Back in 1985, rock band Dire Straits had a mega hit with a song called “Money for Nothing.” And who wouldn’t like to get paid without putting in any long hours of work?
In the financial sphere, “money for nothing” is termed passive income. It can be a great way to make some extra money without putting in overtime hours or taking on another job. You can use passive income to pay down your credit card debt or save toward a big vacation or even retirement.
And it’s not necessarily hard to come by. In fact, here are some of Investor Junkie’s favorite passive income ideas for 2018.
Put Your Money to Work
If you’ve got some extra cash that’s languishing in a savings account and earning next-to-nothing in interest, why not put it to work?
These passive income ideas require you to invest some of your own money, but the potential returns you could see may beat what your local bank can pay.
Lending Club requires a minimum of only $1,000, while with Prosper you need only $25 to get started. Your investment will be spread out across different loans, diversifying your lending and protecting your entire portfolio against a borrower default. (And you should expect some of your borrowers will default — the lending platforms provide statistics on this.)
Fees for both platforms are low, at only 1% per year. And you’ll earn interest from 6% to as much as 36%. That’s much better than a savings account.
If you’re interested in seeing more about how these two competitors stack up, we’ve published a handy comparison guide here.
Here at Investor Junkie, we’re big fans of real estate investing as an income source. But don’t think that means you need to get your hands dirty.
That makes crowdfunding out of reach for most beginning investors.
However, real estate investment trusts (REITs) have made passive real estate investing a reality for practically anyone. REITs are like mutual funds made of real estate properties and trade like stocks (some even list on the major stock exchanges).
Fundrise is one of our favorite REIT platforms and requires a minimum of only $500. Another REIT platform that we like is Rich Uncles, which has an extremely low required minimum investment ($5!) and will let you invest in single-family properties or even student housing facilities.
Maximize Your 401(k)
This idea requires a long-term view but is definitely worth it.
An employer’s contributions are absolutely free money that can make a big difference when you retire. Most companies will match your contributions up to some stated maximum per year. Even if your employer contributes only $500 per year, after 30 years that could add up to over $33,000 in additional retirement savings.
And you can use the Blooom app to make sure you’re getting the best out of your 401(k).
Use a Micro-Investing Service
Acorns is particularly cool — it rounds up your purchases made with a linked card to the nearest dollar and invests the difference in an investment portfolio. So if you buy a cappuccino for $2.40, Acorns will round the purchase amount up to $3 and invest the 60-cent difference.
Stash, on the other hand, lets you automatically transfer small amounts of money from a linked bank account to your portfolio. You can get started with as little as $5.
Invest in CDs
If you do want to keep your money within the safe confines of your bank, check out bank CDs (certificates of deposit).
These are savings accounts that you open for a set amount of time with a fixed interest rate. And they’re insured by the FDIC for up to $250,000 per individual.
Now, once your money is parked in a CD, you won’t be able to withdraw it before its maturity date without incurring a penalty. But while it’s “marinating” in the bank, a CD will likely earn you more interest than a typical savings account.
Here are some of the best rates for CDs that we’ve found.
As you can see, you can generate a nice amount of passive income with these ideas without burning too much of the midnight oil or working at the Amazon warehouse after your desk job ends.