Investment Strategies to Build up Passive Income

Would you want to make money as you sleep? Who wouldn’t? Today, the idea of passive income strategies has become more popular. In the US, this has been driven by the need of an extra income by the people. This article will highlight a few investment strategies that will help you make passive income.

Investing in Online Peer to Peer Lenders

Online Peer to Peer lending is a relatively new strategy that many people are using to make money without doing any work. The concept behind it is relatively easy. If you are a borrower, you go online, create your profile, get assessed by the P2P provider, and then borrow money. After doing this, investors will look at your account and lend you money. As an investor, you will make money when the borrower pays you. As such, if you are able to lend money to borrowers using peer to peer lending platforms, you can make money as you sleep. The average returns in these platforms is between 5% and 10% annually.

The most common peer to peer lending platforms are:

Prosper Marketplace.
Lending Club
Funding Circle

Investing in Robo Advisors

Robo Advisors are relatively new companies that allow you to invest in the stocks and bonds markets. To invest in these companies, all you need to do is to create a free account, select your risk appetite, and then deposit funds. After doing this, the company’s technology will create for you a portfolio based on the amount of risk you are prepared to take. Some of the most popular robo-advisors are companies like:

  1. Betterment
  2. Wealthfront
  3. Ellevest
  4. Schwab Intelligent Portfolios
  5. Wise Banyan.

Investing in Index Funds

If you are not an expert in investing in stocks, the best option you have is to invest in index funds. These are funds that track the performance of the top indices. In the United States, the most popular indices are the S&P 500, Dow Jones Industrial Average, and the Nasdaq. In Europe, the most popular index funds are the FTSE 100, DAX, and CAC. You can also invest in industrial index funds like those that focus on technology, finance, material, energy, and retail. There are two main advantages of investing in index funds. First, historically, indices have been moving on an upward trend and second, they help you invest in a diversified portfolio with ease.

Investing in Mutual Funds and ETFs

Mutual funds and ETFs are some of the most popular methods of investing in passive income in the US. A mutual fund is a fund created by many people and institutions with the goal of making investments. Each fund is managed by a portfolio manager, who has a team of analysts. The team is paid with some of the fees that the investors have paid, which means that the expenses are relatively lower. ETFs on the other hand are similar to mutual funds. There are a few differences.

Most mutual funds are usually actively managed, meaning the portfolio managers at the helm chose where to invest the assets. This depends on the type of the fund. For example, a growth fund invests in fast growing companies. Other mutual funds are usually passively managed, meaning that they follow an index. On the other hand, most ETFs are usually passively managed and they follow an index. In addition, most mutual funds can only be bought and sold once daily.

If you are not an experienced investor, we recommend that you set some of your funds in a mutual fund or an ETF. Before you do that, we recommend that you check their historical performance.

Investing in Real Estate

Real Estate is one of the most important industry in the world. If you live in a rented apartment, you pay your landlord every month to live there. If you are planning to buy a home, you will do this to a person who invested in it. If you have a home already, you have already invested in real estate because the value of the home keeps on moving upwards. If you work in an office, your company has probably leased it from a real estate company. Every year, investors allocate billions of dollars to real estate.

While investing in real estate is usually a capital intensive thing, there are ways you can participate in the industry. Here are a few ways you can invest in real estate when you don’t have a lot of money.

  1. You can invest in publicly traded real estate companies like Zillow and Brookfield.
  2. You can start house flipping. This is where you buy an old house, upgrade it, and then sell it.
  3. You can use the free real estate crowdfunding companies like RealtyMogul, Fundrise, and CrowdStreet among others.
  4. You can partner with friends and relatives to start investing in real estate.

Investing in Stocks and Bonds

Stocks and bonds are the most common types of investments around the world. When you invest in stocks, you basically own a part of the company. As a result, you will be rewarded by the appreciation of the stock price and the dividends the company pays. When you invest in bonds, you basically lend money to a company or government. These borrowers will pay you interest periodically. You can learn the tips of investing in stocks in this article we published a while back.


There are other ways you can use to build passive income. For example, you can rent out your spare from on Airbnb, drive a customer using Uber as you go to work, publish a book and list it on Amazon, and use affiliate marketing techniques. As you do this, you need to realize that all types of investments that you do has its own risks.

For example, if you have invested in stocks, the stock market can decline If you have invested in peer to peer lending, the borrowers can default, and if you have invested in corporate bonds, the companies can default. Therefore, to reduce the risks, we recommend that you do whatever you can to build a diversified portfolio of various assets.

Crispus (BSc and MBA) is a finance professional with more than a decade experience as a financial analyst, writer, researcher, and trader. Crispus has written in-depth articles on leading platforms like CCN, Marketwatch, Investing Cube and Seeking Alpha. He also runs a forex education firm. Follow him on Twitter: @crispusnyaga and read more about us.