Passive Income Ideas For Investors

Dividend stocks

Shareholders in companies with dividend-yielding stocks receive a payment at regular intervals from the company. Companies pay cash dividends on a quarterly basis out of their profits, and all you need to do is own the stock. Dividends are paid per share of stock, so the more shares you own, the higher your payout.

A bond ladder

A bond ladder is a series of bonds that mature at different times over a period of years. The staggered maturities allow you to decrease reinvestment risk, which is the risk of reinvesting your money when bonds offer too-low interest payments.

A high-yield CD or savings account

Investing in a high-yield certificate of deposit (CD) or savings account at an online bank can allow you to generate a passive income and also get one of the highest interest rates in the country. You won’t even have to leave your house to make money.

Set up an annuity

An annuity can be a good place to set up reliable income. With a typical annuity, you make payments to an insurance company, which will provide you with a stream of income in the future. Annuities pay out monthly, and they can be set up in a variety of ways, for example to start paying immediately or much later.

Peer-to-peer lending

A peer-to-peer (P2P) loan is a personal loanmade between you and a borrower, facilitated through a third-party intermediary such as Prosper. Other players include LendingClub and Upstart.

A municipal bond closed-end fund

Municipal bonds offer tax-free dividend income to investors in exchange for financing public projects for states and cities. A closed-end fund focused on this area of the market owns a variety of these bonds and then juices the overall return by borrowing money to buy more. Like investing in CDs or dividend funds, a closed-end fund is the most passive kind of income.

Preferred stock

Preferred stock is a type of stock that acts more like a bond, making attractively large dividend payouts on a quarterly schedule. Like bonds, preferred stock has a face value and may have a specific maturity, though it may also be perpetual, meaning the company need never redeem it.

Written by James Royal, Ph.D., Edited by Lisa Dammeyer, Reviewed by Kenneth Chavis IV

Culled From: https://www.bankrate.com/investing/passive-income-ideas/