Passive Investing: How to Earn Money Without Effort
If you have money, you probably dream of investing it in a way that would generate passive income without much effort.
The topic of passive investing is quite popular on social media, but in reality, not many investment options can be classified as passive income.
Passive investing is an investment strategy in which an investor is minimally involved in the asset management process, seeking to generate regular income without actively participating in the management of their investments.
Traditionally, such investments include securities, bank deposits, and real estate. Recently, staking cryptocurrencies pegged to hard currencies ( stablecoins ) has also become a popular option.
The essence of these investments is that you receive a stable income without having to sell the invested asset. Therefore, gold can only be conditionally included in this list. Although the precious metal steadily appreciates in price, you do not receive interest for owning gold bars.
Types of passive investments available today
In order to choose the best investment option, you need to understand how much a particular investment will bring in.
Securities - a truly passive investment, in this case, would be buying bonds , since in this case you will not need to regularly monitor whether the company pays dividends or not.
After all, dividends on shares depend on the decision of the joint-stock company's management, which can cancel these payments at any time. Therefore, investors must regularly modify their stock portfolio, removing unpromising stocks and acquiring new ones.
The average yield on bonds is 3-6 percent per annum, depending on whether you buy government securities or bonds of large companies. Bond trading .
A bank deposit is the simplest option for passive investment. If you have a sufficient amount of money, it will allow you to live off the interest without much effort.
What is more profitable: dividend stocks or a deposit?.
You can earn a lot on deposits only if these deposits are in weak currencies (hryvnia, ruble, tenge, lari, etc.).
Interest rates on deposits in unstable currencies range from 10 to 20 percent per annum, while interest rates on deposits in dollars or euros are much more modest – from 1 to 4 percent per annum.
An alternative to bank deposits is cryptocurrency staking , but to avoid risks, it is recommended to use stablecoin staking, which can yield 4-6% per annum.
Real estate – if you're planning to buy an apartment and then rent it out, this option is hardly a passive investment. You'll have to manage utility bills, make repairs, and find tenants.
Therefore, it is best to purchase objects such as parking spaces or garages for rent, or, alternatively, commercial real estate.
Income from renting out real estate typically amounts to 4-6% per annum, which, as you can see, isn't much more than the profit from cryptocurrency staking, but the hassle and worry are many times greater.
Gold – I don’t consider investing in gold a passive investment, as in this case you can’t regularly receive interest on the invested amount.
But today, a rather interesting option has emerged where gold can also generate passive income: staking Tether Gold (XAU₮), a cryptocurrency whose value is pegged to gold.
By purchasing Tether Gold and staking it, you profit not only from the rise in gold prices but also from the staking interest, which is around 2-3% per annum.
Ultimately, we can conclude that, no matter how attractive passive investments may be, their maximum return is unlikely to exceed 6% per annum. Therefore, to generate a decent income, a significant amount of money will be required.
