Making Money Work for You: Passive Income is Indeed Possible!
Income producing assets can do a lot of thing for you. Among it is by producing passive income. Sounds exciting right? However, if you will be investing in something, make sure that it is a safe income producing asset.
These are basically low-risk, conservative income producing assets. The trade-off to this low volatility though is, you will not be earning that much compared to aggressive assets. Still, it is a great idea to learn few of the investment ideas below to diversify your portfolio:
- CDs or Certificate of Deposits
This is basically low-risk financial investment that is being offered mostly by banks.
The way it works is fairly simple, you will apply loan to bank for a given period of time which is otherwise called as term length. You will be gaining interests on the base amount throughout this time.
This is the reason why it is important to learn about lending regulations before applying for anything.
Common length term is ranging from 3 to 60 months. Throughout this time, you will be restricted from withdrawing your money without taking penalty hit. But one thing’s for sure, your money will be growing at fixed rate.
- Bonds
Similar to CDs, bonds are similar to IOUs. This is except for a fact that rather than getting the money to a bank, you will be lending the money to a corporation or government. And it is almost identical to CDs which means that:
- Extremely stable – you exactly know how much you would get back when investing in bonds
- Guaranteed returns – you could choose the amount that you like the bond for be it a year, two years, five years and so forth
If you wish to know how much you would get back, then bonds are guaranteed to be remarkable investment.
- REIT
This is an abbreviation for Real Estate Investment Trusts. US Congress has established the real estate investment trust or REIT back in the 60s. This is to give people the chance to invest in real estate that produces income.
REITs work like mutual funds but in this case, they’re intended for real estate. They are a collection of properties that are being managed by a company or also known as trust. This company is using money poured in by investors in buying and developing real estate.
This is a great choice if you wish to be involved when it comes to real estate investing but do not like to commit of either financing or buying a property. Similar with majority of blue-chip stocks, REITs are paid in dividends.
