are a great, generally safe, fixed income investment vehicle. They’re simply traded loans issued by companies or governments, the bond buyer is essentially the bank here. In other words, like a mortgage, if you own a bond you will be paid a fixed income at set intervals. Bonds generally carry less risk than other investments, but research should be done since they are by no means fool-proof. If you’re interested in learning about bonds, check out my previous article : Stocks, Bonds, Mutual Funds… Where do I Begin?
2. Guaranteed Investment Certificates (GIC’s)/ Certificates of Deposit (CD’s)
GIC’s (Or CD’s in countries other than Canada) are investments within a banking institution or credit union that are virtually risk free. They are, in essence, very similar to savings accounts in that they carry an interest rate. However, they differ from regular savings accounts since they have a fixed term, generally they must be held to maturity, at which point the principal and accrued interest can be collected.
3. Dividend Stocks/ETF’s
Among the three, this investment category is likely to be the least truly passive investment in practice since it generally requires the most research, but it can also generate the highest returns. Dividend stocks or dividend focused etf’s are, if carefully selected, great investments that provide regular income with the possibility of increased returns over time. Compounding dividends is also a great method to grow financially.
As always, dear reader, the choice is yours. No matter what you choose, success is a step away. Be sure to do your research and you can achieve anything!