Peer-to-peer lending refers to the process of lending money to people that would otherwise not be approved by the traditional banking system for a loan. Platforms that allow you to lend your money to others take a percentage of the gains from your loan. You can adjust the level of risk you are willing to take and receive the corresponding rate of your loan. Keep in mind that these are high risk loans, hence the higher rate of return. Most platforms, such as Mintos, allow you to formulate a strategy, according to your risk appetite.
Royalties
Royalties are what creators and artists get paid for their work. You can receive royalties when you publish a song or a book and someone else uses it. This is one of the investments that require you to devote time, rather than money. If, however, you’re not the creative type, or you don’t have the time to devote, you can purchase rights for songs, films and trademarks and receive royalties whenever someone else is using the product. Platforms such as Royalty Exchange are a good place to both buy and sell rights. NFTs have also created a marketplace in which creators can sell rights to their work.
Real Estate
Real estate is viewed as one of the most stable forms of passive income. You can either buy property to rent it, or transform the property you already own and live in into an income generating asset through house hacking: you can transform your property to rent part of it, a room to AirBNB or split your house to different apartments and rent them while paying for your mortgage and other living expenses. However, the problem still remains: how do you find the money for the down payment? If you can’t afford an actual piece of real estate, you can buy a share in a Real Estate Investment Trust (REIT). REITs are companies that invest in real estate across regions and countries. US REITs are required by law to pay 90% of their profits to shareholders. By owning a REIT you gain exposure to the Real Estate market, without needing to have enormous capital to spare.
Dividend Stocks
When public companies make a profit they can either reinvest in themselves, acquire other companies, buy back shares, or distribute a portion of those profits to shareholders. The stocks of those companies are called dividend stocks. When it comes to dividend stock investing you can either invest in an index, such as VOO, or in individual stocks. The best place to start is Dividend Kings and Dividend Aristocrats, companies that have been increasing their dividends for 50 and 25 consecutive years, respectively.
Earning Interest on & Staking Crypto
Earning interest on your crypto is now possible thanks to platforms such as BlockFi. These platforms give you the ability to store your currency in their digital wallet and they reward you by depositing monthly interest payments to your account. Those payments compound over the deposit period. Staking is another way to earn passive income from your crypto, by locking an amount for a certain period of time and getting paid afterwards. The main difference between the two is that the former is much more liquid, as you can withdraw your funds any time you like, while in the case of staking you can only access your funds after a predetermined period.
