? asked in Business & FinanceInvesting · 2 years ago

What's the highest yielding "passive" income?

I've recently retired from my career and i have a decent amount sitting in a certificate. The rate is not great, and I was wondering what ways there are to put it to work for me. ie: Affiliate marketing, stock trading, launching a blog, etc. I guess more specifically, what of these types of ventures has potential to yield me the highest returns?

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  • Anonymous
    2 years ago
    Favorite Answer

    None of your examples are "passive". In IRS speak, "earnings" are income received from work, i.e., money you receive for services performed. If you are receiving any kind of retirement annuity, it is likely contingent on your not having earnings or having limited earnings as retirement annuities are typically a form of insurance that insure you against a loss in earnings due to retirement or agedness. This does not, however, prevent you from receiving unlimited income that isn't "earnings," that isn't for services performed, which is what I think you mean by "passive", e.g., investment income.

    Were you to engage in affiliate marketing or launching a blog, those aren't "passive" and the IRS would consider that income as "earnings." Even if you were to do it on your own, it would either be considered "self-employment" or, if you were to incorporate, be considered "employment" and therefore not "passive."

    Investing in the stock market is investment income an passive. Even if you day trade, meaning you spend your days buying and selling, it is still investment income and considered passive. The stock market definitely offers the highest possible yield, but it also presents the highest possible risk, so be warned.

    One alternative you might consider is using the money to buy real estate to either flip or rent. Either of those activities can be done relatively hands-free, but you stand to make much more money if you go hands-on, like if you renovate property you flip or if you manage your own rental property. The reason a lot of retirees go with real estate investment is no matter how hands-on you get, it's still considered strictly investment income under US tax code, so it never affects Social Security or even any private retirement annuities you may receive. Moreover, generally speaking, it does offer a very high yield with relatively low risk--not no risk, because we've seen the bottom fall out of the housing market before, but much lower risk than the stock market because with real estate, if you just hang on and don't sell, you will recover any loss from such a market correction. Unlike the stock market where you can lose your entire investment, in real estate, because you acquire a real asset that is tangible and can't disappear (i.e, the land), you will always have something. Also, the reason real estate never truly devalues is because there is a set finite amount of land in the world, but population is ever increasing. There are 33% more people in the world today than there were 20 years ago, and they all need a place to live, work, play, shop, making real estate constantly in a state of increasing demand and a resource that is ever and ever becoming more scarce in supply. Anyone who has studied economics will tell you that when you have a market where demand ever trends up and supply ever trends down, that's a supply-side market, meaning that's a market that is a smart investment as it will offer relatively high yields. Again, on a micro scale, real estate does have some risk, but it's not risk that you can't mitigate almost entirely with time.

  • tro
    Lv 7
    2 years ago

    what you are suggesting is not passive income, you posted this before and obviously didn't like the answers, they haven't changed passive income is reported on Sch E, and that could be royalties, partnership income etc

  • 2 years ago

    You can get around 10% yield if you invest in well diversified index fund, here is an example stated by Charlie Munger. A college graduated girl, start making $15,000 annually, invested 10% of her annual salary into S&P500, after few decades she had over $6,000,000. Here is the video, if interested.

  • Anonymous
    2 years ago

    You sound confused. And I cannot ascertain what a 'Certificate' actually is. So you might benefit by hiring a Financial Planner.

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  • 2 years ago

    The highest returns would be loan sharking. But I am sure you did not have that in mind. I think the safest possibility is a mutual fund that trades in bonds for US companies. I have a bond fund with T Rowe Price. The total annual return has been about five per cent. And it is easy to make partial withdrawals.

  • 2 years ago

    Are you seriously asking us instead of a real financial advisor? You should send all your money to me. I'll fix it for you.

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