Home - Passive Income

Passive income is money received on a regular basis with little effort required to maintain it. Examples would be interest from savings, adverts on web sites, company shares and mini-bonds.

  1. Savings. To earn from any normal savings account, you first must have cash to put in it. Unfortunately since the crash of 2008, the maximum interest is between 0.1% ~ 1%. Some will go as high as 3% if you are prepared to lock your money away for a few years. You also run the risk of a "haircut" where a bank runs into trouble and takes some of your money eg Cyprus. I only keep a small amount in my savings accounts for emergency bills.

  2. P2P (Peer 2 Peer) Lending has come of age. The first one was zopa and it was closely followed by a few others.

    • ZOPA was started in 2005 headed up by Giles Andrews.
      • They allow you to lend cash directly to other people.
      • You only lend £10 to each person so if they default you only lose that £10.
      • They have two levels of interest: zopa Classic at approx 3.0% and the slightly riskier zopa Plus at approx 5.0%.
      • They return your principle and interest daily into a holding account.
      • You can choose to automatically re-lend this or transfer it into your bank account.
      • A good technique is to keep a few thousand £ in your holding account for emergencies.
      • ZOPA means Zone Of Possible Agreement.
      • I have been using them since 2006 with no complaints.
      • They have a party in London every year where you get to meet the founders and other users.

    • Funding Circle
      • They allow you to lend cash directly to companies.
      • Returns are typically between 6% ~ 8.2%
      • They have an Investors meeting every year in London.

    • Lend Invest
      • Invest in secured property loans.
      • Return on Investment is typically between 5.0% (often) ~ 8.0% (rare)
      • The principle and interest are paid at the end of the month.
      • Terms are typically 10~14 months. Some get paid back early, some late.

  3. Stocks, Shares and Bonds

    • CrowdCube allows you to invest in start-ups. They offer three ways to do this.
      • Equity. The minimum investment is £10 and has a high risk of default.
      • Mini-Bonds are basicaslly a loan. You will typicaly earn 8% per year for 4 years. The minimum investment is £500 and is taken from your account by either Direct Debit (GoCardless) or Credit card (Stripe). NOTE: These seem to be losing popularity and may well be stopped. Mini-Bonds are low (NOT ZERO) risk.
      • Venture Fund. The minimum investment is £2,500 - I think this has been stopped.

    • Rockstar Hubs International.
      • 100% over 4~14 months via founders Club.
      • The entrance fee is £5,000 which allows members to provide R1 seed investment to start-ups and when the start-ups receive R2 funding, the R1 investors get £10,000 back. I paid into this in 2016 and await the payback.

  4. Adverts and affiliate links

    • You need to have a website or a blog for this to work.
    • Adverts can be supplied by AdSense. They supply some HTML code that you copy into your website. When a visitor clicks an advert on your site, you get paid a tiny amount, typically £0.01 ~ £0.10. Don't click your own adverts !
    • Affiliate Links are similar to adverts except they encourage visitors to leave your site to join another. When they do you get a percentage. At the lower end is Amazon who pay about 5%. At the top end are Gambling Sites who can pay upto £100 for referring a paying member.