3 Easy Ways to Make Passive Income From Investing

Speaker 1 Here's one piece of advice that I've given for years: build an emergency fund. Aim to stash away enough to cover at least three months of expenses in case your income suddenly drops.

Speaker 1 Sounds simple, right? But let's be honest, it's not. Saving even one month's worth of living costs can feel impossible.

Speaker 1 Just when you're making progress, that check engine light blinks on and derails your plans. Life already throws enough curveballs.
You don't need your bank adding to the chaos.

Speaker 1 That's why it's so important to choose one that makes makes savings easy and doesn't nibble away at your hard-earned money with ridiculous fees. Chime understands that every dollar counts.

Speaker 1 That's why when you set up direct deposit through QIIME, you get access to fee-free features like free overdraft coverage, getting paid up to two days early with direct deposit, and more.

Speaker 1 With qualifying direct deposits, you're eligible for free overdraft up to $200 on debit card purchases and cash withdrawals. To date, QIIME has spotted members over $30 billion.

Speaker 1 Work on your financial goals through Chime today. Open an account in just two minutes at chime.com/slash MNN.
That's chime.com/slash MNN. Chime feels like progress.

Speaker 2 Chime is a financial technology company, not a bank. Banking services and debit card provided by the Bankor Bank NA or Stripe Bank NA.
Members FDIC.

Speaker 2 Spot me eligibility requirements and overdraft limits apply. Timing depends on submission payment file.
Fees apply it out of network ATMs, bank ranking, and number of ATMs, according to U.S.

Speaker 2 News and World Report 2023. Chime checking account required.

Speaker 1 Here's one piece of advice that I've given for years. Build an emergency fund.
Aim to stash away enough to cover at least three months of expenses in case your income suddenly drops.

Speaker 1 Sounds simple, right? But let's be honest, it's not. Saving even one month's worth of living costs can feel impossible.

Speaker 1 Just when you're making progress, that check engine light blinks on and derails your plans. Life already throws enough curveballs.
You don't need your bank adding to the chaos.

Speaker 1 That's why it's so important to choose one that makes savings easy and doesn't nibble away at your hard-earned money with ridiculous fees. Chime understands that every dollar counts.

Speaker 1 That's why when you set up direct deposit through QIIME, you get access to fee-free features like free overdraft coverage, getting paid up to two days early with direct deposit, and more.

Speaker 1 With qualifying direct deposits, you're eligible for free overdraft up to $200 on debit card purchases and cash withdrawals. To date, QIIME has spotted members over $30 billion.

Speaker 1 Work on your financial goals through QIIME today. Open an account in just two minutes at chime.com slash MNN.
That's chime.com slash MNN. Chime feels like progress.

Speaker 2 Chime is a financial technology company, not a bank. Banking services and debit card provided by the Bank Corporation Bank NA or Stripe Bank NA, members of FDIC.

Speaker 2 Spot me eligibility requirements and overdraft limits apply. Timing depends on submission of payment file.
Fees apply at Out of Network ATMs, bank ranking, and number of ATMs, according to U.S.

Speaker 2 News and World Report 2023. Chime, checking account required.

Speaker 3 I live in LA now, but lately I have been craving the seasons. Snow, hot cocoa, the whole thing.

Speaker 3 I don't even ski, but I have been daydreaming about working remotely from somewhere really cozy on the East Coast, like a cute little ski town for a little bit.

Speaker 3 And whenever I know I'm going to be gone for a while, I always remind myself that my home can actually be working for me while I'm away because I host my space on Airbnb.

Speaker 3 It is one of the easiest ways to earn passive income from something you already have and that extra income feels particularly helpful this time of year as we approach the holidays.

Speaker 3 A lot of my friends say, that sounds amazing, but where do you find the time to manage guests and bookings? And that's when I tell them about Airbnb's co-host network.

Speaker 3 Through Airbnb, you can find a local co-host who can help you set up your listing, handle reservations, communicate with guests, provide on-site support, even help with design and styling.

Speaker 3 I like to give a personal touch when I'm hosting on Airbnb. So I make a list of my favorite restaurants in the area and I hand-write a note welcoming my guests to the property.

Speaker 3 My guests love it, but I also know that some of those little personal touches can take a lot of extra time. So this is the exact kind of thing that you would want your co-host to help you with.

Speaker 3 Whether you're traveling for work or chasing the snow or escaping it, or you've got a second place that just sits there empty more often than you'd like, your home doesn't have to just sit there.

Speaker 3 You can make extra money from it without taking on extra work. Find a co-host at airbnb.com slash host.

Speaker 1 I'm Nicole Lapin, the only financial expert you don't need a dictionary to understand.

Speaker 4 It's time for some money rehab.

Speaker 3 I'm sure you've heard the Wall Street cliche by now. Buy low, sell high.
But selling stocks isn't the only way to make money from your investments.

Speaker 3 You can actually make your money work for you through passive investing income. Passive meaning your money is working for you while you just sit back and let it do its thing.

Speaker 3 Today, I'm going to be talking about three very low maintenance ways to generate income. Bonds, high yield cash accounts, and dividend stocks.

Speaker 3 These options are great for those of you who want to invest but don't want to be glued to a stock ticker all day long, or you just want some diversification in your portfolio.

Speaker 3 All right, let's get into it. First up, bonds.
The set it and forget it investment. A bond is essentially an IOU.

Speaker 3 When you buy a bond, you're lending money to a government or a company, and over time, you get paid interest.

Speaker 3 And when the bond reaches its maturity date, you get your original investment back plus that interest. Now, before we get into different types of bonds, let's break down some key terms.

Speaker 3 When you learn about bonds, you're going to hear the term maturity period thrown out a bunch. I mean, as you just noticed, I said it a second ago.

Speaker 3 A bond's maturity period is essentially how long your money will be invested and earning interest.

Speaker 3 The next term you should know is yield. This is the return you earn on a bond expressed as a percentage.

Speaker 3 It's calculated by taking the bond's annual interest payments and dividing it by the bond's current price.

Speaker 3 So, for example, at the time I'm recording this, the yield for a one-year bond issued by the U.S. government is 4.19% yield.

Speaker 3 So, generally speaking, if you invested $100, you would get back $4.19 after a year because $4.19 is 4.19% of 100. And here's the last one, coupon rate.

Speaker 3 This is the fixed interest rate the bond pays. For example, if you buy a $1,000 bond with a 5% coupon, you'll receive 50 bucks per year in interest payments until the bond matures.

Speaker 3 If you're thinking that coupon rate kind of sounds similar to yield, here's the difference.

Speaker 3 The coupon rate is the fixed interest payment based on the bond's original price, while the yield fluctuates depending on the bond's current market price.

Speaker 3 So if the bond's price drops, the yield goes up and vice versa. It's like a seesaw.
But the coupon rate always, always stays the same.

Speaker 3 All right, with those basics out of the way, let's look at two major types of bonds, treasury bonds and corporate bonds. Let's start with treasury bonds.
Treasuries are bonds issued by the U.S.

Speaker 3 government. They're considered one of the safest investments out there because Uncle Sam always always pays his debts.

Speaker 3 Within this category, you're going to find a few different types of government bonds with different maturities.

Speaker 3 Treasury bills, also known as T bills, are short-term bonds that mature within a year or less. Treasury notes or T-notes are medium-term bonds with maturities between two and ten years.

Speaker 3 Treasury bonds or T-bonds are long-term bonds with maturities of 20 or 30 years. Now on to corporate bonds.
Corporate bonds are bonds issued by companies instead of the government.

Speaker 3 These bonds often give higher yields than treasuries, but with higher rewards comes, say it with me now, higher risk. If a company goes bankrupt, bondholders might not get paid back in full.

Speaker 3 So how do investors evaluate whether a specific bond is a good investment or not?

Speaker 3 Credit ratings, liquidity score, and whether the bond is callable are usually three factors investors evaluate before investing. A bond's credit rating is essentially a measure of risk.

Speaker 3 Agencies like SB Global and Moody's rate corporate bonds based on how likely a company is to repay its debt.

Speaker 3 The best rated bonds are triple A, super safe, while lower rated bonds like double B or lower are riskier but might offer higher rewards.

Speaker 3 A bond's liquidity score tells you how easy it is to buy or sell the bond. If a bond isn't traded very much, it might be harder to sell when you need the cash.

Speaker 3 So think about this like you're selling a house.

Speaker 3 If you put your house on the market and no one is buying houses at that time, you can't bank on the fact that you can get cash from selling your house quickly.

Speaker 3 Lastly, some corporate bonds are callable, which means a company can pay them off early.

Speaker 3 This isn't great for investors because if interest rates drop, the company might decide to pay back the bond early and reissue new ones at lower rates, leaving you without those juicy interest payments.

Speaker 3 Tons of companies issue corporate bonds, like the big companies you're seeing in the headlines, Apple, Microsoft, Alphabet, the parent company of Google, Nvidia, Amazon, and even private companies that you can't even buy through investing on public markets.

Speaker 3 Because bonds deliver a lower risk and usually fixed return, bond investing can act as a more passive investment than something like stock trading.

Speaker 3 To get that true recurring income that passive income stands love, some investors use a strategy called a bond ladder. This is when you buy multiple bonds with different maturity dates.

Speaker 3 The idea is that as each bond matures, you reinvest the money into a new bond, keeping a steady stream of income rolling in while taking advantage of changing interest rates.

Speaker 3 For example, let's say you invest in one-year, three-year, and five-year treasury bonds today.

Speaker 3 In a year, when that first bond matures, you roll it into a new five-year bond. The next year, the three-year bond matures and you roll that into another five-year bond.

Speaker 3 This way, you always have bonds maturing and giving you access to cash while keeping your investments working for you. All right, that's the need to know on bonds.
Next up, high-yield cash accounts.

Speaker 3 If you want to generate passive income, high-yield cash accounts are where it's at. This is just a place to park your cash, almost like a checking account.

Speaker 3 But high-yield cash accounts offer significantly better interest rates. The average interest rate for a checking account right now is 0.07%.

Speaker 3 Yep, you heard me right. That is less than 1%.

Speaker 3 But high-yield cash accounts offer much more than that. Public, the investing app that I always talk about, is offering 4.1% on their high-yield cash account right now.
And what would you rather have?

Speaker 3 0.07%

Speaker 3 or 4.1%?

Speaker 3 I'll wait. And the high-yield cash account for Public is FDIC Insured up to 5 million bucks.

Speaker 3 The thing to keep in mind is that interest rates can change, but since high-yield cash accounts are totally liquid, meaning you could access your money at any time, you can always move move your cash when you need to without penalty.

Speaker 3 Now let's talk about dividend stocks, which may be my favorite way to make passive income. Here's how they work.

Speaker 3 When you invest in a stock, you usually make money in two ways: capital appreciation, which is just a fancy term for saying the stock price goes up, and dividends.

Speaker 3 Some companies issue investors a portion of its profits, and that monetary thank you gift from the company is called a dividend.

Speaker 3 Dividends are usually paid out quarterly, although some companies pay them out monthly or annually.

Speaker 3 The amount you receive is based on something called the dividend yield, which is the percentage of the stock price that the company pays out in dividends.

Speaker 3 Not all companies issue dividends, but some of the well-known companies that do are companies like Johnson ⁇ Johnson, Coca-Cola, Procter ⁇ Gamble, and McDonald's.

Speaker 3 These companies are known as dividend aristocrats, meaning they're in the S ⁇ P 500 and they've increased their dividend for at least 25 consecutive years.

Speaker 3 Dividends are an awesome way to get a little boost in your brokerage account. But if you don't need to use them right away, you can always enroll in a dividend reinvestment plan or a drip.

Speaker 3 With a drip, instead of receiving cash payouts, your dividends are automatically used to buy more shares of the stock.

Speaker 3 This helps your investments compound over time, meaning your future dividend payments get larger and larger. For example, let's say you own 100 shares of a dividend stock paying $1 per share annually.

Speaker 3 That's $100 in dividends per year. If you reinvest those dividends, you'll own more than 100 shares by next year, which means your next dividend payment will be even bigger.

Speaker 3 Over time, this snowballs into some serious money. Passive income does not have to be complicated.

Speaker 3 With bonds, high-yield savings accounts, and dividend stocks, you can build a steady stream of income without constantly checking your stock portfolio.

Speaker 3 Okay, so you're all in and you want to learn more? Here's my secret. Public is my go-to platform for all things investing.

Speaker 3 On Public, you can find dividend-generating stocks, earn 4.1% APY with their high-yield cash account, and buy corporate bonds and treasuries with great interest rates.

Speaker 3 On Public, you can even build a treasury ladder, which will lock in yields with staggered maturities for a steady passive income stream.

Speaker 3 And on Public, you can look at your income hub where you can view your monthly breakdown of your earnings from every income-generating asset you own. So you know how your money is working for you.

Speaker 3 This brings me to today's tip you can take straight to to the bank. To get started with public, just head over to public.com slash moneyrehab, which is also linked in the show notes.

Speaker 4 This is a paid endorsement for public investing. Full disclosures and conditions can be found in the podcast description.

Speaker 1 Money Rehab is a production of Money News Network. I'm your host, Nicole Lappin.
Money Rehab's executive producer is Morgan Lavoie. Our researcher is Emily Holmes.
Do you need some money rehab?

Speaker 1 And let's be honest, we all do.

Speaker 1 So email us your money questions, moneyrehab at moneynewsnetwork.com, to potentially have your questions answered on the show or even have a one-on-one intervention with me.

Speaker 1 And follow us on Instagram at Money News and TikTok at Money News Network for exclusive video content. And lastly, thank you.

Speaker 3 No, seriously, thank you.

Speaker 1 Thank you for listening and for investing in yourself, which is the most important investment you can make.