More people want passive income now that the pandemic has stunted traditional earning opportunities.Try maxing out your 401(k) at your current job or seeing if there are any benefits you’re missing.Keeping your money in a savings bond can also give you an unexpected bonus at the end of the year.Read more stories from Personal Finance Insider.Get the latest tips you need to manage your money — delivered to you biweekly.Loading Something is loading.
Email address By clicking ‘Sign up’, you agree to receive marketing emails from Insider as well as other partner offers and accept our Terms of Service and Privacy Policy .With recent stock market volatility , a lot of people are flocking to stocks and crypto to make passive income.
While there are success stories of people making thousands — even millions — from trading stocks, there are lesser known stories of people losing their life savings in risky crypto or stock investments.
We asked three experts about un-glamorous sources of passive income that people commonly overlook while chasing trendier investments instead.
1.
Your employer’s 401(k) match It seems like basic advice, but financial advisor Hannah Whatley, CFP, AIF at the investment firm Rather & Kitrell , says people whose employer provides a 401(k) match to save for retirement should max out that match before putting their money in other investments.
Read your benefits paperwork very closely to find if your 401(k) contribution is eligible to be matched by your employer, how much they’ll match, and when your employer actually starts matching.For example, some companies don’t match 401(k) contributions until after you’ve worked there for a year or more.
2.Savings bonds Doctor and entrepreneur Shaan Patel , who makes an extra $250,000 per year in passive income, suggests putting your money in a savings bond with the US Treasury.A bond is a loan you make to a government in exchange for a steady stream of income over a fixed period of time.According to the U.S.Treasury website , the interest on bonds until April 2022 is 7.12%.
Patel says he regularly converts his “dead” money, which is just sitting in an account with virtually no interest rates, to “alive” money, to grow in an account with a higher interest rate.
If you plan on keeping a set amount of money in a savings account for a year or more, Patel says you’re better off leaving it in a savings bond where it can grow at a higher rate.
3.High-yield savings accounts A regular savings account can have interest rates as low as 0.03%, while a high-yield savings account can yield up to 1% (although rates do fluctuate).For example, if you keep $10,000 in a regular savings account, it would only grow $3 after a year at 0.03% interest.In contrast, a high-yield savings account with a 1% interest rate would earn an extra $100 by the end of the year.
“It seems small, but if someone says out of nowhere, ‘Hey, here’s $100 in groceries!’ you’d probably take it,” Patel says.”But if someone suggests that you open a high-yield savings account, people say it’s too much work.It’s easy money, and it’s safe.”
Leo Aquino Leo Aquino (they/he) is a reporter at business insider covering spending and saving.Before joining the insider team, they covered relationships, sexual wellness, beauty, fashion and more, always uplifting stories of BIPOC and LGBTQ+ communities.
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