Blog Investing Passive income streams: The true road to riches?

Passive income streams: The true road to riches?

date November 5, 2020 time 3 min read

You can make a lot of money through passive income streams. Passive investments, besides being diverse and easy to start out with, offer lucrative returns with lower taxability and better stability as compared to other forms of investment. 

Passive income streams are debatably the only road to riches. Do you think the richest people in the world got that way through their daily paycheck? 

They became rich because they made investments that pay them a steady income on top of their current one.

So, what exactly are passive investments?

Simply put, passive investments are investments that generate a steady income with little to no effort on your end. While a single passive investment may not yield lucrative returns by itself, a group of such investments can quickly snowball into a second salary for yourself.

Passive investment is a long-term strategy to grow your wealth
Passive investment is a long-term strategy to grow your wealth (source: flickr.com)

Passive income streams come in many shapes and sizes. They include, but are not limited to: 

Are passive investments worth it?

You can gauge the worthiness of any investment by looking at its risks, returns, and sustainability.

Passive investments provide varying degrees of return depending on a bunch of factors. Higher returns can correlate with good economic growth or a higher risk of investment. Low returns may mean the investment is safer or reflect a bad economy.

Generally, passive investments are more secure and much less volatile than “active investment” methods such as trading making them a great choice even for relatively new investors.

There is always some risk involved in your investments
There is always some risk involved in your investments (source: pixabay.com)

Do you need a specific amount before investing in passive income streams?

You don’t have to be rich to begin making a living from passive income streams. 

When it comes to traditional passive income streams such as real estate, business investments, index funds, or mutual funds, there is usually a sizable principal amount or overhead cost involved.

However, with the introduction of newer and more flexible investment options like peer to peer lending or micro-investing, passive income streams have become more accessible to the average investor than ever before.

Platforms such as MyConstant even let you start for free!

Is passive income taxable?

Passive income streams are taxable, but generally do not carry a tax expense as high as other comparable revenue streams.

Passive income gains from business, real estate, and stock-market investments incur capital gains tax in the United States.

Tax rates on investment income vary depending on its value how long you’ve held the investment. Investments with higher values or shorter terms tend to get higher taxes.

Passive income is generally less taxable than regular income
Passive income is generally less taxable than regular income (source: live.staticflickr.com)

Since the point of passive income streams is to buy-and-hold, you don’t typically need to worry about capital gains tax each year.

To ensure that P2P lenders don’t miss out on this benefit, platforms such as MyConstant offer a savings account that offers significantly higher interest rates than conventional banks whilst maintaining the same taxability on investment.

How to start earning passive income today

Passive income streams not only offer a robust way of building and supplementing your income, but may also provide a necessary financial bolster in a post-COVID economy.

P2P lending is a unique example where you can enjoy high rates of return at minimal risk. For instance, with MyConstant’s crypto-backed P2P lending which is secured by smart contract technology, you earn nearly 7% APR on the money you lend while your assured collateral is stored safely in a smart contract escrow.

With MyConstant’s reliable P2P lending ecosystem, you can take charge of your finances and keep earning interest – even when you’re not lending. Sign up for a free Flex account today to get a $2,000 bonus, and see the benefits for yourself.


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