Passive income is the income you earn that requires little or no effort to generate. It provides an additional income source, increases financial security, and ultimately, can help you achieve financial freedom.
Passive income has become increasingly indispensable in the current economic landscape. As inflation rises and global GDP growth tapers, the importance of securing additional stable income cannot be overstated. In such uncertain times, passive income not only enhances financial security but also paves the way towards achieving true financial independence, providing the freedom to explore personal interests.
In this context, The Restack’s alternative investments like Fractional ownership in Commercial Real Estate (CRE) to Real Estate backed Debt investments, present compelling opportunities to unlock the potential of passive income and bolster financial resilience.
While passive income is the dream of many, it does require strategic planning and smart investing. In the following section, we explore some of the top investment options.
Top 5 Investment Options for Passive Income in India
Dividend Stocks:
Dividend stocks are an accessible way for investors to earn passive income. Companies distribute a portion of their earnings back to shareholders in the form of dividends offering a potential steady income stream. However, dividend yields are typically low between 2–6% and are also subject to fluctuations based on company performance, industry trends and stock price.
Bonds:
Bonds are fixed income instruments issued by companies, municipalities, states, and sovereign governments to finance projects and operations. Bonds typically offer interest rates between 6 to 9% with fixed maturity date. Bond Ladder strategy involves building a portfolio of bonds with different maturity dates. The objective is to reduce interest rate risk and increase liquidity. When a bond matures, the investor can either spend the returns or reinvest them, creating a potential source of regular, passive income. There are also bond-related issues to consider, such as default risk, diversification risk and security for these bonds.
Peer-to-Peer Lending:
Through P2P lending platforms, you can lend money to individuals or small businesses in return for interest income. However, this type of investment carries a risk as borrowers may default on their loans. While RBI has set guidelines for P2P NBFCs to minimize such risks, investors also need to understand that associated credit risks can be high.
Index Funds:
Index funds aim to replicate the performance of the chosen index rather than outperform it. Over the long term, investments in Index Funds have the potential to provide a steady return on investment, making them an attractive option for earning passive income through both growth and dividend payouts of 2–4% on average. However, when the market is in a slump, the performance of an index fund would slump right along with it.
Rental Real Estate:
This involves investing in leased commercial properties (like office, warehouse and retail) to earn rental income. While these investments require a larger initial capital and ongoing management, the potential returns are significant through both income yields of ~9% and property appreciation of 4-5% p.a., while offering an excellent safety net through ownership of operating real estate.
The Restack: Your Partner in Passive Income Generation
Among the investment options, real estate stands out due to its robust returns, regular income, property appreciation and relative stability. However, traditional real estate is capital-intensive and requires considerable time and effort to manage. At The Restack, we have harnessed the power of Income producing real estate to make it available to retail investors through fractional investments.
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Debt Investments:
These Debt Investments in Non-convertible debentures (NCDs) are fully secured by real estate assets and offer high fixed returns with monthly/ quarterly interest income of 14-16% p.a. Moreover, the debt investments offered on the platform have a significant security cover upwards of 1.5x – buffering against risks or unforeseen market events.
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Fractional Ownership in Commercial Real Estate:
The Restack offers fractional ownership opportunities in Grade-A commercial real estate. These investments offer rental yields of 9% and property appreciation of 4-7% taking the total returns to up to 16% IRR.
Now earn passive monthly income from fully vetted investments on The Restack marketplace through a seamless digital investing process starting at just INR 10 Lacs.
