3 ways to generate monthly passive income

 

Having consistent monthly passive income can be a desirable goal. Whether it’s meeting expenses or dollar cost averaging into investments, generating monthly passive income can be an important part of one’s portfolio management.

Here are  3 asset classes that can generate monthly passive income.

 

ETFs

An ETF, or Exchange Traded Fund, is similar to a mutual fund in that it tracks a basket of assets as diverse as gold or the Japanese stock market.

Unlike mutual funds, which price at NAV (net asset value) at the end of the day, an ETF trades like a common stock on a stock exchange and its price at any given moment is subject to the supply and demand for it in the market.

There are literally thousands of ETFs that one can choose from and each one is designed to track asset classes. Some of these have been created to provide monthly income to their owners through their ownership of income producing assets.

But they are not all created equal! 

Before committing a portion of you portfolio to this asset class, please make sure you understand how a particuar ETF that you are considering generates the income it is paying you, the leverage (if any) employed, tax considerations, if any, and the market risk of the underlying security.

 

SPIAs

A SPIA (or Single Premium Immediate Annuity) is a contract with an insurance company where you give them a lump sum of money immediately and they pay you a set amount every month for the rest of your life.

Purchasing a SPIA can be considered a form of longevity insurance because the insurance company is guaranteeing you a monthly payment for the rest of your life, no matter how long you live.

The amount you receive will depend on your age when you purchase the SPIA and one of the many options you choose such as a guaranteed minimum term.

 

Alternative Asset Classes

Alternative asset classes are asset classes that are not traditional assets classes such as stocks and bonds.  Some examples of alternative asset classes are:

  • Real estate
  • Notes tied to an income producing asset
  • Merchant Cash Advances
  • Life Settlements
  • First Position Commercial Mortgages
  • Annuities
  • Private equity
  • Bank notes
  • Gold

Some of these asset classes are available only to individuals that meet certain net worth or income minimums.

A few of these asset classes are structured to provide monthly payments for a period of time and then return principal at the end of the term.

While rewards can be quite attractive for many of these asset classes, it is very important for you to understand what you own should you decide to allocate a portion of your portfolio to any of these asset classes.

Want to know more?

"Education is the key to making informed financial decisions." -- Elliot Goldberg, Independent Registered Investment Advisor (610) 999-3599
“Education is the key to making informed financial decisions.” — Elliot Goldberg

Please call me at (610) 999-3599 or click here for more information on how you can generate passive income.

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