The Best Passive Income Investments You Can Make for This Year (2022)

best passive income investments in the philippines

Do you want to make some extra money without having to do much work? Ever imagine sleeping at night, and yet money still comes in? If so, you’re in luck! There are moneysmart ways to earn passive income in the Philippines.

Passive income means that you receive money even if you don’t do anything. In financial terms, it’s the money that you put in a one-time investment that gives you income regularly without too much monitoring or adjustments of funds and holdings.

Building a passive income doesn’t happen overnight. Moreover, it’s not advisable to put all your money in investments if you don’t have savings, emergency funds, and insurance. However, if you are ready to build another income stream, here are the best passive income investments you can make this year.

#1 Property rentals or leasing a commercial space

If you have an extra room or space, you can start by renting it out to potential tenants looking for a job or need to transfer to your area. Start small by renting out one-bedroom units or rooms to individuals, students, families, or small groups who are relocating to your city.

Be sure to check if your area already has short-term rentals since they’re popular among ex-pats looking for long-term accommodation options elsewhere. You can check some rentals on Airbnb for short-term rentals or post your apartment or space at RentPad, Lamudi, or DotProperty for long-term listings.

Leasing is more common in a commercial setting, and of course, the income is higher than short-term rentals for residentials. There are no fixed prices, but everything else depends on the location and size of your property. Overall, you need to consult with legal and tax experts about the contract, taxes, and other legal matters for housing rentals and leasing.

#2 Real Estate Investment Trusts (REITs)

Still want to invest in properties, but you don’t like renting out properties? REITs or Real Estate Investment Trusts are your best bet. It is a company that owns and manages and typically operates income-generating real estate properties.

As a shareholder of a REIT, you buy more shares than individual pieces of real estate, so your exposure to specific activities (and risk) is more limited than with some other forms of indirect real estate investment. But you still get exposure to real estate returns as the company earns from rentals, parking fees, storage fees, and more from their tenants.

To invest in a REIT, you need to open an account with a brokerage house or stock market firm. Your first step should be to check if your existing bank has a tie-up with a reputable broker. You can do this by going to your bank’s website and checking the list of partners. If they have one, you then contact their investor relations team to determine how you can sign up as a client.

#3 Dividend stocks

Dividend stocks as financial instruments give you regular profits or return on investments. Instead of receiving cash, you receive more shares according to your investments. The key to any dividend stock is to find companies, especially those with solid reputations and long-term track records, that regularly pay out dividends.

The number of stocks you will receive will depend on the share price and how much profit the company makes in a year. You can check the Dividend Aristocrats list by Standard and Poor’s for a shortlist of companies that have paid increasing dividends for 25 consecutive years or more if you plan to explore the global markets.

If your brokerage firm supports this list, it becomes simple to take advantage of good dividend stocks as they make their way through the market cycle. As such, you will get higher yields as these stocks rise in price over time due to growth and inflation.

#4 Mutual funds

Mutual funds are companies that pool together the money of individual investors to give them exposure to stocks, bonds, or other assets. Depending on your risk appetite, you can choose from the many different types of mutual funds.

But before you get started, see if you can assess your capabilities first by looking at how much time you have for research and monitoring, your investment goals (short-term vs. long-term), your investment horizon (how long you plan to hold on to your investments), and also risk tolerance (do you know what you can lose or are you aiming for x% return on y amount of money).

Mutual funds are easy targets because they’re perfect choices for do-it-yourself investors who prefer low-cost entry points and don’t mind leaving it up to fund managers to invest on their behalf. But if you have little time for this type of work and want to grow your money for the long term, investing in mutual funds is a great way to start building a passive income.

#5 Peer-to-Peer Lending

Peer-to-peer lending uses online platforms that connect borrowers with individual or institutional investors. Small businesses and start-ups who need funds, whether for business expansion or personal use, can go here to find their financial match.

Borrowers post a campaign for the loan amount they need and the interest rate paid to lenders if any. Lenders do due diligence before committing money to people who seek loans through this type of platform. Borrowers don’t need to go to the bank to get the money. For lenders, you can start for as low as P1,000 to get started.

Some of the P2P lending platforms you check are LendPH, SeedIn, and BlendPH, to name a few. Individuals can invest in asked loans using a small capital but earn relatively higher returns than the fixed-yielding bank savings account alternatives.

Final thoughts

It’sessentialt to think about the best passive income investments you can make this year to have a sustainable income. You can include this in your financial new year’s resolutions. This way, your money will work for you and hopefully bring in more than what you need on an annual basis.

While the examples mentioned above all have their risks and rewards, investing in these ways can help you increase your savings account balance or grow your portfolio of assets over time.

What do you think of the passive income investments above? If you have an extra P100,000, where would you invest it? Let us know in the comments below!