Have you got some savings kept away that you want to improve in value, or some spare cash set aside that doesn’t have any prior commitments? Why not take a look at these ideas on ways to use that money to obtain a passive income while you get on with your everyday life.
Deciding on an investment type
After figuring out what your personal goals are for potential savings or investments, there is a wide range of options available to you for passive gain. Examples include Fixed-rate cash Isas, which secure your savings for several years with a pre-determined interest rate, allowing you to get on with your primary aims and not having to intervene. If looking for a more dynamic investment opportunity, an investment fund or individual stocks/shares can be an option If you’re confident.
Top-Tip: Always on the move with work and don’t have time to spend looking into individual investments? Make sure you’re using your smartphone to its full capability. Intuitive investment apps such as MoneyBox and Invstr help you to stay in the loop at the tap of your finger, and educate yourself about the investment process while you’re at it.
If you have the money to put into an endeavour like this, it can prove to be extremely lucrative, especially if looking toward northern areas of the country such as Liverpool and Manchester. Aside from owning a physical commodity, giving you more safety than investing in stocks and shares, property investment is useful in providing you with two types of passive income returns: rental yields and potential capital appreciation:
- Rental yield is the amount of profit gained on a property through the rent a tenant pays. Typically, when looking to invest in properties, this figure is shown as a percentage of the total amount paid for the initial investment.
- Capital appreciation (alternatively known as capital growth) is the potential for your purchase to increase in value over time, as an area grows in demand.
As the ‘northern powerhouse’ begins to rival the south on the property market, the London area is stagnating, with house prices in some areas falling by up to 6%. Despite fears that Brexit is set to make a slight dent in the housing market, the north-west area is one projected to grow in value by 3%.
Property investment companies such as RW Invest are keeping up with the demand for properties in these growing areas by offering off-plan investment options – an investment in a project that has not yet been completed. What this could mean for your passive income is that in an area where house prices are rising, capital appreciation gives your property the chance to increase in value before the development has even finished, meaning that you can make a profit even before the doors have been opened and taking rent payments has begun.
Long-term savings plan
If you have money that you’re not doing anything with, and want to save for the future, then perhaps you could consider putting it in a savings account that you can’t access, which will prevent you from dipping in and out of it for impulse purchases. Many experts recommend that you should save around 10% of your monthly earnings, so figure out what regular contributions you can manage without putting yourself in an uncomfortable position.
Before you know it, you will have a healthy portion saved and will feel confident in your financial stability.
Did you know? Switching banks can be a really easy way to get some extra cash to kickstart your savings plan. In the same way that broadband and energy companies offer little in the form of customer loyalty rewards these days, instead wanting to entice new customers, your bank might not be offering you the benefits that another could, and so it would not harm you to have a look around.