After you have saved enough money to invest, you have to decide how to invest your savings. There are many ways to do this, and while each has its strengths and weaknesses, automated investing can be the best route of all. If you’re not sure what kind of investments make sense for you or how to get started, keep reading and find out how to set up an automatic investment plan that will give your money the best chance of growing over time.
That’s debatable. The IRS broadly defines it as any revenue you earn without much work, such as money from investments and rental properties. Some argue that income from interest and stock dividends isn’t truly passive since they take effort to receive (you have to own shares of a company for its dividends to be paid out).
Passive income is money that you’re paid without having to work for it, though some forms of passive income are easier than others. The main three types of passive income are
3) Rental properties. Each type of passive income requires different time commitments, but over time they all grow into a small-second stream of revenue.
If you’re a busy professional, you don’t have time to keep tabs on your investments. If you want your money working for you (that is, earning passive income), putting your portfolio on autopilot might be a good idea. SoFi Invest can help you with this, As per their expert, “We’ll rebalance your investments, which means adjusting your stock and bond funds on a quarterly basis, so your money is always invested how you want it to be.”
If you’re interested in getting your money working for you, here are several ways you can do it yourself with a little help from automation. Invest in index funds, specifically low-cost ones that automatically track large indexes like the S&P 500 (SPY) or Russell 2000 (IWM). Many brokerage firms offer these types of funds as part of their core lineup.
You need to open an account with a brokerage firm or fund company to invest your money. This account is where you’ll buy and sell investments. Depending on your preferences, you can keep all of your money in one place or spread it around. In the case of multiple accounts, each one should be at a different firm for more diversification.
There are many ways to invest your money, and some of them require a lot more work than others. Before you create a portfolio, you should ask yourself what type of return you’re looking for and what degree of risk is appropriate for your goals. Then, based on those answers, choose investments that align with your preferences. Do you want dividends? Capital gains? Do you want to bet on specific companies or sectors, or markets?
Investing doesn’t have to be scary. It doesn’t have to be time-consuming, and it certainly shouldn’t keep you from spending time with your family and friends.