Ranking the Best Passive Income Investments

Passive income is your best chance if you want to attain financial freedom. There are many types of passive income streams. They vary in activity, liquidity, feasibility, return and risk. This post seeks to rank a number of streams going by those factors. 

The rankings may be subjective. They are based on one investor’s personal life over a 20-year experience. 

It All Starts with Saving

Spending is more fun than saving. 

While saving is crucial, it is only one step of many. The most important part is knowing how to invest the savings. 

Ranking Passive Income Streams

The following are 8 of the best passive income streams. They are ranked based on activity, liquidity, feasibility, return and risk. For each of these factors, the investment will get a score, 1 to 10. 

• Score of 10 for risk – no risk
• Score of 1 for return – horrible returns
• Score of 10 for feasibility – anyone can do it
• Score of 1 for liquidity – withdrawing money is difficult and/or attracts a huge penalty
• Score of 10 for activity – you can relax and do nothing, you will still earn

Lastly, the method is based on someone trying to generate an annual passive income of $10,000. 

CD (Certificate of Deposit)/Money Market

Nowadays, CDs don’t yield as much as they used to. The good thing about them is that there is no minimum requirement for net worth or income. Any person can open a CD at their local bank. 

• Risk: 10 (no risk)
• Return: 3 (the rates have gone up)
• Feasibility: 10
• Liquidity: 6
• Activity: 10
• Total score: 39

Bonds/Fixed Income

Bond prices keep rising as interest rates go down. They bring some stability to your portfolio, more so when times are tough and uncertain. 

Most bond types are easily accessible. 

The main issue is future interest rates. If they increase, the value of bonds will decline. 

• Risk: 8
• Return: 5
• Feasibility: 10
• Liquidity: 8
• Activity: 9
• Total score: 40

Physical Real Estate

Real estate is a favorite asset class for many people. It generates income and is not that hard to understand. The main downside is maintenance and tenant issues. 

• Risk: 5
• Return: 8
• Feasibility: 7
• Liquidity: 3
• Activity: 6
• Total score: 29

P2P (Peer-to-Peer) Lending

The idea behind P2P is to make loans accessible to denied borrowers at lower interest rates. 

• Risk: 5
• Return: 9
• Feasibility: 9
• Liquidity: 6
• Activity: 8
• Total score: 38

Dividend Investing

This is an amazing way to create passive income—especially if you invest in a large cap company. 

• Risk: 6
• Return: 7
• Feasibility: 10
• Liquidity: 8
• Activity: 10
• Total score: 41

Private Equity Investing

Pick the right investments and you will have an outstanding source of income. 

• Risk: 4
• Return: 7
• Feasibility: 4
• Liquidity: 2
• Activity: 10
• Total score: 27

Real Estate Crowdsourcing

With real estate crowdsourcing, you can invest a little amount into a huge real estate project and get some attractive returns. 

• Risk: 7
• Return: 8
• Feasibility: 10
• Liquidity: 7
• Activity: 10
• Total score: 42

Make Your Own Products

If you have great ideas, creating products may bring you a steady flow of cash for years. 

• Risk: 10
• Return: 9
• Feasibility: 7
• Liquidity: 8
• Activity: 9
• Total score: 43