Passive income may seem like a unicorn to many. It’s the idea that your money can generate its own cash flow, enough for you to take advantage of. But this stream of income is not unheard of. In fact, you are probably already taking advantage of one way to create this passive cash infusion already.
Put simply, income of all types requires an input of either time or money. You either must work for a wage, or put your money to work in an investment vehicle that will hopefully return a great profit. Passive income requires an input as well, but once that has been completed, you can simply sit back and watch the profit roll into your account without any extra thought. Here are a few ways to have more passive income flowing into your account.
Invest in dividend stocks
As a trader, your stock portfolio includes dividend stocks. You would have to go out of your way to invest in assets that don’t pay a dividend. As you reach retirement, your portfolio is likely a worthy collection of cash that nets a healthy return based on years of trading experience and regular deposits. Whether you prefer tech startups or blue chip industrials and manufacturing sector businesses, finding stocks that pay healthy dividends and then cashing in on the payouts every month is the simplest way to grow your checking account without a single ounce of work. Many traders buy into the ‘buy low, sell high’ mentality, and this is that principle working to full effect.
Long term hold strategies allow for the most growth over time and net incredible dividend profits in the process.
The best part of dividend growth is that you can invest in a class of growth stocks classed as dividend aristocrats. These are companies that have increased the payout every year for the last 25. This means that not only will you make more per share every year, your price to earnings ratio also skyrockets over the years you hold the shares. Microsoft, for instance was priced around $50 per share in recent memory. If you had bought shares then, you’d be cashing in on today’s $200 price tag and the payout that comes along with it for a quarter of the buy in price. With a little preplanning, you can build a formidable collection of high-yield dividend shares that pay out in alternating quarterly patterns, meaning that you get paid monthly.
Write a book.
As a new retiree, you have all this newfound free time and a wealth of expertise in the field you have just left. Another way to generate passive income is to write a book about your profession, or even a memoir of your life, to market for online sales. These days, authors no longer need an agent and professional book publisher to get behind them. Amazon’s Kindle platform allows anyone to publish their work and market it for sale on the world’s most powerful online storefront. Alternatively, you could start blogging and sell the book directly to your audience from your website. Writing is also a great hobby that might spark your curiosity and interest as a newly retired person, above and beyond the prospects of passive income generation.
Buy a rental property.
If writing isn’t for you, then buying real estate might be the answer. Utilizing collateral or probate loans from an inheritance can even get you a favorable rate or cut out the mortgage process altogether. Buying a home to rent out is another easy way to make your capital work for you. You can even hire out the property management aspects to a professional entity in your area so that all you have to do is collect the check every month.
Whatever your preference, there is a passive income strategy out there that works for you. Put your savings to work while you sit back and enjoy the fruits of its labor.