Best Options for Passive Income to Grow your Wealth

11 min read • Published 25 October 2022
Written by Prateek Agrawal
Best Assets for Passive Income to Grow your Wealth

Whether you’ve got a well-paying job or run your own business, no one will decline an opportunity to earn additional money without putting in a lot of effort. Does it sound like a dream- earning money without a lot of effort? This is where Passive Income comes into the picture! 

Let’s understand what passive income is, its type and various sources to earn passive income.

What is Passive Income?

Passive income refers to income that does not require too much effort in terms of time and resources. It doesn’t entail any active participation or fixed working hours. Creating sources of passive income can be an effective method to generate extra cash flow to support your financial goals or needs.

You can earn passive income from investments, properties, or side gigs. It can include rental from a property, participating in a limited partnership or an enterprise, interest income from investment, selling stock photography, etc. While these sources majorly require passive involvement, during the initial phase you have to put in some effort and participation. For example, you may need to maintain your property to earn high rent or learn about the stock market before investing.

Types of Passive Income

While there are many ways to generate passive income, they can be broadly categorised into three categories:

1. Buy

Buying dividend stocks, bonds, and Real Estate Investment Trusts (REITs) are some of the investment-based ways to generate passive income. You can invest in an existing company or in a limited partnership. 

2. Create

As the name implies, it involves creating income-generating products or services. Blogs, YouTube channels, and online courses are a few ideas for passive income.

3. Contribute

You can sell or rent an asset you own or lease, for instance, rent out an empty room in your house.

Best Assets for Passive Income

1. Invest in dividend-paying stocks

Dividend stocks distribute a portion of the company’s earnings to shareholders on a regular basis. Companies that pay Dividend are generally well-established and have a strong presence in the industry, thus reducing their risk of market fluctuations. 

Further, when you receive dividend payouts, you have the option to either use it for personal expenses or reinvest in the same stock. By reinvesting, you can earn steady returns with the help of dividend compounding.

2. Build a bond ladder

The term “bond ladder” refers to a portfolio of bonds with different maturity dates.

The maturity dates of the bonds are evenly spaced over several months or years in order to reinvest the proceeds at regular intervals as the bonds approach maturity. Therefore, building a bond ladder minimises liquidity risk and diversifies credit risk. 

Bond ladders can be an attractive passive income asset if you want more predictable returns.

3. Selling your own informational products

Are you an expert in your field? If so, you can turn your expertise into information products. You can explore various formats, such as a membership site, webinar, e-book, or online course.

Your success will depend on your ability to create a product that is informative, useful, and adds significant value. You can provide tips and strategies that will make a positive impact on others.

With the right kind of offering, you can generate revenue by selling your products, displaying ads, running sponsored content, and linking to affiliates.

It is certainly possible to generate passive income through your products. However, to stay competitive, it is crucial that you continually update or create new content to keep your audience interested and engaged.

4. Rent your own real estate

Renting out properties is one of the best ways to generate a passive income fund. Sometimes, managing rental properties and tenants may feel like a hassle. However, it can be a good asset for passive income, especially if you already own a property in a prime location.

If you don’t own a property, you might consider investing in one. You can rent your property for homestays or vacation rentals. If you want to start small, consider renting out one room in your house. It is always suggested that before renting out your property do proper verification of your tenant to avoid any hassle in future

5. Investing in REITs (Real Estate Investment Trust)

REITs can help you earn passive income from real estate without the hassles of managing and purchasing properties yourself.

A real estate investment trust allows both small and big investors to invest in commercial real estate, such as office buildings, retail spaces, apartments, malls, warehouses, hotels, etc. They are similar to mutual funds as they pool-in money from multiple investors and use that to buy income-generating real estate properties.

REITs also offer investors the opportunity to earn dividends from high-value real estate investments. Similar to mutual funds, REITs are designed to reduce risk as much as possible while creating real estate portfolios.

6. Peer-to-peer lending

Peer-to-peer lending is a method of borrowing money from other investors or individuals through an online platform. A borrower who wants to avail an unsecured loan can get in touch with investors who are willing to lend in exchange of interest payments. Both borrowers and lenders find peer-to-peer lending attractive due to its flexibility. 

As with any investment, peer-to-peer lending carries some risks. You can make a more informed decision by considering potential risk factors.

7. Invest in index funds

The term ‘index funds’ refers to mutual funds linked to a specific market index. They are passively managed, which means their portfolio composition does not change and they invest in the same securities as the underlying index. 

Several stocks are compiled into index funds to mirror and replicate the performance of a particular index. While index funds are less volatile than individual stocks, the fund doesn’t always produce the same returns as that of the index due to tracking errors.

8. Create your YouTube channel

Creating a YouTube channel is a great way to share your expertise and earn side income. When you establish a YouTube channel that caters to thousands of subscribers, you create the most valuable assets for passive income.

It is one of the best ways to generate passive income with low risk. However, YouTube is heavily crowded and highly competitive. A strategic approach is essential to showcase domain authority. Share unique and original content to grab attention and gain a loyal audience. Choose topics that are useful and relevant.

Don’t forget that producing high-quality videos is a creative job in itself. It’s not easy, but gaining thousands of subscribers is worth the effort.

9. Invest in a business as a limited partner

The limited partnership model makes you a part-owner of the company when you invest in it. Often called a silent partner, a limited partner does not participate in day-to-day decisions. Generally, a limited partner’s liability is limited to the amount they have invested in the company. General partners are responsible for the day-to-day business decisions and for the company’s obligations.

Venture capital companies and angel investors can help you with investment assistance. These groups invest their money in companies they believe have a high chance of success and growth.

Benefits of passive income investments

You’ve now discovered the assets that generate passive income. Such investments have many benefits, some of them include:

1. More financial stability

You can get one step closer to financial stability with an additional source of income. A passive income is especially beneficial since it does not take much of your time.

It reduces your dependence on your paycheck. Therefore, additional passive income sources help you beat inflation or unexpected job loss and help you save money.

For greater financial stability, you need to diversify your income sources by investing, renting out your property, or by creating passive income assets.

2. Achieve financial goals easily

A successful financial plan begins with setting the goals. You can achieve financial stability by setting short-term, mid-term, and long-term objectives.

Your short-term goals typically include your immediate expenses such as buying an expensive piece of jewellery or minor repairs at home. Mid-term goals tend to take a few years to accomplish, like buying a car, travelling abroad, etc. A long-term goal is usually your biggest expense and may take decades to achieve. 

Passive income assets can be an excellent way to generate additional cash flow. You can achieve your financial goals faster if you have an additional source of income to invest or save.

3. Build a retirement corpus

An important financial goal is to save for retirement. With a sufficient corpus, you can have a comfortable, stress-free retired life.

Investing in your retirement is an important aspect of your financial planning. Financial stability during your later years is essential, since there will be no regular income post-retirement.

A retirement corpus will allow you to take care of yourself and your dependents without relying on others. One of the most effective ways to accumulate retirement savings is through passive income strategies.

Creating multiple revenue streams for a retirement fund may take more than investing in the right stocks. Creating passive income assets or investing in diversified assets may yield greater returns.

4. More financial freedom

When was the last time you travelled to your dream destination? How much time do you have to pursue your passion?

An overreliance on your paycheck may prevent you from pursuing activities that you enjoy most. Insufficient cash flow can limit your options in many ways.

An active income requires employment. An uncertain retirement or loss of employment could result in a lack of active income.

A passive income asset is the best route to your financial freedom. Living life to the fullest is possible when you have a passive income source that covers your family’s basic living expenses.

Bottom line

Having a passive income source assumes greater significance with rising inflation. It can lead to financial stability and independence and the ability to achieve financial goals faster.

With so many options available, you can now explore avenues to generate wealth with passive income assets. Be sure to research all options, examine all opportunities, and confirm market conditions.


What is one of the highest paying passive income investments?

One of the best ways to generate passive income, especially for the long term, is by investing in real estate.

You can invest in homes, apartments, and offices and rent them out. Be sure to carefully consider the location and the long-term rental potential before making a decision.

Are passive income investments a good idea?

The concept of passive income refers to the ability to generate income without having to work on a regular basis.

In that sense, passive income is a good idea. And if you do it right, passive income can help you achieve your financial goals. Nevertheless, you should avoid pitches that appear too good to be true, for instance, multi-level marketing (MLM) etc.

How to start with a passive income investment?

You can start investing in passive income assets such as dividend stocks or mutual funds. Furthermore, you can learn about the real estate market and rental properties. You can also create your own assets by writing an e-book or starting a blog or an online course or a YouTube channel.

To ensure the successful implementation of any of these strategies, you should thoroughly research your options, evaluate opportunities, and examine market conditions.

How many income streams should you have?

There is no fixed number. The answer really depends on where you stand financially right now and what your future goals are.

Trying to adopt multiple passive income ideas at once can overwhelm you. Getting started with one or two is a good idea.

Does passive income really work?

Passive income refers to making money by using money. You can generate passive income by investing in the right assets or creating your own.

Although passive income can be a great source of income, it is not a quick way to become wealthy. You must think long-term in order to achieve success.

Your investment may not yield significant returns initially, but it may generate substantial returns over time.

Was this helpful?

Prateek Agrawal

Investment Principal
Prateek is an investment professional with a demonstrated history of working in Debt Capital Markets and wholesale funding to the Corporates. He has more than 9 years of experience in Treasury and Wholesale lending to more than 50 Institutions across India. He is currently working as an Investments Principal at Wint Wealth.

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