Top 5 passive income ideas for over-worked employees
For anyone to achieve Financial Independence without being burnt out, one needs to look into passive income ideas that require a more lifestyle approach. While I’m all for hustling, it’s also just as important to stay healthy and enjoy the process to stay in it for the long run. Most people who are on their journey to FIRE eventually quit because they might be burnt out or are at the extreme end of frugality. So, how to solve it? Read on… 😄
Do you ever feel like needing a break from your day job and pamper yourself with something nice in the evening after a whole day’s work? You’re looking forward to it, but then there’s always your conscience telling you otherwise — reminding you that you have a loan to pay, daily expenses to spend on, or a holiday to fund, and so you gotta hustle. I’m pretty sure that you’ve either asked yourself, “how can I earn additional income to reduce my financial burden or fund my holiday?”, or “what assets should I purchase to fund my cost of living?”. If you’ve heard of passive income, you’re likely to have asked the latter question.
So here are the top 5 ways to have a better lifestyle approach in your journey to achieve financial independence.
1. Sell covered monthly options
I know, it might be too technical for some but it is worth researching into. In layman's terms, an Option is a derivative instrument that gives the buyer the right to buy a stock at a certain price for a specified time. Vice versa, as an option seller, you would be selling the buyer the right to buy a stock at a certain price for a specified timeline. Take an insurance agent for instance. It’s like being an insurance agent in the stock market, receiving monthly premiums while ensuring the buyer with the purchase or sale of stock should the price of the stock go against them.
2. Rent or lease a spare room
Besides thinking of assets to purchase, an ideal way to have a passive income without much effort would be to rent out a spare room or lease your garage for someone who might need it. While the majority would mostly think of purchasing a rental property when it comes to passive income, leasing something that is unused would be a much more hassle-free option because lesser monitoring is needed when you’re already there! So if you’re renting an entire house or apartment, or own a multiple bedroom house, why not sub-rent it to another person that is able to cover the cost of your rent or mortgage? The same could be said for a car.
3. Buy growing dividend companies
The keyword here is growing. While I’m not entirely for dividend payout companies because it tells me that the company is not able to retain their profits and put it for better use to grow the company’s profits, with a steady increase of dividend-paying companies, at least the capital on the purchase of the stock has been compensated. For example, Microsoft has had a steady increase in dividends to date ever since the company was listed on the stock exchange. If you’re able to do further research and find companies that grow their profits year over year as well like in the case of Microsoft, then the likelihood of increasing your capital gain would be much higher as they are valued at a much higher price as profits continue to increase.
4. Stake crypto
Before you jump into the crypto bandwagon and buy crypto for the sole purpose of staking it to earn passive income, it’s important to understand the fundamentals of purchasing the asset class before being invested in it. If you’re new to crypto, see here for a better understanding of the pros and cons of crypto. Staking crypto is a process that requires you to allocate your crypto assets in support of a blockchain network and to help the network to verify their transactions in return for a reward. Unlike mining a cryptocurrency which also helps to verify transactions, it does not require any hardware equipment. So, staking crypto saves you the hassle of forking out money for the maintenance cost and energy usage of hardware equipment needed to validate transactions. It’s one of the easy ways to earn interest from your cryptocurrency holdings if you’re already invested in it for the long term.
5. Buy REITs
Another alternative to purchasing a rental property that requires active management would be REITs (Real Estate Investment Trust). A real estate investment trust is a company that owns, operates, or finances properties that generate rental income. Hence, REITs are commonly known to generate a stable dividend income and capital appreciation. Unlike dividend income stocks, they are more stable in nature and so, are less likely to appreciate capital gains as fast as a dividend income stock. Owning a REIT stock is like owning multiple properties for a fraction of the price and avoiding the hassle of managing all the properties at once. So instead of purchasing a few properties that probably need lots of fixer-uppers or time commitment to manage your tenants, adding REITs as part of your investment would be a good consideration.
While I do agree that passive income is important to achieve financial independence, it’s also just as important to make sure that the capital invested is growing as well. But with time on my side as I have still many years ahead to compound my wealth, passive income would not be my priority at the moment but focusing on growth instead (capital gain). However, I am still selling monthly options on growth stocks which I intend to be invested in as an additional perk to be invested in for capital appreciation. Hope this gives you better suggestions to gain passive income without being overworked!
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