Passive income has become the new normal as we nearly strive to find means to beat the constantly rising cost of living. Statistics show that approximately 60% of the world’s population has ventured into passive income opportunities. However, to benefit from the idea, one must be careful with the business idea they adopt for passive income, as not all businesses blend well with it.
Here are several ideas to follow with $100K and yield higher returns.
1. Invest in Mortgages
You can invest in mortgages in various ways, especially as a source of passive income. Mortgage investment is an ideal passive income idea that provides reliable returns and lower investment fees. It doesn’t necessarily involve constructing or buying houses but adding efforts to what people need to purchase a mortgage instead of taking loans from a bank.
Often, mortgage investors team up with non-bank or private lenders to offer loans at favourable rates of 6% to 13%. To become a passive mortgage investor, you should study more about mortgages and choose a specific branch to focus on for the most effective results possible.
2. Real Estate Crowdfunding
Real estate crowdfunding refers to an approach where various investors pool their financial resources together to invest in significant projects with the assurance of winning a fixed amount or rewards as a return. You can undertake this as your source of passive income with $100K, as the initial contribution cost is quite affordable for many.
This investment idea allows you to venture into high-return opportunities which would otherwise be unbearable as a single party due to the large sums of money required to start. Although crowdfunding income is distributed among several investors, the return is a good passive income and improves with time.
3. Buy Stocks
Another ideal way to invest $100K for passive income is to buy stocks from the best-performing industries in the market. They include healthcare, financial technology, e-commerce, cloud computing, and transport.
Investing in the stock market with businesses from such industries can enable you to earn a good passive income. While it may be tempting to go for cheaper stock, investors should research their potential industry for growth in the coming years.
4. Invest in Bonds
Bonds are considered slightly safer than stocks with an investment of $100K. Bonds can be a good idea to earn a passive income and reinforce your primary one. There are four main types of bonds one can invest in, including treasury bonds, corporate bonds, municipal bonds, and government bonds.
Before venturing into bonds as your passive income investment, you should seek to understand what every type has to offer. Remember that investing in bonds can be risky, but you can consult a financial advisor before diving in.
5. Peer-to-Peer Lending
Peer-to-peer lending is another way of investing your $100K for passive income. This investment idea involves lending money to other people or businesses who repay with interest. Peer-to-peer lending can start with insignificant capital and work smarter to yield more profits in the long run. Like a bank, you must develop a specific interest rate and terms and conditions that borrowers must adhere to before acquiring loans.
6. Go for a High-Yield Savings Account
Did you know you can open a high-yield savings account with as low as $100K and enjoy good returns in the long run? As the term suggests, these accounts provide a passive income to investors by offering more significant interest rates than standard savings accounts.
If you have been looking for ways to earn a passive income with $100K, you can deposit the money in these accounts and expect high interest with little or no extra effort. The interest is typically ‘free money’ accumulating over time as your account grows.
7. Establish a financial plan
When choosing which business idea to embrace for passive income with $100K to achieve the best yields for your hard-earned finances, one must consider various factors. These factors include:
Financial goals
One must consider their financial goals before investing $100K for passive income. For instance, someone looking for long-term growth can embrace a high-yield savings account.
Risk tolerance
You must know the risk tolerance of your investment idea before letting go of your $100K. Often, the lower return investments come with lower risks and vice versa.
Market condition
Before submerging your head, consider the prevailing market conditions of the business idea you wish to venture into.
Return on Investment
ROI refers to the expected yield after investing money in a particular business within a specified period. Your potential investment should boast a reasonable ROI both in the short and long term.
We hope you’ve better understood how to invest $100K for passive income to prevent you from suffering losses. However, consult a financial advisor before settling for a specific investment idea for a successful investment. You can also open a separate account for your investments different from your usual one so you may evaluate it better.
