How To Invest $100K For Passive Income

When it comes to investing, many people think that they need to do everything themselves. They want to pick out the companies they like best and buy shares directly.

How To Invest $100K For Passive Income

However, this approach requires a significant amount of work and research. If you don’t know exactly what you are doing, you could end up losing money.

What Is Passive Income?

Passive income is often confused with active income. However, while both types of income allow you to generate revenue, one requires much more effort than the other.

With passive income, you’re able to make money without having to work very hard. You won’t even have to put forth much effort once you’ve set up your system.

However, with active income, you’ll need to spend some time upfront in order to build something that will continue to pay off over time.

With this in mind, before you start investing money (see also ‘How To Invest With 500 Dollars‘), you need to decide whether you want to take a more hands-on approach or sit back and watch things happen.

There are many different types of investors out there, each with their own characteristics.

For example, some people love taking charge and managing everything themselves while others just want to see how much money they can make without doing anything at all.

If active management is something that interests you, then stock market or real estate may be great options.

However, if you’re looking for a way to make passive income without having to put in a lot of effort, then you may want to consider options like dividend paying stocks or peer-to -peer lending.

Each of these investment options (see also ‘How To Invest 30k‘) has their own unique set of risks, and rewards. So it’s important to do thorough research before you invest (see also ‘How To Invest In Dow Jones‘). Let’s look at these in a bit more detail. 

Before Investing

An emergency fund is simply money put aside for use in the case of an unplanned expense. For many people it might seem like a luxury, but having a rainy day fund is vital to financial security.

What would you do, for instance, if you lost your current job suddenly?Would you be able to cover your next paycheck without dipping into your savings?

What if your car requires major repairs or you become ill and require medical attention?

You should set aside money in your emergency fund (see also ‘How To Start An Investment Fund‘) to help you get through these situations before investing a large sum such as 100k. 

The same applies If you have high-interest debts, your best strategy is probably to pay them off before making an investment (see also ‘How To Invest Inheritance‘). You want to focus on paying down your highest-interest debts first, since those are the ones that hurt you most.

1. Real Estate Investments 

This is probably the most common way to earn passive income. Buying rental properties might seem complicated, but it actually doesn’t require a lot of work.

By buying houses and apartments that are already rented, you are essentially getting pre-approved for a loan before you’ve ever seen the property.

Once you purchase the home, you’ll receive rent checks every month and you can use those payments to pay off your mortgage.

If you are thinking about buying a house to rent out it might seem like the perfect time to do so. And it may have several tax advantages. 

The Internal Revenue Service allows homeowners to deduct certain costs associated with maintaining a property.

This includes things such as insurance, utilities, maintenance, repairs, and even landscaping. If you live in a high-tax state, however, the amount you can deduct each year is limited.

For example, California residents can claim $1,500 per month in deductions for mortgage interest, whereas New Yorkers can only deduct $750 per month.

And if you want to take advantage of those deductions, you must maintain a primary residence.  

2. Peer-to-Peer Lending Platforms

There are lots of peer-to-peer lending platforms out there such as Lending Club and Prosper. These sites allow investors to lend money to borrowers and get returns (see also ‘What Is The Nominal Rate Of Return On An Investment?‘) based on the interest earned on the loans.

Interest rates vary depending on the borrower, the type of loan, and the term length. As the economy improves, more lenders mean better opportunities for lower interest rates.

3. Equity Crowdfunding 

Another great way to earn passive income is to invest (see also ‘How To Invest $50,000‘) in equity crowdfunding deals. With this method, you invest (see also ‘How To Invest In Royalty Income‘) in small businesses that offer profit sharing plans.

Many startups today rely heavily on social media marketing and word of mouth advertising. Having a strong brand name and good reviews can help entrepreneurs attract customers.

4. Cryptocurrencies

Lastly, another popular choice for earning passive income is cryptocurrency investments (see also ‘How To Invest In Wheat‘). Most people hear about Bitcoin and immediately assume it’s risky.

How To Invest $100K For Passive Income (1)

However, there are many safe places to invest (see also ‘How To Invest In Imperium Stock’) including CDIs, ICOs, and Altcoins. You can also trade cryptocurrencies and collect dividends throughout the year.

5. Create Your Own Product 

Creating products is another great way to earn passive incomes.

Whether you write books, start a YouTube channel, sell t-shirts, or launch a side hustle, there are endless possibilities for how you can generate passive income and lots of options if you have 100k to start with. 

5. Stocks 

Stock investing (see also ‘How To Pick Stocks To Invest In‘) is a great way to diversify your investment portfolio. You can buy shares of companies whose products you use every day, such as Apple, Amazon, or Coca Cola.

This gives you exposure to different industries and helps reduce risk.

You can invest (see also ‘How To Invest In De-Fi‘) directly in a stock market index fund, or you can purchase individual stocks. With individual stocks, you’ll likely see greater volatility than with a broad market index fund.

But it’s possible to find low-cost funds that track popular indices like the S&P 500.

If you want to grow your wealth faster, consider purchasing a dividend growth mutual fund. These funds generally focus on companies that pay dividends regularly.

They typically offer higher yields than regular equity funds, which makes them attractive to investors looking for better return on their money.

Retirement Accounts 

If you’re planning to retire soon, you might want to consider investing your money by converting your current retirement account to a Roth IRA.

This way, you’ll avoid paying taxes on withdrawals later in life. But there are some things to keep in mind before making the switch.

A traditional IRA allows you to save up to $5,500 ($6,500 if you’re 50 or older) per year without having to pay taxes on those contributions.

You don’t have to worry about getting hit with a 10% penalty if you withdraw the money early either.

On the other hand, a Roth IRA (see also ‘Can You Have Multiple Roth IRAs?‘) offers similar benefits—you can put away as much as $5,500 each year, plus whatever additional amounts you’d like.

However, unlike a traditional IRA, once you make a withdrawal from a Roth, it’s considered “income,” meaning you’ll owe taxes on the amount withdrawn. If you decide to pull out the full balance, you’ll face a 40% federal tax penalty.

You can convert a traditional IRA into a Roth anytime. And while you can take advantage of the same annual contribution limits as a Roth, you’re limited to just $1,000 per month.

So even though you’re able to stash away more money in a Roth, you won’t be able to max out your contribution.

To open a Roth IRA, you must be at least 18 years old and have earned income. Once you’ve done that, you can start contributing. Your employer will automatically deduct the amount from your paycheck and deposit it into your Roth IRA.


The blogging industry is booming thanks to the rise of social media and the shift toward mobile devices. Bloggers are starting to make a living off their blogs, creating lucrative businesses out of something they once did just for fun.

In fact, according to HubSpot, bloggers earned $1 billion in advertising revenue alone in 2017. And it doesn’t look like things are slowing down anytime soon.

In 2018, AdWeek reported that advertisers spent $2.4 billion on digital ads, up 12% over 2017. This is good news for those looking to turn their hobby into a side hustle.

You don’t need to be a famous person to start making money online. In fact, most bloggers aren’t even celebrities. They’re regular people who found success by following their passions and turning their hobbies into profitable businesses.

Compound Interest 

Income is one of the three main pillars of financial freedom.

If you want to live like royalty without having to work like one,as mentioned earlier,  building up a portfolio of investment properties could be just what you need.

But before you start buying property, there is something you need to know about the power of compound interest, otherwise known as compounding.

Compound interest simply refers to the fact that every dollar you invest (see also ‘How To Invest 5000 Dollars‘) earns money over time, and that is exactly why it is such a powerful tool for achieving financial success.

If you had $1 million earning 5% annually, compounded monthly, you would end up with $5 million in just 12 months. Imagine what your bank balance would look like after 30 years of compounding at 5%. 

This is where the magic happens. You see, every month you earn money off your original capital, and those earnings grow and multiply each month. So, the longer you let your money work for you, the bigger your fortune becomes.

Now, here is the good news. There is no limit to the amount of money you can make with compounding. All you need to do is take out smaller amounts of money from your account and reinvest them on a regular basis.

So, if you have been putting off taking action on your finances because you think you don’t have enough money, now might be a great time to stop procrastinating and start doing something about it.

Diversify Your Portfolio 

The average investor needs to consider three things when choosing investments: return, risk, and cost. If you’re looking to retire early, save for college tuition, or just build wealth, it’s important to understand what each type of investment offers.

If you want to achieve long-term success, you’ll need to take into account both short-term and long-term performance.

For example, if you plan to retire in 30 years, you might want to focus on investing in companies with strong growth potential while avoiding those with poor prospects.

In addition, there are different risks associated with certain types of investments. For instance, some investments offer high yields, but come with greater volatility and less liquidity compared to others.

This makes it harder to sell the asset quickly, if needed.

Finally, investors need to determine whether they want to pay a premium for the convenience of trading online, or whether they prefer to deal directly with brokers.

A diversified portfolio combines several different kinds of investments to ensure that you don’t put all your eggs in one basket.

However, no single stock or fund should have too much weight in your portfolio. Instead, you should spread out your money among multiple sources.

For example, a common mistake is to hold 10% of your portfolio in equities and 90% in fixed income. While this strategy sounds great because it reduces risk, it limits your upside.

If the market tanks, the value of your bond holdings could plummet along with everything else. Conversely, if interest rates rise, your equity exposure could suffer.

By spreading your money across different types of assets, you can reduce the chance that one sector of the economy will dominate your entire portfolio.


Investing 100k can be nerve racking and It takes discipline and patience to succeed over the long term. But, once you learn how to invest properly, you’ll find yourself building wealth faster than ever before without having to do too much leg work. 

As we mentioned earlier, there’s never been a better time to get started. With low interest rates and historically low inflation, you can borrow money at record lows.

And thanks to technology,you can access markets around the world 24/7 so now’s the time to start building for the future.

Luke Baldwin