The post How To Make $1,000 a Month in Passive Income appeared first on Millennial Money.
While it may sound difficult, making $1,000 a month in passive income is possible! It takes creativity, time, and effort; but once you get started, you’ll find it easier and easier to continue earning passively.
The methods below can help you effortlessly make $1k or more every month. Find something that speaks to you and combine multiple strategies to reach your goal of earning $1,000 in passive income monthly.
9 Ways To Make $1,000 in Passive Income Every Month
- Use Rewards Credit Cards
- Purchase Government Bonds
- Create a CD Ladder
- Invest in Crowdfunded Real Estate
- Invest in REITs
- Peer-to-Peer Lending
- Rent a Room or House
- Rent Your Car
- Start a Blog
1. Use Rewards Credit Cards
Effort Level: Low
Many credit cards offer hefty rewards for using them. If you’re applying for a new credit card, many offer sign-up bonuses, plus you earn cashback when you spend money. Look for rewards credit cards that offer the highest rewards for the type of shopping you do. For example, if you have a large family and do a lot of grocery shopping, find a credit card that pays well for groceries.
You can mix and match the credit cards you use if you’re organized and can handle paying the balances in full each month. Otherwise, find a credit card with the highest rewards for most of your shopping and enjoy the cashback rewards.
How to reach $1,000: Find great sign-up bonuses and mix them with cashback rewards on your most frequent purchases.
2. Purchase Government Bonds
Effort Level: Low
Government bonds are low-risk investments. You lend money to the government in exchange for interest. I series bonds currently pay 5.37% APY and mature in 30 years. You can cash them in after 12 months if needed, but you will pay a penalty worth three months of interest if you withdraw before you own the bonds for five years.
Bonds are a great way to diversify a portfolio, especially if you invest in the stock market. You can balance your portfolio with bonds to reduce the risk and give yourself a liquid investment should you need funds fast. While you won’t have $1,000 in your hand in each, the accrued interest increases your net worth.
How to reach $1,000: Invest capital in bonds and let the interest accrue. For maximum earnings, avoid withdrawing funds before five years.
3. Create a CD Ladder
Effort Level: Low
CDs or time deposits are deposits at a local or online bank. You deposit the funds for the set term and earn interest on your deposit. The interest is fixed and can be as high as 5% or more, depending on the term, how much you deposit, and the bank.
You can create a CD ladder if you don’t want to tie up all your funds long-term. This means you split up your deposit between multiple CD terms. When a term matures, you can withdraw the funds or reinvest them. This works great when interest rates increase because you can reinvest the matured funds into another CD and earn even more money. But the money remains liquid, should you need it.
Use caution in the terms you choose, though. Most banks charge investors an early withdrawal penalty if you liquidate the CD before it matures.
How to reach $1,000: Split up your deposits between various CD terms and continually reinvest to reach your goals. Avoid withdrawing funds early so you don’t lose money.
4. Invest in Crowdfunded Real Estate
Effort Level: Low
If you’ve always wanted to invest in real estate but don’t want the active involvement owning rental properties requires, consider real estate crowdfunding. This opportunity allows you to invest in commercial real estate with other investors. You can invest as little or as much as you want in each investment, diversifying your risk and earning a prorated return on each investment.
How to reach $1,000: Diversify your capital across many properties to reduce the risk of vacancies or defaulted rent, and you’ll reach your goal of $1,000.
5. Invest in REITs
Effort Level: Mid
Real estate investment trusts are another way to invest in real estate, and you don’t have to own any property physically. When you invest in REITs, you invest in a company that owns the real estate, usually commercial properties. They buy, manage, and sell properties; you own a share of the company.
REITs pay as much as 90% or more of their profits. Investors earn a prorated amount of the earnings based on their investment. It’s a great way to experience commercial real estate investment returns without all the work, helping you reach your $1,000 monthly passive income goal.
How to reach $1,000: Do your research and find a REIT with a positive experience in providing your desired returns. Look for REITs that diversify across several industries to avoid a total loss if things don’t go as planned.
6. Peer-to-Peer Lending
Effort Level: Mid
Peer-to-peer lending lets investors invest in consumer loans. Keep in mind that these are usually loans for people who can’t get approved for bank loans, so they are somewhat riskier. However, that’s the excitement because they pay higher yields than other investments, especially if you have a high risk tolerance.
Lending Club and Prosper are two popular peer-to-peer lending websites. They do all the work for you, which is why this is a mid-level effort passive income idea. Your job is to peruse the available loans and research their grade levels, interest rates, and earnings. To maximize your returns, diversify your capital across many loans.
How to reach $1,000: Diversify your capital across many loans so you have some almost ‘guaranteed’ income and some money earning higher yields to help you reach your goal.
7. Rent a Room or House
Effort Level: Mid to High
Renting an extra room or vacation home is one of the best ways to learn how to make $1000 a month in passive income. If you have the room, you can make money. All you need to do is ensure it’s ready for your tenants and provide the desired amenities. However, it’s also your responsibility to vet applicants, collect rent, and maintain the property or room.
How to reach $1,000: It’s easy to reach $1,000 a month by renting an entire home or a room. You set the rent based on market rent, and if you have a continuous flow of tenants, you can reach your goals.
8. Rent Your Car
Effort Level: Mid
If you have an extra car or don’t use your car often, you can rent it on sites like Turo. This marketplace matches people who need a car to rent with car owners. You set the rate and terms of the rental and earn good money renting your car while it sits idle.
Turo provides $750,000 in liability insurance and handles all the paperwork and administration, including vetting renters. Your job is to list your car, keep it in good condition, and make it accessible when you have renters.
How to reach $1,000: The more you make your car available for rent, the more you earn. The average Turo host makes $10,516 yearly with a single car to rent.
9. Start a Blog
Effort Level: High
If you are passionate about a particular topic, consider writing a blog about it. Even though millions of blogs already exist, there is always room for more. The key is to find your niche and focus on that target audience. For example, don’t write a blog about parenting; instead, find a niche within it, such as parenting teens or parenting children with ADHD. You can hyperfocus on your audience and get more views.
When you build a solid audience, you can monetize your blog by using affiliate links. These are exclusive links from retailers or brands for your blog. You earn a small commission when your readers click the links and purchase something. You may also be able to write sponsored posts, which brands pay you to write and share.
How to reach $1,000: Blogging takes regular effort to build an audience, but once you have that audience, your marketing efforts and affiliate links can continue to pay you, helping you reach $1,000.
Passive Investing Tips to Make $1,000 a Month
If you’re considering investing to make $1,000 a month in passive income, the name of the game is diversification. Even if one investment tanks, you may have others in your portfolio that offset it.
- Due your due diligence: Only invest in assets you know are legit and have a positive history. Don’t take someone’s word that they found ‘the best’ investment. Do your research, and if it seems too good to be true, it likely is.
- Know minimum balance requirements: Some investments have minimum balance requirements. If you can’t meet them, you may not be eligible, or you may be eligible but at a lower yield. Read the fine print and ensure you have the necessary capital.
- Watch the fees: Great investments may not seem great after reading the fine print. Know how much an investment will cost before investing. There may be commission fees or annual assets under management fees. Calculate what they will cost to determine if the investment is worth it.
- Watch your asset allocation: Your initial investment portfolio won’t stay the same as the market performs. Over time, you may find that you are more heavily invested in stocks than you wanted or that your portfolio is too conservative. Reallocating your portfolio to reach your goals is important, and if you don’t want to do it yourself, consider using a robo-advisor that offers automatic rebalancing.
- Know your risk tolerance: No two investments have the same risk. Know what you can afford to lose or what investments won’t keep you worrying at night. Diversifying across conservative and aggressive investments is ideal, but only if you can handle the risk.
What’s the Best Way to Earn $1k a Month in Passive Income?
So, how do you choose the best way to make $1,000 a month in passive income? Just like you should diversify your portfolio, you should diversify your passive income efforts.
Don’t rely on one method; you likely won’t reach your goal. Instead, spread your capital and time across as many methods as possible without burning yourself out. Many of the techniques described here require little to no effort so that you can spread yourself out well.
If you choose passive income opportunities that require some work, like renting a property or car, make sure you have the time to give adequate attention and effort to maximize your earnings.
Don’t choose passive income ideas that make you uncomfortable or require capital you don’t have. There are many simple ways to earn passive income, even if you start with something small, like a CD ladder.
The post How To Make $1,000 a Month in Passive Income appeared first on Millennial Money.
from Make Money Archives - Millennial Money https://ift.tt/gb0FhNv
April 12, 2024 at 11:35PM
No comments:
Post a Comment