This is how to generate passive income

6 ways to generate passive income

There are, of course, numerous ways in which you can generate a passive income.

Let's take a look at half a dozen of the most popular below:

(i) Commercial property - there are many different types of commercial property. 

Probably the most popular at the moment is industrial property, which can generate strong net yields, after costs.

It's important to understand your target tenant and the lease terms, and to minimise vacancy risk. 

Get expert assistance for this type of property if you aren't sure, as it's a somewhat different beast from residential property. 

(ii) Real Estate Investment Trusts (REITs) - a REIT is an easier way to get exposure to a diversified commercial real estate portfolio...albeit usually without using the same leverage. 

Some property ETFs and REITs have had a little bit of a rough time of late due to markets pricing in higher interest rates for longer, but generally performance has been good over the past decade for the most favourable products. 

Such investments have been a popular way for investors to diversify from traditional stocks and bonds portfolios, and tend to be popular for their strong distributions or dividend streams.

(iii) Airbnb, holiday, or short-stay accommodation - there's certainly been an explosion in short-term rentals over recent years, which may lead to some regulatory risk if state governments or local councils decade to crack down on landlords. 

But there's no doubt that short-stay accommodation has been a lucrative approach for investors with properties in popular locations. 

(iv) ETFs, stocks and shares - Australia's tax system is seemingly almost tailor-made for those seeking an income from the stock market.

The arrival of ETFs has made investing simple and accessible to the average Aussie, as well documented on the internet! 

(v) Fixed income investments - fixed income investing almost appeared to have suffered an untimely death during the ZIRP period.

And yet with interest rates having increased around the world, it's now possible to get yields that would've seemed like a distant dream only 18 months ago! 

(vi) Online business - potentially a huge topic, yet an important one for those wishing to escape the drudgery of the 9 to 5. 

Most of us have specialist knowledge, skills, or simply a passion that can be monetised or turned into a small business income stream.

What might yours be?

I discussed this a little further in the short video below:

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