You don’t have to be a full-time investor to create some additional income on the side that’s consistently adding to your annual revenue. There are passive income generation techniques that anyone can learn and apply over time, even if they have never invested before.
It’s worth mentioning that the idea of passive income isn’t to generate money without putting in any effort. It is to set up a sustainable income generator product or system that yields rewards in the long run without excessive maintenance. This also means that the more passive income sources you set up, the more their returns accumulate over time.
Stocks, bonds, and cash are known as the most common types of investment, but there are alternative investment methods that you can incorporate into your portfolio.
Let’s look at the pros and cons of some of the alternative passive income generation techniques you can adopt as an average investor.
Crowdfunding platforms are focused on generating passive income streams with investments in physical assets. A good example is Yieldstreet, a platform that can earn you annual returns of at least 8 percent. This emerging fintech gives you access to options once only available for the ultra-wealthy, such as art portfolios, or commercial property refinancing.
Most offerings have a minimum $10,000 initial investment but there are some investments you can start with as low as $1,000. While this platform is not a micro-investment platform, keep in mind that you’re investing in multi-million dollar projects.
When researching crowdfunding platforms, consider those with competitive costs, easy-to-use platforms, and multiple asset options. Even when the stock market is producing negative returns, you can earn a positive yield. It’s important to remember, however, that these opportunities are usually open to accredited investors with a commitment of five years minimum.
You might be surprised to hear about this category as a form of investment, but information products are actually a great way to create passive income and they are inexpensive to set up.
There are products that you can have for as low as $100, such as ebooks; others require a bit more effort and investment, like online courses or mobile apps. But you can hire a professional for researching, creating, and selling your product on a landing page or search engine without you having to spend too much time executing the strategy.
The secret to information products is to find categories that have proven demand but haven’t been serviced yet. The risks and returns of this investment form are hard to quantify, but in the end, you own the product and have full control over it.
Unless you’ve been living under a rock, you’ve probably heard about this relatively new form of investment. Cyptocurrency is digital currency that’s used to purchase goods and services. It uses a technology called blockchain, a decentralized technology that’s spread across many computers that manage and record transactions, making this technology secure.
Since it’s highly unregulated, the price of cryptocurrencies can quickly skyrocket and fall within a relatively short period of time. There are more than 10,000 different cryptocurrencies in the world and most of them don’t require a huge investment to get started with. Experienced investors say crypto takes up between 2 and 5% of their net worth as a high-risk item on their portfolio.
Buying real estate is still one of the most common alternative investment methods. The real estate market is one of low volatility, particularly when compared to stocks and bonds. A big benefit of real estate investing is its potential for diversification, with its low (or even negative) correlation with other major asset classes; so when stocks are down, real estate is often up.
You can decide to invest in properties through real estate investment trusts (REITs) or you can opt to own the property yourself.
If you purchase a property, you can invest in the renovation of the house or apartment and then sell it for a higher price. You can also buy and hold, which means you wait until market prices turn and sell it when the value of your real estate is higher than at the time of purchase. While you do that, you can also rent your property for the short- or long-term, either as residential property or office space.
Ultimately, each form of alternative passive income requires some research, planning, effort, and financial investment. Choose the one that best works for your needs and it will reward you with great returns for years to come.