Passive income is money that requires little to no effort to generate once an initial investment has been made.
The key advantage of passive income is that it can provide cash flow without you having to trade your time for money. With smart passive income streams, you can potentially make $3,000 or more per month.
Here are 9 realistic ideas to earn passive income and make $3,000 per month:
Dividend stocks pay shareholders a portion of the company’s earnings on a regular basis, usually quarterly. The average dividend yield for stocks in the S&P 500 index is around 2%. To generate $3,000 per month in dividends at a 2% yield, you would need a portfolio of dividend stocks worth $1.8 million.
While this may seem out of reach for many, you can start small and build your portfolio over time. Consistently investing and reinvesting your dividends can result in exponential growth through the power of compounding. Aim to build a diversified portfolio of dividend aristocrats, which are stocks that have increased their dividends for at least 25 consecutive years.
- Open a brokerage account with a low-fee provider like Fidelity or Charles Schwab
- Research and select high-quality dividend stocks
- Invest as much as you can each month into dividend-payers
- Reinvest your dividends to accelerate growth
- Hold long-term and let compounding work its magic
Real estate investment trusts (REITs) provide exposure to income-generating real estate without having to buy, manage, or finance properties yourself. REITs own commercial real estate like apartments, hotels, shopping malls, and more. To qualify as a REIT, they must pay out at least 90% of taxable income as shareholder dividends.
The average REIT currently yields around 4%, so you would need a portfolio of around $750,000 invested in REITs to generate $3,000 per month in dividend income…
