How to make money while you sleep
The first week we talked about saving, the second week about spending, and in the third week of your training course, we move on to investing. Whether you’re trying to pay off a debt, top up your emergency fund, or make a major purchase like a car or real estate, any additional monthly income can help you get there faster.
You might consider adding a side job to make some extra money, but with so few hours a day, this option isn’t for everyone. The good news is there are other ways to generate income. You can start today and it only takes 60 minutes of your time: investing.
Right. With the right investment, you could receive stable passive income in your sleep. And on closer inspection, it’s easier than you might think. Before you start, you need to decide if you want to invest in the short term (if you need to make money fast), in the medium term, or for a long term goal.
This means asking yourself how affordable you want your money to be, and how much risk you are willing to take. If this sounds a little intimidating, don’t worry. We’ll show you in detail how to find the answers.
First, ask yourself these three questions:
Do you want to pay off debt in the next 12 months (short term)?
Are you planning your dream trip for several years (medium term)?
Or do you even want to make a major purchase in the future, such as a car or real estate (for a long time)?
Then, to determine availability and risk, ask yourself these three questions:
Do you need immediate access to your money or are you ready to block it for a fixed period of time?
Are you willing to take risks or are you much more conservative about how much risk you are willing to take? Could your nerves fall or jump in the market, or would you prefer something more resilient where the highs and lows are much less extreme?
Now you have an idea of the timing of your investment, how affordable your money is, and what your risk appetite is. The next step is to determine where you want to invest your money.
(Best for creating an emergency fund that you may need to access for 12 months)
Online savings account
Current Potential Annual Return: 0.05% – 0.35%
Pros: Very liquid, deposits up to $ 250,000 are insured by the Australian government, little or no commission.
Cons: very low interest rate (lowest of all!)
A savings account that allows you to earn interest on the money you deposit is one of the easiest investment options available. The more money you can put into a savings account and the longer you can keep it there, the more interest you can earn and the faster you can reach your savings goals.
The catch is that savings accounts usually have a low interest rate, so they won’t make you a lot of money overnight, but it’s better than leaving it in your account for day-to-day transactions. Instant and easy access is also very useful if you are saving money for short-term purposes, such as paying off debt or quickly setting up a reserve fund. Some banks even offer accounts that reward you for your savings, which will help you reach your savings goal faster.
(Best for monetary purposes in the next three to 10 years)
Peer-to-Peer Lending (P2P)
Current Potential Annual Return: 5.59% – 8.22%
Pros: No monthly maintenance or exit fees, generally high yield in a short time frame.
Cons: no government guarantee.
P2P lending is when people lend money to someone other than a bank or other financial institution. P2P lending has grown in popularity since its launch in Australia in 2012, with ASIC reporting that it has issued loans totaling $ 300 million in the last fiscal year. These are just a few of the several key providers you can use to invest in P2P lending in Australia: MoneyPlace, Plenti, Harmoney, Our Money Market, ThinCats Australia and SocietyOne.
So how do you make money with P2P lending?
It works in the same way as other peer-to-peer companies such as Uber or Airbnb. P2P lenders also receive a discount in the form of platform fees and sometimes application fees. For example, SocietyOne noted in its 2014 Financial Systems Survey that its business takes a 1.25% per annum commission on the interest paid by borrowers and passes the rest of the interest on the loan to investors.
However, it is worth remembering that, given the lack of a government guarantee for P2P lending, additional risks and lack of protection arise in the event that borrowers default on their debts.