Passive Income - Home - finance

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Passive income is money received on a regular basis with little effort required to maintain it.

Examples would be interest from savings, Peer-to-peer lending, adverts on websites, company shares and mini-bonds.

  1. Savings. To earn from any normal savings account, you first must have cash to put in it. Unfortunately since the crash of 2008, the maximum interest is between 0.1% ~ 1%. Some will go as high as 3% if you are prepared to lock your money away for a few years. You also run the risk of a "haircut" where a bank runs into trouble and takes some of your money eg Cyprus. I only keep a small amount in my savings accounts for emergency bills.

  2. Stocks, Shares and Bonds

    • CrowdCube allows you to invest in start-ups. They offer three ways to do this.

      • Equity. The minimum investment is £10 and has a high risk of default.
      • Mini-Bonds are basicaslly a loan. You will typically earn 8% per year for 4 years. The minimum investment is £500 and is taken from your account by either Direct Debit (GoCardless) or credit card (Stripe). NOTE: These seem to be losing popularity and may well be stopped. Mini-Bonds are low (NOT ZERO) risk.
      • Venture Fund. The minimum investment is £2,500 - I think this has been stopped.

    • WiseAlpha allows normal people to earn interest from bonds that would normally be too expensive.

      • Normal returns are between 3% ~ 8%, but there are high-yield bonds available that go as high as 11%
      • WiseAlpha was founded by Rezaah Ahmad who is responsible for driving the strategic growth.
      • They are located in Canary Wharf, London.

  3. Websites are a good way to earn passive income. Building websites can be done anywhere you can take a laptop and there is a half-decent WiFi service. They come in three main types :-

    • Static or Brochureware Many of the websites will be like this.

      • Easy to create. Many web-hosts have web-creation tools and templates.
      • Can be done for free. -
      • Little interaction with visitors.
      • New content needs to be uploaded.

    • Blogs

      • Easy to create and use. -
      • No technical expertise required.
      • New content can be entered on-site and made visible immediately.
      • Various components (widgets) can be easily added. eg Hit-counter, guest-book

    • Dynamic

      • Two main types: CMS (Content Management Systems like Drupal, Joomla and django) and bespoke (eg you build it)
      • Very hard to setup.
      • Developer is responsible for updates and security.
      • There are many free resources available to help you get started.
      • Open Source operating systems like Linux (or FreeBSD) will have these tools built-in or available as a free download.

  4. Adverts and affiliate links

    • You need to have a website or a blog for this to work.

    • Adverts can be supplied by AdSense. They supply some HTML code that you copy into your website. When a visitor clicks an advert on your site, you get paid a tiny amount, typically £0.01 ~ £0.10. Don't click your own adverts !

    • Affiliate Links are similar to adverts except they encourage visitors to leave your site to join another. When they do you get a percentage. At the lower end is Amazon who pay about 5%. At the top end are Gambling Sites who can pay up to £100 for referring a paying member.

  5. Crypto Currencies Many exchanges (and wallets) have a feature called Staking. This is where they pay you interest by holding your cryptocurrency on their platform. Here are the returns for Exodus which I tried in 2022 :-

    • ATOM (Cosmos) 8% ~ 18% . I started my test in September 2022 on a small amount of ATOM. I'm now un-staking to complete the test.
    • SOL (Solana) 8% ~ 9%
    • ALGO (Algorand) 7% ~ 8%
    • ADA (Cardano) 4% ~ 5%
    • XTZ (Tezos) 5% ~ 6%
    • ONT (Ontology) 19% ~ 20%
    • VET (VeChain) 1%
    • I have written more about crypto staking here

  • P2P (Peer 2 Peer) Lending had it's time but many P2P lenders have closed this service for a variety of reason.

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