How do I earn a passive income?
A passive income is something that most people aspire to obtain and is a great way of gaining financial independence. The problem is earning a passive income is not quite as simple as just putting your money in the bank!
Although very little is required in terms of time and effort, you will be required to invest a certain amount of capital as after all, the only way that you can realistic gaining a passive income is by investing in something.
There are various methods of gaining a passive income such as dividends from stocks and shares, income from being a sleeping partner in a business or income in the form of rent from investment properties. The varying degrees of risk in any of these types of investment will generally be reflected in the return that you are likely to receive – the higher the risk, the higher the return.
For several years, certainly prior to 2008, shares in blue chip companies and the dividends that you would receive seemed like a license to print money. After all, we were all under the impression that these sorts of business always performed well, the value of the shares increased and a healthy dividend would be paid. Sadly, this proved not to the case with millions of investors globally losing significant sums of money.
Investing in a business but playing no role is also something that carries a large degree of risk. You are essentially putting all your faith in another person or persons to run the business successfully and in turn generate a profit. You don’t need to be an expert in the world of economics to appreciate that a high percentage of small businesses fail in the first year so once again the risk involved in perhaps too great for people to contemplate.
We then move onto investment properties as a method of earning a passive income in the form of rent. This is currently one of the most popular methods of obtaining a passive income for the simple reason that demand globally is high for rental accommodation. With demand being high, the risk is heavily reduced but the rental returns are still quite high, returns of between 5% and 10% are extremely realistic for the right properties.
Of course, the downside of rental properties is that you need to find a suitable a tenant and your property needs to be occupied for most the year. This is not as straightforward as it may sound and is often the reason why people choose to overlook this type of investment. However, developers have seen this concern as an opportunity and are offering rental guarantee incentives to sell their properties.
One such scheme is operated by the New Nordic Group in Thailand and we are pleased to say that it is a scheme that has been successfully operated for the last decade. They offer a guaranteed 10% p.a. return on their properties, an amount that is paid on a monthly basis into your nominated bank account, for periods of five to twenty years. This eliminates the risk associated with your unit not being rented as the ‘rent’ is paid by the developer who in turn sub-lets your unit to tour groups generating a profit for themselves and the investor. A win, win situation for all parties.
So, if you are looking to generate a passive income maybe the New Nordic offer is just what you are looking for, great returns at a relatively low.