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- Financial advisors mentioned that real estate stands as a primary generator of passive income among their clientele.
- However, they also observe digital goods, blogs, podcasts, and YouTube channels earning revenue.
- Investing in dividends is a classic method to earn passive income, which also proves effective for clients.
Generating passive income is not always as straightforward as it seems—it requires initial time and capital investment, with rewards not being immediate. However, according to financial experts, this approach is both feasible and beneficial to undertake.
To learn about various ways people generate passive income, Business Insider interviewed multiple individuals. financial advisors In 2021, who revealed their customers' primary sources of passive income?
Here's what they said.
1. Utilizing house hacking for real estate investment
Financial advisor and co-founder of Facet Wealth Brent Weiss mentioned that many of his clients have turned to real estate, particularly house hacking, as a way to create passive income.
Investing in real estate can be straightforward through house hacking, which involves purchasing a property with the plan to lease out part of it, such as a single room or an individual unit.
Regarding passive income, "the top topic everyone discusses is real estate," according to Weiss. "However, once I speak with my clients about the requirements for investing in real estate, they often rethink their broader objectives."
Oftentimes, investing in real estate may necessitate a larger initial down payment compared to purchasing your own residence, along with additional responsibilities of managing renters.
By engaging in house hacking, you can minimize these inconveniences while simultaneously earning an income. He mentioned, "Roughly fifty percent of my clients have started viewing real estate from a new perspective." As a result, many find themselves covering only half of their mortgage payment and even adding extra funds to support their household.
2. Dividend investing
For certain stock holdings, businesses provide shareholders a portion of their earnings, where each share generates a monetary payout at regular intervals. Although this might not constitute monthly revenue, dividends can indeed serve as a largely hands-off source of income.
"Dividend income is definitely one major source of passive income that a lot of my clients have," said Akeiva Ellis, a financial planner and founder of The Bemused She has observed this trend among her high-net-worth clientele, and she mentioned that it’s becoming increasingly popular with her younger clients as well.
“Certainly, people understand the appreciation and capital gains. However, picking firms that distribute dividends regularly to their shareholders adds another layer to your investment portfolio, allowing you to earn additional income from it,” she explained.
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3. YouTube channels, podcast shows, online sites, and applications
Alongside real estate and dividend investing, senior financial advisor Andrew Westlin of Betterment noticed another pattern with his clientele.
He told Business Insider that popular methods for earning passive income include podcasts, websites, applications, and YouTube channels that generate revenue through advertisements.
Although these forms of passive income might be less consistent and require more time compared to some others, they tend to be quite enjoyable.
"What's been really awesome is seeing clients, friends, and family members turn these ideas that are where they spend a lot of their time on, and turning it into an income stream," he said.
4. Developing online goods for purchase over the internet
Ellis mentioned that lately, she has noticed digital products as a popular method for her clients to generate passive income.
She mentioned that many individuals nowadays are launching new businesses focused on selling digital goods or informational products.
Typically, it involves items available for purchase on the internet. As observed, individuals are developing digital goods. This could be something like a downloadable printout they offer online, or perhaps a worksheet, handbook, e-book, or even an online class. These types of offerings allow creators to establish them one time with minimal ongoing upkeep needed.
Not sure how to begin? Think about consulting a financial advisor.
Finding a financial advisor It doesn’t have to be complicated. You can use SmartAsset’s free tool to find up to three fiduciary financial advisors who serve your locality within just a few minutes. These advisors have undergone scrutiny from SmartAsset and adhere to a fiduciary standard, ensuring they work in your best interest. Start your search now.
The initial publication of this article took place in June 2021.
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