Using passive income can be one of the easiest ways to build long-term wealth. It is underused by younger generations because they feel they do not have access to it. Passive income can come in many different forms, but when you are busy looking for your first job out of college, it isn’t the first thing that comes to mind. Passive income lands in your bank account while you are busy doing something else. It’s like getting a raise on your hourly wages while putting in minimal effort. And having multiple streams of income can bail you out of a bad financial situation if you lose your job. However, finding methods of earning passive income isn’t always easy.
Investing in the stock market
The first and most accessible way is the stock market. I am not telling you to become a day trader, but just getting a basic introduction to the stock market can earn you a little money. Several mobile apps allow you to trade stocks at your leisure, and if you keep a modest budget, this can be a very low-risk way to earn money. Downloading an app such as Acorns is just like having a savings account with a higher interest rate. They round off your purchases and invest the extra change into the stock market. I have an account that’s been active for six months. I invest roughly $5 per week and have earned more than $100 just for maintaining my normal spending habits. It’s not life-changing money, but it adds up over time.
Investing in real estate
The biggest way to earn passive income is to own property. Buying a house allows you to pay off a mortgage instead of throwing away your money on rent. This isn’t always a realistic option for those just starting to build their wealth, but once you’ve accrued some money, it should be in your plans. The initial cost of buying a house can be steep, as you have to put up a down payment and pay expensive closing costs. After that, it isn’t a major shift in your budget. If you are living in the house, mortgage rates are very similar to rent. If you are renting the building to tenants, you can charge a rate similar to your mortgage and earn passive income for simply maintaining the property.