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Sunday, March 31, 2019

Ways to Generate Passive Income in Retirement

Older adults can use money or skills they already have to earn revenue that doesn’t require constant effort.

Wouldn’t it be great to know that while you’re at the grocery store or doing the laundry, you’re making money? That’s the idea behind passive income, which is money that comes in even though you’re not actively involved.

One way to create passive income is to put your money to work for you. Strategies are available for various asset levels, including someone with $100 in the bank. You can find new ways to diversify your investments through innovative internet companies, or even make money on stock you already own.

We also found several methods to get paid for “jobs” that are activities you already do, or that generate a revenue stream from work you do once. Some are incredibly easy, and others require a little more effort upfront.

Whatever your situation, it’s a great feeling to watch your net worth rise while you sit back and enjoy life.

Strategy One: Put Your Money to Work

  • Earn more interest. If you have cash sitting in an account earning less than 1 percent, you need to move your money. The advent of online banking has made it easy to link bank accounts, so you can keep using the checking account and ATM at your local branch. Move your savings to a high-yield account elsewhere so inflation isn’t robbing you blind.   CIT bank has a high-yield savings account that is currently paying 2.45 percent interest. You won’t get rich, but why pass up free money? Another great choice is Ally Bank, which offers a 2.20 percent yield and can set you up with a free checking account and low-cost brokerage. Both banks offer CDs which pay closer to 2.75 percent, depending on how much you invest.
  • Make peer-to-peer loans at Lending Club. Shake things up by making some peer-to-peer loans for as little as $25 each and earn up to about 10 percent. Can a loan go bad? There’s always that chance, although each loan is vetted. So if you have $2,500 to invest, you could diversify by putting it into 100 different loans.
  • Crowdfund real estate with Fundrise. Boasting annual returns of between 8.7 and 12.4 percent, real estate crowdfunding platform Fundrise offers attractive yields to the average investor. Start with as little as $500 in the Fundrise Starter Portfolio. The company chooses real estate projects for their potential to generate cash. 
  • Use a low-cost brokerage. If you’re paying more than $5 per trade, you can save some money. (Caveat: The cost to make a trade is just one part of the cost associated with investment accounts. Funds and advisors charge fees as well. Some are hidden, such as the fees associated with mutual funds.) Check out free trades at M1 Finance, Robinhood and Fidelity. Or go with a more traditional brokerage, like Schwab or Vanguard, that offers a complete range of services, including many extremely low-cost exchange-traded funds (ETFs) for a nominal or zero trade fee. . You can get started for $100 or less at any of these institutions.
  • Provide veteran business bonds. Streetshares facilitates peer-to-peer lending for veterans and their communities. You loan the money for veterans (mostly) to capitalize their business in return for a 5 percent flat rate return. The minimum to start is only $25, and accredited investors (generally those with over a million in assets, but check here for exact rules) can earn more.
  • Refinance your mortgage. Rates are still historically low, and it might make sense for you to stretch out that mortgage and invest the monthly savings. Use a mortgage calculator to run the numbers and see if it makes sense in your situation.
  • Lend to real estate developers. Crowdfunding platform PeerStreet allows you to select debt deals on individual real estate projects nationwide for a $1,000 minimum investment. You can spread that money around to multiple deals and expect returns in the 6 to 11 percent range. Automatic investment selection is built into the system. This program is available only to accredited investors at this time.
  • Get dividends. Many stocks pay you to own them. The payments are called dividends, and you can diversify by owning a group of these dividend payers in a low-cost ETF. Better yet, buy them in your IRA account and avoid paying taxes on your dividends. 
  • Invest in solar energy. Based in Colorado, Wunder Capital allows you to invest in large-scale solar energy projects, rather than individual companies. Their diversified portfolio has been returning about 6 to 7.5 percent on minimum investments of $1,000 to accredited investors only. 
  • Learn about litigation finance. Legal investments include pre-settlement financing, legal advertising and post-settlement financing. Listen to Yieldstreet CEO Milind Mehere explain the concept on the Invest Like a Boss podcast.  Accredited investors earn from 8 to 10 percent on these investments. 
  • Own rental properties. You may have thought the real estate game wasn’t for you, that it was too complicated and time-consuming, or that you would have to lose money for years upfront because of how expensive your city or suburb has become. Turnkey rental property broker Roofstock has changed the dynamic.  This company finds cash-flowing rental properties in areas where the numbers work. You buy a single-family property with a tenant and choose from a selection of available property managers in that area. Go to the site to check their current inventory for free.

Strategy Two: Use What You Have

  • Hack your house. If you own a home, you can probably engage in the art of house hacking, or making money off of it. Do you have an extra bedroom, or a basement you’re not using? Are you still in the home you raised your family in, and you don’t really want to downsize? Rent out space to pay the mortgage or put some cash in your pocket every month.  You can either draw up a rental agreement and have someone move in, or use a site like AirBnB to rent by the day or week. The first option is less labor-intensive, since you only have to clean when your tenant moves out. The second option may allow you to make a little more money per month, depending on how booked you are. Some homeowners prefer having the same person in their house, and others like a constant flow of guests. You might also want to take a look at The Freebird Club, a homestay site for international travelers over 50. Host others or exchange lodging to save big on vacation accommodations.
  • Bump your savings. There is actually an app called Bumped that gives you free stock when you shop. There are no fees, and you can link a debit or credit card to the app and still get your rewards. Sound too good to be true? Currently, there is a wait list, which you can join online.
  • Sell your own designs. If you’re a creative type, or you are naturally funny, then this could be the answer for your own little income stream. Use a platform like CafePress to sell your designs for everything from t-shirts to mugs. Upload the design one time, and CafePress does the rest. 
  • Start a blog. It takes a substantial amount of time to create enough quality blog content to attract a sizable following, but it can be done. If you’re passionate about a topic lots of others would want to read about and search, then it may be time to get moving. Blogs make money by serving ads, offering products for purchase or providing click-throughs to affiliate links.  Don’t expect to get significant returns for a few years. 
  • Put together an online course. So you realize that you’re an expert at, say, weaving horsehair (yes, it’s a thing called “hitching”) and you want to pass on the art. Why not create an online course or video to teach your craft? Online marketplace Udemy is the most popular platform, and comes with a built-in audience. However, it takes a big bite out of the profits and controls pricing. If you already have a website, Teachable may be a better bet. It’s an end-to-end solution that you can post on your own site.


Blog posting provided by Society of Certified Senior Advisors