Why passive income is so important?

Passive income

Introduction

“The power of compounding is the most powerful force in the universe.” So sayeth Albert Einstein, and who are we to disagree with this great mind? The “eighth wonder of the world” (as Benjamin Franklin famously described it) is how your money makes money. That’s called earning compounding interest, and it can make a huge difference when you’re investing or, more specifically, earning passive income. This type of income is earned by people who’ve created assets that earn money while they sleep. As they say, a penny saved is a penny earned—and that’s especially true if that penny continues to make more pennies while you sleep.

Why passive income is important

Why does passive income matter? Because you can make money without working.

Because, if you’re lucky enough to get it, passive income is important because you can make money without worrying about losing it.

And finally, because with passive income, there are no taxes!

Passive income ideas

• Dividend investing
• Real estate investing
• Crowdfunded real estate investing (you can find these at Fundrise, Patch of Land and RealtyShares)
• Peer-to-peer lending (we recommend Lending Club and Prosper)
• Investing in the stock market (stocks, bonds, ETFs)

Dividend investing

Dividends are a great way to earn passive income. They’re not just for old folks like me!

Dividend investing is a simple and effective way to generate income from your investments. It’s especially useful if you want to build wealth without taking on the risk of stock market volatility—and it can be done in as little as 10 minutes per week! To get started, we recommend picking up the book How To Make Money With Dividend Stocks by Frank Armstrong III. This book will give you all the details about how dividend investing works, including:

• What is dividend investing?
• How do I find a dividend stock?
• How much should I invest in a single company?
• How often should I reinvest my dividends back into more shares of that company’s stock?

Setting up a DRIP

A DRIP is a way to invest in a company without paying any commissions. It’s like a 401(k), except instead of getting free money from your employer, you get free money from the company—and it happens automatically.

To set up a DRIP account, you need to find an online broker that offers this service (but don’t worry; there are plenty of them).

Your next step is choosing the stock or mutual fund that you want to invest in. You can choose something specific like Google or Apple if you want, but it’s better to diversify and put some of your paycheck into several different investments so they don’t all go down at once if there’s bad news about one company or another. Some people even split their contributions into different categories like stocks, bonds and mutual funds so they have more options for their portfolio. Brokers typically offer hundreds of choices for each investment category so it might take some time before finding what works best for you!

Last thoughts on dividend investing

Now that you’ve learned how to invest in dividends, it’s time for the last of our tips on how to make money with dividend investing.

First, if you’re serious about making money with dividend investing and want to get started right away, then it’s important to pick an online broker like TD Ameritrade or E*TRADE that offers commission-free trades. This way, there are no hidden costs when buying stocks with your hard-earned cash!

If you aren’t ready yet but want to learn more about passive income streams and how they can help put more money in your pockets each month (and who doesn’t?), check out this article from WealthSimple: How Anyone Can Make Money With Passively Invested Real Estate Investments

Real estate investing

Real estate investing is a smart way to build a passive income stream. There are three main ways to invest in real estate:

• Rentals: Buying an investment property and then renting it out for a nice monthly payment.
• Fix and flip: Buying low-cost properties, fixing them up, and selling them at a profit.
• Buy-and-hold: Investing in appreciating assets that can be rented out or sold down the road.

Crowdfunded real estate investing

Crowdfunded real estate investing is a way to invest in real estate without the hassle of owning it yourself. It’s also an excellent way to diversify your portfolio and make money in a passive manner, meaning that you don’t have to do much work after the initial investment is made.

One thing that sets crowdfunding apart from other types of investments is that it allows investors to participate in larger deals than they might be able to handle individually. For example, if you want to buy a house but don’t have enough capital on hand, crowdfunding lets you put together funds from multiple people who otherwise wouldn’t be able to afford such an investment. This gives them access and exposure to opportunities they otherwise wouldn’t have had access too, while letting them earn decent returns on their money over time—and all without having any day-to-day involvement with the property itself!

Peer-to-peer lending

Peer-to-peer lending is a way for individuals or businesses to borrow money from other individuals. It’s often used by borrowers who have poor credit scores or are unable to obtain traditional loans from banks and other financial institutions.

To invest in peer-to-peer loans, you’ll need an online brokerage with access to the secondary markets where these investments trade. You can buy and sell loans using your existing accounts, but you’ll also want one account specifically for P2P investing so that everything is easy to track. Your online broker should have no minimum investment requirements; however, they may have maximum limits on how many loans you’re allowed to purchase at once.

Once you’ve opened this account and deposited money into it (some brokers allow investors to use their IRA accounts), go ahead and start browsing through available investment opportunities! Some websites will display statistics about each borrower’s credit score, employment history and debt load; others simply show only basic information such as location or income level without delving into specifics like this one does.)

Investing in the stock market

Investing in the stock market is a great way to earn passive income. If you’re not familiar with investing, it’s just a fancy word for buying and selling shares of companies (or countries). For example, let’s say that I buy 100 shares of Apple stock for $10 each. If Apple goes up by 1%, then my investment has increased by $100: my 100 shares are now worth $1,000. But if it goes down by 1%, then I’ve lost $100: my 100 shares are now worth only $900.

Now here’s where things get interesting! The next day after I bought those 100 shares from Apple, some guy named Steve Jobs comes onto CNBC and announces that he has invented something called an iPhone—and it will be released in two weeks! As soon as the news hits the wire service (and more importantly as soon as you have heard about it), everyone rushes out and buys up all their Apple stock so they can sell them later at a higher price when people realize what an amazing product they have created

Robo advisers and automated investing

The next step in passive income is making your money work for you. With automated investing services like Wealthsimple and Betterment, you can invest your savings with a few clicks of the mouse. These services are usually cheaper than hiring a human financial advisor, and they’re far less prone to human error. For example, when we were trying to find a suitable home in Toronto as new parents last year, our real estate agent was unable to show us anything within our price range because he didn’t have any listings he could afford; but if we had invested our savings into an automated investing service instead of holding them in cash (or paying off debt), we would’ve been able to buy a house without issue!

You can make your money work for you.

Working a side hustle is hard.

You can’t just do it whenever you feel like it. You have to go out, find clients and execute the work.

It’s also not very lucrative in itself—after all, why would you pay someone to do something that they could do for free?

The good news is that there are more moneymaking options than just working an extra job or two: passive income sources. Passive income is any kind of revenue stream that requires little-to-no manual effort on your part after its initial creation. Passive income streams include things like dividends from investments and interest from savings accounts; royalties from book sales or songs played on streaming services; even selling goods online through platforms like Amazon Fulfillment Service (AFS), where another company handles fulfillment while you make money off sales based on commission rates set by each vendor platform supplier.”

Conclusion

The key to passive income is to find the investments that are most attractive to you and fit your life goals.