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3 minute read
24 Jun 2021
2:15 pm

Using Passive Investments as a second income stream

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If you are looking for ways to make extra money without the hassle of a side hustle, investments may be the way to go.

In the current economic climate, it is important for consumers to be Walletwise, and this comes with a lot of financial education, discipline, and consistency. If you enlist the help of a financial consultant, you could easily turn your investments into a second income stream.

Investments are usually seen as financial tools that are set up for a longer period of time, usually to ensure one retires comfortably. However, there are a few investment options that could help you grow your financial portfolio. Zie Moyo, Client Solution Owner for Savings and Investments at Standard Bank, says a common misconception that many people have is that you have to make a lot of money if you intend to diversify your income stream through investments. This is not the case.

“There’s great opportunity for people to invest whatever they have and make more out of it. It’s a matter of exploring options and learning about these various second income stream probabilities,” says Moyo.

Dividend Stocks

If you are looking for higher returns and are not risk averse, dividend stocks are a great way to create a second income stream. Do not let this term terrify you, it is quite simple and straight forward. You can purchase stocks from publicly traded companies, and as these companies generate profit, so will you. Now, the trick here is that the pay-outs, formally termed as dividends, vary from company to company and may be paid out quarterly or annually. It is, however, a great way to secure a second income stream.

Property

Many young professionals decide on purchasing property or renting property once they get a financially stable job, and this is nothing to be frowned upon. However, to be Walletwise means to look at the bigger picture. If you can afford to purchase an affordable apartment and create rental income from that while you stay at home, this is another great way to create a second income stream. Granted, there are some costs to factor in, which you should consider when you put together your rental agreement.

There are plenty of other investment options to consider that will bring in some income, such as fixed deposits where your money is locked in for a period of time in order to get a higher interest rate, a Notice Deposit savings account where you access your funds after placing a notice period, also to earn a competitive interest rate or even a tax-free savings account, an ideal long term savings option where interest earned, capital gains and dividend income is free from taxes. The income attained from these savings and investments accounts may not be as high as what could be gained from higher risk investment options, but they are still worth your while because your capital is usually guaranteed.

While there are plenty more investment options to consider, it is important that you take some time to fully understand what your options are and find the best way to maximise your potential second income stream. Have a look at your appetite for risk and analyse whether you can afford to aim high, or steadily rake in interests from low-risk investments. Remember to make the right decision suitable for your pockets and always be Walletwise.