Trying to Earn $1,000 in Passive Income? 3 Expert-Backed Paths
If you want to earn passive income, it's best to start small. Even an extra $1,000 a month can set you on the path to financial freedom. After all, once you've made that much passively, there's virtually no limit to what you can achieve next.
But what exactly should you do to earn at least $1,000 a month in passive income? And what are your options?
We spoke with Erika Kullberg, an attorney, personal finance expert and founder of Erika.com, to see what she suggested. Here are some ways to start earning money through passive income.
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1. Prioritize Investments That Bring in Cash Flow
One way to start earning $1,000 or more a month is to invest in -- and hold -- dividend-paying stocks or real estate investment trusts (REITs).
"These are the investments that bring regular cash in the form of dividends or rental income without daily management," Kullberg said. "To start, do some research for companies or funds that have stable returns in the past, and open an account at a brokerage service, such as Vanguard or Fidelity. By regular contributions and dividend reinvestment, you'll increase your passive income over time."
Say you want to get started with REITs, for example. You can go through a platform like Arrived or Fundrise, which gives you access to both commercial and residential properties.
Keep in mind that you'll typically need to keep your money invested for a long time to see the best returns. Invest only an amount you're comfortable with. As you start to earn, you can always reinvest your earnings for even higher returns.
If you don't want your money locked up, you can also invest in REIT stocks, such as Iron Mountain (NYSE: IRM) and Blackstone Mortgage Trust (NYSE: BXMT).
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2. Create and Sell Digital Items
If investing isn't your preference, or if you don't have a ton of capital, consider producing and selling something digitally.
"Another passive income opportunity is to sell a digital item like an e-book, an online course or printables," Kullberg said. "When they're made, these can be sold again and again without much additional work."
As for getting started, you've got options.
"Amazon Kindle Direct Publishing, Udemy and Etsy are some great places where you can begin making money from what you know or what you create," Kullberg said. "It does require some work on the side, but with good marketing, it could generate lots of passive income."
3. Peer-to-Peer Lending or Crowdfunding
"You also have peer-to-peer lending and property crowdfunding sites like Fundrise, for passive income," Kullberg explained. "You can use them to lend money to others or invest in real estate, and then receive an interest return."
Take peer-to-peer lending as an example. According to Financial Poise, many peer-to-peer loans see returns of 5% to 9% a year. Some investors have reported earning upward of 10% a year.
If you invest $140,000 upfront and earn 9% a year, you'd get a little over $1,000 a month. While this might seem like a lot -- and it is -- you can start small, continually invest and then reinvest any returns until you reach your goal.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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