There are many types of bonds with different structures and time horizons. That said, bond values can go up as well as down, so they’re not risk-free. Bonds are typically regarded as being less risky than shares. Government bonds, especially those associated with the governments of advanced economies like Australia and the UK, are generally considered to be less risky than bonds issued by companies. It’s because of the interest payments made by bonds that they are also referred to as ‘fixed income’ investments. Those borrowings are known as ‘bonds.’ In exchange for those borrowings, governments and companies make interest payments. Governments, as well as companies, borrow money from investors. 3. Earning passive income through investing in bonds/fixed income You can usually buy and sell them quickly, and it usually doesn’t require a lot of money to start investing in them. Shares, whether directly owned, or indirectly owned through managed funds and ETFs, are generally liquid. You can also invest in shares through Exchange Traded Funds (ETFs), which are listed on the stock exchange and offer exposure to many industries, companies, and countries. It’s also easy to diversify your share investments, especially if you own managed funds giving exposure to Australian as well as global companies. Companies generally provide income in the form of dividends. Shares are another passive income source. Unlike an investment property, which is sold once in a blue moon. Investors are constantly buying and selling A-REITs every day and in doing so they’re revaluing them constantly. It’s also diversified across lots of different property sectors, and regions.īut values of A-REITs do fluctuate more because they’re listed on the share market. In the case of A-REITs, all property management, tenancies, and sourcing new properties are the responsibility of the manager of the A-REIT. Investing in Australian real estate investment trusts (A-REITs)įor those who don’t want the hassles associated with direct property ownership, there’s the option of investing in listed property funds, also known as A-REITs, providing exposure to commercial property. This may provide another source of passive income. And you can’t sell a bathroom if you need to access part of your investment. There can also be issues with tenants, some of whom may not treat the property well. Of course, there are downsides to owning property like council rates, insurance, repairs, and upkeep. Hold the property long enough and the debt is likely to be repaid and you can enjoy the full benefits of a passive income source. Depending on the type of loan over time, the debt is likely to be paid down and the rental income go up, so that eventually the property will generate surplus cash. 1īuying an investment property probably means borrowing money. According to CoreLogic, more than 2.2 million of us, or around 20% of us, are property investors. We all know about Australians’ love affair with real estate. Earning passive income through property investing Owning an investment property Movements like #Anti-Work and Financial Independence, Retire Early (FIRE) are showing that our views of earning a living through a 9 to 5 job are changing.Īs people start looking for other ways to earn money, generating a passive income stream–earning money with minimal effort–is becoming more attractive than ever.īetter still, passive income strategies are not only helping people add to their regular income, they’re also providing a first step towards replacing the income from a job altogether.Īside from growing money in super, here are ideas for generating passive income.
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