5 Investment Options to Consider for Generating Passive Income

5 Investment Options to Consider for Generating Passive Income

Even if you have a full-time job that takes up virtually all of your time, having some extra passive income that you can use, can never hurt, right? This is particularly true in these unpredictable times, where job security and savings have become pivotal to your welfare and peace of mind. Passive income is generally defined as a kind of income where your active involvement is minimal. Before considering getting involved with passive income opportunities it is critical to undertake appropriate due diligence to determine if this type of investment is right for you. With this in mind, here are a few investment options that can generate passive income:

Real Estate

Real estate is often touted as a steady option for people of varying investment profiles. Investing in real property can lead to great returns as long as you effectively shoulder the responsibility that comes with buying a property. People wanting to generate passive income from real estate have a plethora of options to choose from – single-family units, duplexes or triplexes, bungalows, et al. 

So if you have quite a bit of money saved and are looking for an avenue to invest this money in a steady investment vehicle, real estate can be an attractive possibility. In a time where people are looking for safe havens to get through this pandemic, renting properties can generate regular monthly income. Real estate income can be a short-term or a long-term opportunity, depending on the kind of investment you are going for. 

Peer-to-Peer Lending

Peer-to-Peer Lending, also popularly referred to as P2P lending, generates passive income by lending money to potential borrowers online. The process of P2P lending starts with you investing money by providing someone a loan and then getting a monthly interest payment until the invested amount is completely refunded. The income accumulates over time allowing you the chance to generate a decent passive (often) monthly income

As P2P loans are generally unsecured, the interest rates you receive tend to be higher than any bank or financial institution can offer on your savings account. This approach may help you diversify your investment portfolio. That said, where a loan is unsecured, it is crucial that you investigate the creditworthiness of the borrower.

Dividend Stocks

Dividend stocks are another way to invest in a profit-sharing model in which you can generate income periodically, however, it is important to choose the right stocks that offer good dividends. The best part about publicly-traded stocks is that they are liquid, making them easy to buy or sell. However, the risks associated with stock investments are pretty high. If you have a higher risk capacity and appetite, you can make significant monthly and/or quarterly returns from your investments. 

Knowledge/Information Products

Looking for a great way to start earning passive income while controlling the risks associated with it? Invest in a product – not just any, but your own. If you are a doctor, consider providing medical advice online. If you are an interior designer, consider having a channel where you share your knowledge about the trends in your industry. During this pandemic, many people have started their online channels to generate income by sharing their expertise. 

In the event you create an online course, you can reach out to popular platforms like Udemy, thus earning through the knowledge and experience that you have gathered over the years. The best part is that if your course or informational channel gains popularity you can consider taking a more active role in creating more content and, in turn, more income. This investment option initially necessitates more of a time, rather than financial, outlay.

Index Funds

Index funds basically mimic a financial market index, by creating a portfolio of stocks. Due to the nature of the investment instrument, index funds can get a bit risky, but the risk is somewhat mitigated through fund diversification.

Index funds also generally have lower expenses and fees compared with actively managed funds. Unlike actively managed funds, index funds usually focus on a long term vision and involve less buying and selling of securities, thus making it a fairly less volatile investment. 


Finding the right investment strategy can sometimes bridge the gap between your expenses and your current income, which is why choosing the right instruments to achieve this goal has become imperative.

Diversifying your portfolio is often recommended as a way to minimize the risk of a major loss. You should choose an investment vehicle that provides you the right returns to achieve your goals only after thorough research.

Lucy Manole

Lucy Manole is a creative content writer and strategist at Marketing Digest. She specializes in writing about EdTech, productivity, career, technology and entrepreneurship. When she is not writing or editing, she spends time reading books, cooking and listening to music.

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