Passive income – and life is good

7 min read
Passive income – and life is good
Picture: Dmytro Varavin | Dreamstime

In times of political instability and economic crises, people think about additional sources of income. Not everyone can find a second job or create a business.

The way out is to receive money without wasting personal time.

What is passive income?

Passive income is an autonomous source of income. This means that money will come regardless of the state of the person, his mood, age and other factors.

A vivid example is a bank account, the interest on which is calculated without the participation of the depositor.

It is important to note that the topic under consideration has long been the subject of numerous speculations. Fraudsters and speculators promise fabulous wealth through the use of financial instruments obscure for a beginner (foreign exchange market, binary options, etc.).

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In practice, passive income is formed over the years and requires discipline. Money will not fall from the sky – you will have to make calculations and take care of reducing risks.

How to generate passive income?

To begin with, determine the period by which the funds will be needed, as well as their volume and frequency of receipts. For example, the goal may be to buy an apartment – then money is needed in a large amount – in one or several payments. If passive income was created to pay for vacations, the accrual option is acceptable 1-2 times a year.

Passive income
Picture: Dreamstime

The second step is to determine the payment schedule. Study your own economic situation and calculate how much money and how often you can painlessly invest in the formation of future income. For example, set aside 10% of every paycheck.

The third step is the choice of financial instruments. The released funds should be invested wisely. This stage is the main one, because a choice without taking into account risks is fraught with the loss of large amounts or all capital.

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At this stage, it is necessary to develop the skills of an investor in oneself – this is a complex process, stretched for 5-20 years. Without an education in investment, it is better to use instruments with low risk and a guarantee of return of funds, such as a bank deposit.

Who has access to passive income, how not to lose capital?

Rent is the dream of many, if not all, as Vasily Lavrov comments. Money drips on its own. How good!

In general, the business is arranged in such a way that it needs to be monitored and looked after. If a business works, it requires care.

But. The man who runs his restaurant does a hell of a job, difficult, nervous and very unreliable. You have to be very immersed in it to ensure a steady income.

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But the owner of the premises, who rented it out for this restaurant, doesn’t care for him at all. A month has passed – the rent has dropped. And worries, in general, no.

Profitable real estate in our country was bought by the most prudent and pragmatic people from all over the world. When it appeared on the market for next to nothing, after privatization, there was a fight among investors who understood that there would be no more such a chance.

And in principle, the train left. The main source of rent – commercial real estate, premises for “street retail”, has already left the market. The vast majority of proposals for the sale of profitable real estate – are simply the usual systemic nature for large investors. And they are tied to the price of borrowing money in the country.

Today, if you have at least $1 million, you can count on the acquisition of rental property with a gross yield of 12+% per annum.

But, only those who have these “at least” $1 million have these opportunities. Most residents of the savings, which are really melting away in banks, with a very low deposit that does not cover inflation, do not have that kind of money.

What should they do, where should they invest?

In the stock market – only to those who sincerely and carefully will deal with it. And only in securities, in Shares and Bonds of Russian companies. Our market is undervalued, again, plus it is not a total “field of fools”, which is the American stock market. The latter, by the way, will reboot in the next two or three years – fools will again be in trouble.

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Small business is also only for those who will be engaged in this business. It’s hard work and anything but rent.

The only understandable and affordable option for a reliable and good rental income is participation in the creation of new profitable commercial real estate.

So you will have rent, it is also passive income.

Instruments for generating passive income

When choosing a source of passive income, pay attention to three parameters:

  1. Risks (term and return guarantee)
  2. Yield
  3. Liquidity
Passive income
Picture: Ruzanna Hakobyan | Dreamstime

The best choice is a financial instrument that will be characterized by low risks, high profitability and liquidity (conversion of investments into money). Unfortunately, the profitability of the project is directly related to the risks. In this regard, venture (highly profitable) investments are promising. However, it should be borne in mind that out of 10 such investment projects, only 2-3 cover the total costs.

Financial instruments for a novice investor

Bank deposit

By choosing a bank you can trust, you will receive a profit of up to 10% per annum. Adjusted for inflation, capital will grow by 1-5% annually. Compound interest will help – frequent (once a month) capitalization while keeping money in the account. The risks are obvious – inflation and a possible delay in the return, which is typical for some commercial banks.


This type of securities is the same receipt, backed by legal force. The state or the company undertakes to return the funds raised within a predetermined period in the agreed amount.

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Currency bonds, as a rule, bring 3-5% per year. The risk in this case includes a difficult financial situation for enterprises, being in which they may not fulfill their obligations. Such investments do not belong to the category of deposits, therefore they are not subject to compulsory insurance.

Purchasing a property

You can get a second salary by settling tenants. The network even advertises a business with renting apartments for a month and launching tenants there on a daily basis.

In the case of buying real estate, the risks are minimal, but not equal to zero – there are unscrupulous tenants, and sometimes brawlers. Profitability also depends on the area in which the apartment is located, on the amount of utility bills and the condition of the home.

Create intellectual property or personal brand

Using professional skills, you can write a book or create a video course. Such a product requires only a one-time time investment and will subsequently be sold independently.

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The tools discussed above are suitable for beginners due to their availability and safety. Investing at an advanced level requires special education and a clear understanding of the risks involved.

Investments with increased risk

Non-state pension

This dream of workaholics may be shattered by the bankruptcy of a non-state pension fund. The task of the fund is to correctly invest the funds of investors, but it can easily invest in unprofitable or even fraudulent projects.


Buying securities is not always profitable. You need to have patience and invest only in profitable companies – but this does not give any guarantees.

Mutual investment funds. The idea of ​​the fund is classic – to collect the money of the participants and invest it in securities. Mutual funds attract investors because of their democratic nature – you can invest in them even a little money.

Investment life insurance

This type of investment involves the transfer of funds to the insurance company, which will independently invest them. Insurers offer different strategies and give guarantees for a partial or full refund if the investment does not pay off.

The listed financial instruments are available to a novice investor. To manage large capitals, it is necessary to obtain a special education, as well as to borrow experience from professionals.

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Investing can be started by “putting in a notebook”, writing down ideas and comparing them with the current situation in a year. This way you will not lose money and evaluate your money management skills. It is important to remember that investments are a long-term project created for profit. If the risk is too great, it is better to invest in education and increase your own productivity.

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