There is not one person in the world who would not want to earn money even when they are asleep. Scratch that – everyone wants to earn money especially when they are asleep. This is possible when you invest for passive income as an end goal. It’s how your investments keep earning for you without you having to do anything actively.
The goal of Passive Investing, as differentiated from Active Investing, is not to beat the market to generate profit but to match it. This means that the risks and returns are not as high as that in Active Investing. The risks are low and the returns are market average when you make investments for passive income.
There is minimal management required in passive investing, with an approach that is more hands-off and requires only monthly or quarterly purchases. This type of investing is ideal for investors who do not want to be involved in the management of the asset. It is like a set-it-and-forget-it approach, checking upon it only after a few years or so when the investment matures.
Passive investing is not focused on buying and selling stocks for a short period, it is a long-term investment. When you buy shares of stocks, the intention is to hold onto them and not trade them frequently, which is a conservative approach. By letting the investment mature over a long period of time, the returns can be maximized. This type of investing requires an upfront investment of cash or capital to acquire the asset.
The minimal risks associated with this type of investment are because investors put their money in diversified portfolios such as Index Funds and Exchange Traded Funds (EFTs) intending to mirror the market rather than beat it, or through Real Estate Investment Trusts (REITs).
Having financial freedom is something that everyone aspires to in life. It means having more than what you need to cover your basic needs and more. It also means not getting anxious waiting for your next paycheck to get by. For some people, this is not something they have achieved in their lifetime and a lot of it has something to do with poor financial management.
However, having another source of income will help you to achieve financial freedom faster through passive investment income. If you have money saved up and you are unsure how to start this type of investment journey, ask for the expertise of Fund Managers. They can help you get started, oversee and manage the stocks you purchase, and even provide you with valuable insights to maximize investment returns.
Finally, setting financial goals and having clear plans on how you want to achieve your investment goals can help you achieve the kind of life you have dreamed of and maybe retire early. Part of setting a financial goal is setting short-term versus long-term goals and specifying the timelines for achieving them.
Even with financial goals, the objectives to achieve them must be specific, measurable, achievable, relevant, and time-bound. This will help you stay focused on your goal and achieve financial freedom sooner.
Passive Income Investments can work for you in achieving your long-term financial goals. When you have worked hard enough to save up so much to start acquiring assets that can generate passive income, you no longer need to worry about the uncertainties of the future.
Below are the examples of the best investments for passive income:
Spencer Hiligoss co-founded Madison Investing and currently serves as its CEO. For 13 years, Spencer worked as a technology executive, building high-performing teams within five companies, three of which were valued at over $1B.
His last job was in Silicon Valley as the lead of the professional development group for LendingHome. He quit to grow his own investment group, Madison Investing. He is currently engaged as an investor and speaker, leading business development and investor relations at Madison Investing.
Partnering with in-market and vetted operators, he has transitioned into a full-time investor and has accumulated $2.3B in acquisitions, which include over 20,000 units. Additionally, he is a registered FINRA member and part of the Forbes Real Estate Council.
The earlier you figure out your end goal financially, the sooner you can begin. And the sooner you start working on your goals, the faster you can achieve them. Here are the steps you can take to plan out your retirement:
Not all types of investments will start earning passive income; having a solid passive income strategy will help you make sound investments for passive income. Although only some possess the expertise to know the correct type of investments to acquire, relying on professional expertise in the active management of your funds and assets to maximize returns.
Passive investing focuses on holding the asset until it appreciates over the next couple of years, while passive income can generate profit without doing much work. Considered by many as the best passive income investment that you can invest in is real estate, you’ll have to do a lot of work to get the property habitable, but after you do all the necessary work and get a tenant, all you’ll have to focus on is maintenance for the property and receiving the rent from the tenant.
Even though a passive investor means acquiring assets that will be pretty costly, over time, you will have the investment paid off without having to do any heavy tasks, bringing you closer to financial stability and enjoying financial freedom.
An Index Fund is a pool of investments that tracks a market’s index. An index is what is used to measure or track the performance of assets like equity investments. Index funds include Index Mutual Funds where you invest based on the amount you want to invest and Index Exchange Traded Funds (EFTs) where you invest based on the market price of the shares.
Typically, these funds employ a passive approach to investing, delivering returns based on the market index. However, Index Funds usually deliver returns lower than the amount in the market due to their associated fees.
There are many examples of Index Funds like the S&P 500, which is an index that tracks the performance of the most extensive 500 stocks in the US stock exchange, buying the S&P 500 Index Fund would mean you invested in the most prominent 500 stocks in the US Stock Exchange.
Other Index Funds include the Dow Jones Index Fund (DJIA), which tracks the most significant 30 companies’ stocks; countries also have a certain type of exchange-traded fund, and so do specific market sectors depending on the business nature.
The first step to building wealth is always to earn money, either by working a regular job, having side hustles, or opening a business that offers products or services, and be able to capitalize on that to save enough, or invest in something that will make you extra income, preferably investing for passive income.
Some financial advisors say that being debt-free is the only way to build wealth, but that isn’t always the case. So long as your assets outweigh your liabilities, and with effective cash management, you will be able to clear your liabilities in no time.
But here’s one thing that will help you in wealth building: patience. Never rush the process of wealth accumulation. Do things one step at a time and remember to always keep your focus on your goals.
Long-term investments are assets acquired with the intention to hold them for more than a year – in decades for some. It is different from passive income investing, whether it be shares acquired by the company, bonds issued, or real estate.
This type of investing includes the following characteristics from the investor:
There is no doubt that a passive investment offers high rewards, which can be the easiest way to build your wealth. The vital thing to note in investing is there is no guarantee that it will become profitable. If you invest, you need to face the risk of losing the money you invested even when they teach you that higher returns come from higher risks.
To have a deeper understanding of passive investing and passive income, you can take an online course that will teach you from scratch all the basics you need to understand the market and investment instruments better.
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