Most people dream on retiring early, not having too work all their lives, and take vacations whenever they want. This is not possible if you follow the system. If you just have a normal job, pay your expenses and put some money on your retirement account, you will have to wait until you are 60 years old or more (depending on the country) to start getting small paychecks without working. So what can you do to retire early and travel the world? Passive income is the answer.
Passive income basically means that you get money without being materially involved in the work. The most popular way is to buy a house and get the rental income so you are getting money every month without working for it. This is a great way to get passive income but it may require a lot of money to start. If you only have $100 or a small amount of money, I would recommend to start with dividend stocks/ETFs which you can buy with no fees using tools like Robinhood.
There are public companies like Google that do not pay dividends, so you just buy a stock, wait until it increases value and then sell it to make money. However, there are other companies like Microsoft and Apple that pay dividends every 3 months! So you earn money when the stock increases its value and also every 3 months you get money without doing anything.
There are also ETFs (Exchange Traded Funds) which are funds that track an index such as the S&P 500. Some ETFs also pay dividends every 3 months and they tend to be more secured than individual stocks since they are more diversified. For example, ETFs that follow the S&P 500 basically invest in the 500 largest companies in the US. So even if Apple or Microsoft are not doing good, the other 498 companies may be doing better and the ETF price will not go down.
Warren Buffett, Tony Robbins and other remarkable investors always recommend to invest in ETFs that track the S&P500, and that is exactly what I am doing. Just a few months ago I bought VOO when it was 217 dollars, right now it is $233 and it also pays $1 dollar every 3 months for every share you have.
Lets say you bought 30 shares when it was $217 for a total of $6,510, right now (only 6 months later) that would be $6,990. You are already earning $480 plus 30 dollars every 3 months without doing anything! That is the beauty of passive income.
VOO is just an example, but there are other ETFs for under $100 like VIG or public stocks that you can buy for only $20 dollars and start getting passive income!
With mobile apps like Robinhood you can easily buy ETFs or stocks of public companies without paying any fees. I used to pay 5 dollars to buy and 5 dollars to sell a stock, however, with Robinhood you do not have these fees which means you can earn more money! It is also really simple to use and as of right it works in the US and Australia. If you are an international student or have H1B visa in the US, you can use it as well!
You do not need to be an expert or finance guru to start but you need to be patient and most importantly know that stocks can and will go down at some point so do not panic and do not invest what you can’t lose. Historically the market has always increased its value after recessions and great investors buy more when the market is down so just plan your strategy. Please do your own research prior to making any investing decisions.
I like using Google Finance to check prices of the stocks/ETFs and doing my own research online. If you sign up through this link you can actually get a free stock of a company like Apple, Sprint or Ford so you have nothing to lose. If you are serious about retiring early and getting passive income then take action! Get this free stock, do research, and invest small amounts of money until you are comfortable putting more money.
If you have any questions or more ideas to start getting passive income just let us know so we can share them with the world! Now go and start generating passive income!
“The future depends on what you do today” Gandhi