BEST 5 Passive Income Investments 2021 // how to make money while you sleep with less than $1,000

– In this video I wanna talk to you about the five best
passive income investment as a beginner. Do you know what you can't buy with money? Time. The thing is, we're gonna
always make more money, but those dollar bills that
you make just can't buy your time back. And like what Warren Buffett said, if you aren't able to find a way to make money while you're asleep, you will work until you (beep). With that in mind, I filtered out the five best passive
income investments to make money while you're asleep. Now to make this video as
practical as possible for you, all of these passive income
investments can be turned into cash within three
to five business days, and the amount of work
required from you is less than an episode of your favorite show on Netflix per month.

On top of all that, I've added
a two-factor rating system to each of these passive
income investments, so that you can pick one that's best for your circumstances. If this is your first time here, welcome. My name is David, and I'm
just a bold Asian man making personal finance videos (laughing) with a order at the back. Now make sure you always
gently smash that like button, and without further ado, let's go! So this is how this video's going to work.

Now because I have picked out
passive income investments that's already extremely
liquid and require minimal work on your end, I'm gonna judge the quality of these passive income
investments based on two factors: risk and return. Now when it comes to risk,
one is extremely risky, and five is really safe, like
cash or government bonds. And when it comes to returns, one is low returns and
five is high returns.

And for each of the
passive income investments, I'll talk a little bit about what it is, how it works, and I'll
talk through the rationale why it's risky, or not risky, or why it's high returns or low returns. Now the first passive income investment I wanna talk to you about is something that we're all very, very familiar with, and they are index funds. Now index funds are
essentially a portfolio filled with the world's top companies, and depending on which
country's index you by, the dividend yield for that
index is very, very different. Let me give you an example. The S&P 500, which is
essentially the top 500 companies in the U.S., yields approximately 2.31% as of recording this video. On the other hand, ASX 200,
which is the top 200 companies in Australia, yields approximately 4.4% as of recording this video.

That's mainly because the top companies in Australia are not tech companies. They are resource companies or banks, and they're usually more mature and less growth-oriented,
so it's understandable that they have a higher dividend yield. So at a dividend yield of 4.4%, if you invest $1000 at the
beginning of this year, at the end of this year
you will have $1044, not accounting for share
price growth or decline. And can I just remind
you that you barely have to do anything to earn that $44? Now with $1000, or even less than $1000, I recommend you to look
into exchange-traded funds that follow an index that you want.

And also really pay attention
to low management fees. You want fees to be as low
as as they possible can be. So from a risk standpoint,
because the index that you're usually investing in are some of the top companies in the world or in that country,
they're relatively safe. They are less dangerous
compared to small cap stocks or even penny stocks. So I'm gonna give that
a three out of five. From a return standpoint, we know that if you invest in an
index over the long term, we know that the return is anywhere between nine to 10% with
dividends reinvested.

So I'm gonna give returns
a four out of five. So in total, investing in index funds as a passive income investment is a seven out of 10 investment in my opinion, and I think investing in index
funds is just a great way to start investing, and
also learn to build a habit of investing, and also make sure you watch this video all the way to the end because I'll be sharing my
dividend stock portfolio on how I'm able to make $155 per month by barely doing anything. Okay the next passive income investment I have for you is fixed income assets. Don't let their name scare you. It essentially just means
that you are lending money to someone else, and they are obliged to pay you a fixed amount
over a set amount of time.

A good example of fixed
income assets would be certificate of deposits, government bonds, municipal bonds, or even
peer-to-peer lending. Now this video is supposed
to be the best passive income investments, not a list of them. So I decided for this
segment I'm not going to talk about certificate of deposits or peer-to-peer lending,
but if you'd like me to explain why I don't like it, just ask me in the comments below, and I'd just rather write
you an extensive reply, rather than talk about it in this video. Now with government and municipal bonds, you are essentially
lending to the government and the state, respectively. And because it's backed by the government or the state, it just doesn't really get any safer than that. And, better yet, with municipal bonds, the fixed income is federal tax-free, and if you live in the same state it'll also be city and state tax-free. I wish municipal bonds is
a thing here in Australia, but unfortunately the only thing we have here are government bonds.

So when it comes to
picking individual bonds, whether that is government
bonds or municipal bonds, if you have the time to
understand economic conditions, central bank interest rates, and also consumer
sentiment, then feel free to choose individual bonds for yourself. Because my interest is in stocks and also creating video for you, I personally prefer a portfolio
of different duration bonds to diversify my risk and spend
my time doing something else. On the topic of portfolio of bonds, if you're in the U.S check out IEF. IEF is a portfolio of seven to 10-years Treasury bond fund, and
it's currently yielding approximately 1.71% as
of recording this video. And also feel free to check out another ETF called MUB, which
is a municipal bond fund that's currently yielding 2.31%. Now if you're in Australia, check out an ETF called IAF, and that is essentially
a diversified portfolio of government bonds
that's currently yielding approximately 1.97%. Now similar to investing in index funds, if the portfolio of
government bonds is yielding approximately 1.97%, if you invest $1000 in the beginning of the year, at the end of that year you
will have approximately $1019 without doing anything.

Also no accounting for bond
prices going up or down. From a risk standpoint,
other than certificate of deposits or cash, I don't think there's anything safer
than government bonds. So that's a four out of five when it comes to risk. And because of the minimal
risk you are taking, the returns are just not gonna be as good as stocks, so
from a return standpoint, that's going to be a two out of five. So in total, government
bonds and municipal bonds, as a passive income investment, is a six out of 10 type
investment, in my opinion. So I would think of fixed income assets not as a core
passive income investment in your portfolio, but
more as a defensive asset to defend yourself against
really volatile environments. And now we have to talk
about everyone's favorite passive income investment under the sun, and that's real estate. As some of you may or may not know, the cost of housing in Australia will set me back 200,000 cups of
soy mocha worth $5.50 each.

So I am not really ready for that kind of commitment buying
rental properties yet. But that doesn't mean that we can't invest in real estate at all. There are real estate investment
trusts just like stocks, and they're short-formed REITs. And the whole purpose of REITs is to own, operate, and finance
income-producing real estate. So for those of you who don't wanna fork out $200,000 as a down payment and a 800,000 mortgage,
deal with angry tenants and broken toilets, then, yeah, I would personally recommend
checking out REITs. The thing to pay attention to when it comes to REITs is
that different REITs hold different types of real
estate in their portfolio. Some REITs hold a lot
more shopping centers. Some hold a lot more in
commercial real estate like office spaces. And some hold a lot more in
residential or logistics. So here's what I look for in REITs as a passive income investment. There are two main criterias. The first criteria is
a strong balance sheet. Now whenever you here people talk about strength in balance
sheet and strong balance sheet, what they're really saying is, do they have enough current assets to meet all of their current liabilities? So let me explain.

Current assets are essentially cash or anything that you can
make transaction with in a very short amount of time. And current liabilities are essentially all the debt you have to pay
within the next 12 months. Now if a REIT has a strong balance sheet, then you would know that
they have the capability to survive in the sort to medium term. The second criteria is that the REIT needs to own resilient and essential properties. Let me explain. Given what's happening
in the world right now, where a majority of the
population is staying home, I really believe that
this has a cultural shift to the value of real estate properties.

Now we have to think long term. The types of real estate in my opinion that tick both the resilience box and also essential box are
logistic real estate properties and residential properties. If REITs is something
that you're interested in and you're in the U.S., check out a company called Prologis. Prologis. It's currently yielding 2.4%,
as of recording this video. And if you're in Australia, check out a company called Goodman Group. Now the interesting thing about both of these stocks is that Amazon
is the biggest customer, and both of these REITs
have strong balance sheets to weather the storm over
the short to medium term.

So from a risk standpoint, REITs, especially the REITs that I talked about that are in residential or logistics and have a strong balance sheet, in my opinion, they
are a three out of five when it comes to risk. And return-wise, I know
they don't sound amazing, but they also gave growth potential, and also dividend yield. So I'm gonna meet you half way and say that is a three out of five
when it comes to return. So in total, REITs is a six out of 10 type passive income investment, and I think that if
real estate is something that you're passionate about, that you wanna learn more about, this is a really good way to get started to learn more about real estate if you don't have the money yet to buy a rental property. And also a great way to get some exposure in real estate if that's
what you're after.

The next passive income
investment is actually one that helped me build my investing habit, and these are round-up apps. Now with round-up apps
like Acorns in the U.S. or Raiz in Australia,
you have an opportunity to pick a portfolio that
fits your risk appetite. So you have portfolios
that are very conservative, which the majority of your
money will be invested in either bonds or cash, or
you have a highly aggressive portfolio where the majority of your money will be
invested in equities.

From a risk standpoint,
it's highly dependent on the portfolio that you choose within the round-up app. But generally speaking, the majority of these portfolios are already invested in ETFs, which are extremely diversified, and the companies have done a lot of due diligence on selecting which ETFs with the lowest fees are ready. So I'm gonna give the
risk a three out of five. For a return standpoint, again, that's highly depending on which portfolio that you're choosing
within the round-up apps, but to generalize again, I'm
just gonna say the returns are three out of five.

So in total, round-up apps is a six out of 10 type passive income investment, and I think it's just a great way to start investing if you
don't have the money to do so, but to also build the
habit of investing as well. And last, and definitely not least, and that's dividend stocks as
a passive income investment. Now this is one of my favorite things in the world right now because I can't afford a rental property.

And remember in the beginning of the video I mentioned that I'm making
$155 per month barely doing anything? Yeah, dividend stocks. So I wanna take the
opportunity to show you how and what I've chosen to invest in. By no means they're not perfect, but so far here's what
my portfolio looks like. Wait, I actually mean $192.11 per month. This is a complete
breakdown of my portfolio, and from the outside it might look very, very strange and there's
no apparent strategy to it, but let me explain.

The majority of my portfolio
is actually invested in listed investment companies where their focus is to
build their portfolio and invest in companies that will grow their dividend income year on year. And around 15 to 20% of my portfolio will always be dedicated
towards index funds. Now there's a really,
really good reason why I didn't choose to invest
in an Australia index fund because with the listed
investment companies I'm invested in, I already
have enough exposure into Australian stocks. I just much prefer if was going to dedicate 15 to 20% of my portfolio, I wanted to dedicate it towards stocks in a different country,
especially growth stocks if possible. Now there's a few odd
stocks in my portfolio that just doesn't seem right. For example, ResMed and AMD, they don't really yield
a lot of dividends; however, there are some companies that I will always make an exception for if I want to personally own. I personally really love
the management team of AMD and everything that they
have done since 2014.

If you'd like me to talk more specifically about the stocks of the companies that I own in my portfolio, let me know in the comments below
by doing a thumbs-up, and if there's enough people who want me to explain my key rationale when it comes to picking individual stocks,
I will do a dedicated video just for that. Now when it comes to
picking dividend stocks, it's very, very similar to REITs. You want companies with
really strong balance sheets, and you want the business that they're in to be resistant, and also
it's an essential part of our world. But the thing is, when it comes
to investing in Australia, if you just buy individual companies the transaction costs is
actually very, very expensive.

We, unfortunately, we don't
really have a stock-trading platform here that allows
us to trade for free. All the transaction cost money. And if I was to build a
portfolio with individual stocks, it would be very, very expensive. So this is one of the reasons why I wanted to manage and minimize my costs by investing into listed
investment companies with a portfolio that I feel really, really comfortable with, and that's one of the reasons why you see the majority of my dividend stock
portfolio are actually in listed investment companies. So when it comes to risks of investing in dividend stocks as a
passive income investment, in my humble opinion,
it's a three out of five. Now dividend stocks are
mostly mature companies who have an established
competitive advantage, so their share price don't volatile and don't swing as much. And because of that, the
returns are pretty stable. But because of franking credits that's available in Australia, I have to give the
returns a four out of five instead of a three out of five, even though franking
credits may not be available to different countries, I
still think dividend stocks are a four out of five
when it comes to returns, as long as you have a
diversified portfolio of dividend stocks.

So in total, investing in
dividend stocks is seven out of 10 type passive income investment, and this is one of my favorite ways of investing my money right now because I just can't
afford a rental property. That's probably the
only reason. (laughing) Thank you for watching this video all the way to the end. I really appreciate you doing that because it helps me gauge whether you enjoy content like this. And it helps me determine what I need to improve on in my next couple videos. Now as usual, if you wanna support me, make sure you gently, gently
destroy that like button so that the YouTube algorithm will push my video out there and
share it with more people. And always remember to
subscribe to my channel, clicking onto the bell, so that every time I release a brand-new video you'll be the first one to know. And until next time, I'm
gonna let him say goodbye.

(lively music) See you guys. ā™Ŗ Ah ah ā™Ŗ.

As found on YouTube

BEST 5 Passive Income Investments 2021 // how to make money while you sleep with less than $1,000

In this video, I am going to walk you through the BEST 5 passive income investments 2021. Like Warren Buffet said, if you can't find a way to make money while you're asleep, you'll work until you...".

With that in mind, I've filtered out 5 best passive income investments to make money while you're asleep.

Got Questions? - Email me at thedavidquan@gmail.com

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ā° Passive Income Investments 2021 // how to make money while you sleep ā°
1:31 Investing In Index funds
3:23 Fixed Income Assets
6:11 Real Estate
9:08 Round-Up Apps
10:10 Investing In Dividend Stocks For Passive Income

If you prefer reading it instead, check out the blog version:
https://www.thedavidquan.com/blog

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ā¤ļø SUBSCRIBE ā€” Yep, it's 100% FREE, you just have to tap on the SUBSCRIBE button. (Hit the šŸ”” notification icon if you want a bald Asian man sliding into your notification every week)

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Now to make it as practical as possible for you, all of these passive income investments can be turned into cash within 3-5 business days, and the amount of work required from your end is less an episode of your favorite show on Netflix per month.

On top of that, each of these passive income investment ideas will get a rating out of 5 on risk, and a rating out of 5 for returns.

When it comes to risk, 1 is high risk, 5 and low risk. With returns, 1 is low returns, 5 is high returns.

Passive Income Investment #1 - Index Funds
Index funds are essentially a portfolio filled with the world's top companies. Now depending on which country's index you are buying, the dividend yields on those indexes are very different.

For example, the S&P500 yields approximately 2.31% as of recording this video, whereas ASX200 (the top 200 companies in AU) yields 4.4%.

Risk = 3/5
Returns = 4/5
Total 7/10

Passive Income Investment #2 - Fixed Income Assets
Don't let the name scare you, it essentially means that you're lending money to someone else, and the borrower is obliged to make a FIXED payment on a set time schedule.

For example, certificates of deposits, government and municipal bonds, even peer to peer lending are all examples of fixed income assets. (the concept is similar, you're just lending to different entities)

Risk = 4/5
Returns 2/5
Total = 6/10

Passive Income Investment #3 - Real Estate
Since I can't afford rental properties yet, real estate investment trusts are another option for me to get exposure into the real estate market.

Here's how I evaluate what REITs to invest in. (don't worry I have a few suggestions to get you started in the video)

2 main criteria
1. Strong balance sheet (that means that the REIT has enough cash to hand short term liabilities many times over)
2. Own resilience and essential properties

Risk = 3/5
Returns 3/5
Total 6/10

Passive Income Investment #4 - Round Up Apps
This is where I started investing! When you're investing for passive income in round up apps, you have a few portfolio to choose from to match your risk appetite.

The higher the risk profile of the portfolio, the more equities you'll be exposed to.

Risk = 3/5
Returns = 3/5
Total = 6/10

Passive Income Investment #5 - Dividend Stocks
Investing in dividend stocks for passive income is one of my favorite things in the world right now. In the video, I reveal my entire portfolio, and this passive income investment is currently generating $150+ per month in cash flow for me.

Risk = 3/5
Returns 4/5
Total = 7/10

Disclaimer: Iā€™m not a financial advisor. The information contained in this video is for entertainment purposes only. Any purchases of stock that I show during the video should not be considered financial advice and you should consult a licensed financial advisor before making any investment decisions. I will not be held liable for any losses incurred for investments or trades that mirror my strategy. Please be careful!

Please note: some of these links are affiliate links where I'll earn a small commission if you make a purchase at no additional cost to you.

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