Investing is one of the best things you can do with your money. Your investments can then allow you to earn more money without the need for you to put in much effort. In other words, your money works for you and makes you more money.
This is what we call passive income. And if you don’t have any source of passive income yet, it’s about time you start looking for one.
Here are six good income-generating investments that will help you make more money with your money.
1. Dividend stocks
Dividend stocks are a good example of income-generating investments. You must buy stocks from a public company to invest in dividend stocks. As the company generates profits, you will be paid some dividends, which you can then decide to reinvest in the company or transfer to your bank account.
But keep in mind that stocks can be a very volatile investment. Companies are not guaranteed to generate profits each month. And if ever a company falls on hard times, you could eventually lose some money.
To invest in dividend stocks, you need to look for stocks that are considered less volatile and focus on a long-term strategy. You also need to be willing and able to take risks with your money.
2. Mortgage investments
Mortgage investments could be an interesting option if you have a lot of money.
A mortgage investment fund is an investment vehicle that allows borrowers to benefit from private mortgages. First, You must check whether you can become a mortgage investor. And then, when you buy units in a mortgage investment fund, you will start generating income as the borrowers pay back their loans with interest.
Since the private mortgages issued by mortgage investment funds are secured by either residential or commercial real estate, mortgage investments are not considered too risky.
As the borrower pays back their mortgage, you can expect consistent returns on your investment, month after month.
3. Bonds
Bonds could be for you if you want a good income-generating investment but are not interested in taking risks with your money. When you invest in bonds, you can expect to receive less money than in dividend stocks. However, you don’t risk losing any money.
But what are bonds, exactly? Bonds are a loan you can make to a government or a company that needs to raise funds. You will then get some money when the government or company pays back the loan with interest.
Of course, a long-term bond will give you a higher return on your investment than a short-term one. How much money you receive will also depend on current interest rates.
4. Real estate investments
When it comes to good income-generating investments, you generally can’t go wrong with real estate. After all, even during times of economic downturn, people will still need to pay the rent so they can have a place to live.
But if you want your residential or commercial real estate investments to be a good source of passive income, you will need to hire a property manager to take care of repair and maintenance. If not, you must take care of these yourself, which can be time-consuming.
Alternatively, you can invest in real estate investment trusts or a crowdfunding platform.
5. Index funds
Investing in index funds is a different way to invest in stocks and bonds. When you buy an index fund, you are buying a portfolio of stocks and bonds designed to mirror the securities and performance of a particular financial market index.
Depending on your chosen index, you could invest in foreign stocks or some of the largest publicly owned companies in the United States, for example.
Index funds are expected to give you a great return on your investment in the long term, so they are a good option for you if you want to generate passive income and diversify your portfolio.
6. Peer-to-peer lending
Peer-to-peer lending is another easy way to generate income with your investments. You can act as a lender for an individual or a business entity through a peer-to-peer online platform.
As the borrower pays back the loan, you earn interest on your initial investment without having to make any effort.
One benefit of peer-to-peer lending is that it’s an easy way to generate income even if you don’t have much money to invest. Depending on your chosen platform, you might be able to start funding a loan for just a few dollars, making it a great venture for you if you are just getting started as an investor.
