How to Invest $100K for Passive Income
How much passive income you make from a $100,000 investment is based on how you initially invest it. Put it into the wrong venture or pick the wrong strategy and risk seeing your income diminish or incur investment losses. Earning passive income should require minimal effort and very little ongoing monitoring.
More than a fifth of households in Canada earn passive income either through dividends, interest, or rental properties. There are many ways to earn a little extra on top of your regular income. Here is how to invest $100K for passive income and win.
1. Put It in a Savings Account
A high-interest savings account is not going to make you rich. However, the interest you earn isn’t anything, either. Even 1% of $100K is $1,000. Depending on the circumstances, many banks offer a promotional rate on savings accounts, sometimes up to 3-5% or higher.
If you don’t want to learn about investments beyond the basics, park your money in a high-interest savings account for the foreseeable future.
2. Rent Your Parking Space
If you live in a major city, buying and renting out a parking space may be a way to earn passive income. After all, there is no upkeep or maintenance involved.
If you own a parking space in a high-demand area or invest in a mix of parking spaces for under $100,000, you may be able to pull in some fairly good income every month without doing anything.
3. Start a Niche Website
Set up a website in a niche with many clicks and interest. Build a blog. Acquire audience. Add ads, sell products or courses, or earn income through affiliate links.
You can do a lot with a website, especially hiring writers and web designers to do much of the heavy lifting. All you have to do is make your payments and watch your users grow.
4. Invest in Mortgages
Another way to take advantage of housing markets in booming cities, i.e. Toronto and other hot real estate markets, is by investing in mortgages.
This can be done through direct mortgage investments, such as when taking on responsibility as a private lender or syndicate mortgage investments, where your money is pooled with other lenders to ultimately provide mortgages and earn interest on these investments.
5. Buy Stocks That Pay a Dividend
Dividend rates vary, but some stocks earn double-digits on dividends which can mean significant income when you have invested a decent amount of money. While stocks can fall, by doing your research and investing smartly, you can brace yourself for losses and steer your portfolio toward dividends and retirement.
6. Invest in Index Funds, ETFs, and More
An index or exchange-traded fund, aka ETF, is a basket of stocks. You aren’t invested in any stock when you invest in them. Still, you are instead putting money into a mix of stocks, similar to a mutual fund, where even if a stock fails, your portfolio is still balanced out with other stocks that are earning you your retirement in the long term.
7. Buy a Home and Rent It Out
For a $100,000 down payment, you can buy a fairly decent home or condo in most areas, rent it out, and earn monthly income while paying down debts and earning equity. A property manager can manage any property; you only have to deposit the initial money to purchase the rental.
8. Become a Private Lender
In investing in mortgages, you can invest as a private lender in all sorts of products with peer-to-peer lending. There are online platforms that allow you to become a peer-to-peer lender and groups that allow you to buy in to earn a passive income return.
Done right, this can give you a way to start earning passive income by providing loans directly to everyday people.
9. Invest in Small Businesses
With $100K, you can easily invest this into one or more small businesses and, with the right business managers, earn a regular return of anywhere between 10-25% depending on various factors.
Of course, you will want to carefully consider what type of business you invest in and make this decision based solely on passive income potential rather than making a decision based on personal meaning or emotions.
10. Invest in eCommerce With Dropshipping
Dropshipping is a supplier business where you sell products online but do not have to handle inventory. It’s all taken care of for you, from manufacturing to packaging and fulfillment.
You can locate trending products across different niches and create an eCommerce store to sell them without doing much more. A customer sets an order to a dropshipping supplier, prepares it, and shipped.