If you’ve got a steady paycheck but want to earn a little extra on the side why not try one of our top 7 passive income ideas. This way you can truly make money while you sleep.
Passive income is making money for no extra effort. By investing up front you can receive money on an ongoing basis. This is different from Active income which is where you actively swap your time and effort for income which would be a 9-5 job.
- Dividends
Invest in stocks and shares that pay dividends. When a company makes a profit they give a little bit of money to you . Some companies are renowned for paying better dividends than others. There is an added bonus investing in growth stocks as while you invest at the start and get a little bit every now and then the total value of the asset will increase over the period you hold it, so when you are ready to sell you will get a lump sum as a bonus to the dividends to gain whilst you are still holding the asset.
- Vanguard Investments
They have a series of low cost trackers and index funds that can invest your money. They track performance of global stock markets with specific indices for your interests. You can invest initially and then leave them to make you money in the background. Vanguard charges a small fee for managing your account and are much better than the industry average. You can also gain from dividends, companies that payout will be reinvested into your account to compound your investment.
- Company stocks
If you sign a new contract try asking for shares in the company. While this is not often openly offered by most hiring firms it can be a great way to earn passive income. Often the company you work for will give you a great buy in rate or even through in some shares for free as part of your signing package. So whilst you work your 9 to 5 you can rest assured knowing that you are building wealth through company growth stocks. Not only does this earn you a bit of passive income but it also incentivises you to work harder!
To benefit from Dividends, Vanguard Investments or Company Stocks, you will need to open an account with a broker to manage your investments.
Choosing the best online stock broker can make the difference from an easy and exciting new experience to constant frustration and disappointment. Accessing financial markets through online brokers is easy and inexpensive but there are so many out there tailored to a different sort of customer so choose the right broker that will optimise your user experience and profits.
If you’re just starting out we recommend eToro and easyMarkets for their easy to use interfaces and fee – free trading.
- Royalties
Graphics, music, programming, red bubble. If the company continues to be successful or grows you can opt to choose to receive small amounts of money depending on the success of your product rather than taking a flat fee .
- Credit Card Cashback
Using cash or debit cards simply hands over your money without benefiting you. But a credit card can be used to pay for pretty much any transaction, food, bills etc. with the hopes that the customer wont pay back the full amount at the end of the month and then can therefore charge interest. But if you pay back your credit card bill in full, you are losing nothing and could benefit from a cashback scheme. You will get rewarded at a percentage, usually 0.25 – 2% for every pound you spend, therefore acting as a great passive income stream as your money is doing the work for you. But make sure you are disciplined and are not just paying more because you are excited by the cashback and are able to pay back your credit card in full by the end of each month.
- Rent
Although a more serious option, in terms of investment and time and energy to organise, renting out property is a highly profitable passive income stream. You can earn anywhere from 0 – 15 % return on your investment depending on costs of maintenance and landlords etc. It is also a great growth asset which should increase in value over time so if there was a time where you wanted a large lump sum of money then you could sell the property. Remember renting out property is a complex and time-consuming matter and isn’t for the faint of heart or for people who want to withdraw their investment quickly and easily. It also only makes you money when you have tenants!
- Host Airbnb
If owning a property and charging rent seems a little too much hassle then why not informally rent as a host on Airbnb. List your home or spare room on Airbnb when you aren’t using it and charge £50+ per night with little effort.
Passive income can really help create security and supplement your earnings. The work that goes into earning passive income is manageable alongside your 9 to 5. If you are ready to invest, we recommend eToro and easyMarkets for beginners.
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