What Are The Types of Investment You Can Make for Passive Income?

If you’re working for people to earn a living, you are basically trading your time for money. Sometimes, that can be frustrating. The workload seems to increase but the salary remains the same, and you wonder how you can make more money without having to work overtime. The answer to this dilemma is easy and you probably already know it, which is to earn a passive income. Most of the people know investing your money can earn you passive income but they often don’t know how or where to invest. Without proper investment knowledge, you can end up losing a lot of money instead of earning. That money could be your life savings. Therefore, it is important to know where to put your money. 

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There are many types of investments available in the financial market, the more common ones are such as fixed deposit, stocks, bonds, and insurance saving plans. Fixed deposit is where you deposit a lump sum of money with the bank for a fixed period of time. You will be advised not to withdraw the money so that the bank can offer you a good interest rate, typically higher than your normal savings account.

The stock market offers you both common and preferred stock. In simpler terms, when you buy stock of a company, you are buying ownership shares. The success of the company’s business will determine whether you earn or lose money. Buying stocks usually comes with higher risk than putting your money in a mutual fund. Speaking of mutual funds, bonds are one type of investment that includes mutual funds, where you are basically loaning your money to organizations in exchange for the interest payments plus the principal amount of money you invested once the bond reaches maturity date.

On the other hand, investing in life insurance plans is also another form of passive income. However, this method of investment requires more commitment long-term wise. Although you may not see instant return on investment, there are benefits to insurance plans as it has coverage, in case of any unfortunate circumstances, depending on the type of plan you signed for.

Next, foreign exchange can also be another method of investment. Similar to the stock exchange market, forex is about the exchange of currencies around the world, hence you could say that the forex market never sleeps. In foreign exchange, you are basically buying, selling and speculating currencies. Whether you earn or not totally depends on the currency price and exchange rate (see forex trading brokers vietnam).

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In recent years, the term cryptocurrency has become well known as it is one of the newest types of investments. This has a lot to do with blockchain technology which is a distributed ledger technology with the participation of multiple individuals. Besides that, companies are also raising money through Initial Coin Offering (ICO) where they offer digital tokens instead of shares. You could invest your money by buying “coins”, and speculate them like the stocks you buy. Although the idea of investing in cryptocurrency is similar to stocks, it is still considered as a safer investment.