If you’d like to invest your money in a company with dividend-yielding stocks, you’ll receive a dividend check a few times a year without having to do anything other than put in your initial investment. These dividends depend on how many shares of stock you own, so it’s a good way to invest a larger sum of money.
You’ll also want to put in some research effort for this passive income stream. Choosing the right stocks is essential. You want something that’s going to increase in value over time, not decrease.
Spend at least a couple of weeks investigating each company you’re considering, so you’re familiar with their financial statements and can tell whether or not they’re likely to go up in value.
John H. Graves has another recommendation for dividend stocks, especially for novices: try ExchangeTtraded-Funds (ETFs).
These are investment funds that hold assets such as stocks, commodities, and bonds, but they trade like stocks. They’re easy to understand and inexpensive compared to regular dividend stocks. They cost less than mutual funds and are easy to liquidate when you need to.
Another big risk (besides picking the wrong stocks) is that stocks and ETFs can drop in value significantly if the market takes a downturn (as it did early in the global pandemic).
Save, Save, Save!
Talk about your passive income streams! How much more passive can you get than socking your money into a high-yield savings account and just watching the interest add up?
We’ve all enjoyed this benefit since childhood: going down to the bank and opening up an account with our lawn-mowing earnings, then watching eagerly as those pennies compound.
So long as the bank you choose is backed by the FDIC, your risk with this stream of income is pretty low. Just save up a few thousand dollars and aim for the highest interest rate possible.
Online banks can have interest rates that are 10 times more than your local brick and mortar bank (sometimes even more than that). Just do a bit of homework and make sure they’ve got that official backing to protect your investment.
You can even transfer money from your primary bank to the online one (and vice versa). This is a simple method of earning that just requires that initial investment of cash. The more you have, of course, means the more you earn in the end. There’s almost no risk at all if you’ve got that FDIC insurance up to around $250,000.
The only problem that might arise if the economy weakens. In that case, the interest rates will tend to drop and you won’t get as much of a payout as you would otherwise.