Financial planners share their clients’ top sources of passive income

  • Financial planners said that real estate is one of the main sources of passive income for their clients.
  • But they also see digital products, blogs, podcasts, and YouTube channels that make money.
  • Dividend investing is a traditional way of earning passive income that also works well for clients.
  • Read more Personal Finance Insider coverage »

Generating passive income is not always as easy as it seems: it requires time and money up front, and the benefits do not come overnight. But, financial planners say it’s possible, and a worthwhile pursuit.

To find out how people earn passive income, Insider asked several financial planners to share their clients’ top sources of passive income.

This is what they said.

1. Home and real estate hacking

Financial planner and Facet Wealth co-founder Brent Weiss said he has seen a significant number of his clients turn to real estate, more specifically home hacking, to generate passive income.

Home hacking, or buying a home with the intention of renting out a room or separate unit within the home, is a simple way to invest in real estate.

“The number 1 thing we all talk about [with passive income] it’s real estate,” Weiss said. “But when I talk to my clients about real estate, what it takes to do it, sometimes they rethink their overall goals.”

Investing in real estate can often require more


Deposit

to buy their own house, as well as some additional work in managing tenants.

House hacking reduces those hassles and continues to generate income. “Probably half of my clients are now thinking about real estate differently,” she said. “Suddenly they are paying half of their mortgage and generating additional income for their family.”

2. Dividend investment

With some shares of stock, companies offer investors a portion of the profits, with each share earning an amount of cash periodically. While it may not be monthly income, dividends can be truly passive income.

“Dividend income is definitely a major source of passive income that a lot of my clients have,” said Akeiva Ellis, a financial planner at Ballentine Partners in Boston. She has seen this not only from her height


net worth

customers, but said it is also growing in popularity with its younger customers.

“Of course, there is the appreciation and


Capital gains

that everyone knows. But selecting companies that also pay dividends to their shareholders on a regular basis is another part of the entire investment portfolio from which income can also be derived,” he said.

3. YouTube channels, podcasts, websites, and apps

In addition to real estate investing and dividends, Senior Financial Planner Andrew Westlin of Betterment saw another trend among his clients.

“Passive income streams like podcasts, websites, apps, YouTube channels that generate revenue from ads — those are really common passive income streams that I’ve seen,” he told Insider.

While these types of passive income can be more inconsistent and time consuming than other methods, they are often enjoyable.

“What’s been really amazing is seeing clients, friends and family turn these ideas that they spend a lot of time into and turn them into a source of income,” he said.

4. Creation of digital products for online sale

Ellis said digital products are a common way he has seen clients earn passive income recently.

“You see a lot of people these days starting new business ventures where they sell digital products or information products,” he said.

Generally, it consists of products for sale online. “I see people creating digital products. Whether it’s a printable they sell online, a worksheet, a guide, an ebook, or an online course, it’s those kinds of things that people can set up once, and that takes little without maintenance”.

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