The rankings are somewhat subjective, but they are born from my own real-life experiences attempting to generate multiple types of passive income sources over the past 20 years.

The passive income journey is a long one. But because of innovation and technology, the power to get a meaningful passive income is accelerating!

Passive Income Starts With Saving

Generally speaking, it’s much more pleasurable to spend than to save. If saving was easy, we’d never need to read another story again a few multimillionaires who ended up broke.

By far the foremost important reason to save lots of is so you’ll have enough money to try to what you would like, once you want, without anybody telling you what to try to. Financial freedom is the best!

Sounds nice right? If only there was a formula or a chart like the 401k by Age chart which gives people guidance on how much to save and for how long in order to reach financial freedom. Unfortunately, saving money is merely the primary step in building a passive income. Figuring out the way to properly invest your savings is even more important.

If you’ll reach your 401k or reach your IRA then save a further 20%+ of your after-tax, after-retirement contribution, goodies really start to happen. It is your taxable retirement income that is going to allow you to retire early and do whatever you want.

Ranking Various Passive Income Investments

Below are eight main passive income investments to think about. Each passive income stream is going to be ranked supported Risk, Return, Feasibility, Liquidity, and Activity. Each criterion will get a score of between 1-10. The higher the score, the better.

  • A Risk Score of 10 means no risk.
  • A Return Score of 1 means the returns are horrible compared to the risk-free rate.
  • A Feasibility score of 10 means everybody can do it.
  • A Liquidity Score of 1 means it’s very difficult to withdraw your money without a massive penalty.
  • An Activity Score of 10 means you can kick back and do nothing to earn income.

To make the ranking as realistic as possible, every score is relative to every other. Furthermore, the return criteria are predicated off trying to get $10,000 a year in passive income.

Certificate of Deposit (CD) / Money Market:

  • Risk: 10 (no risk)
  • Return: 3 (as rates have increased)
  • Feasibility: 10
  • Liquidity: 6
  • Activity: 10

     Total Score: 39

Fixed Income / Bonds

  • Risk: 8
  • Return: 5
  • Feasibility: 10
  • Liquidity: 8
  • Activity: 9

Total Score: 40

 

Physical Real Estate

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

Total Score: 29

Peer-to-Peer Lending (P2P)

  • Risk: 5
  • Return: 6
  • Feasibility: 9
  • Liquidity: 6
  • Activity: 8

Total Score: 3

Dividend Investing

  • Risk: 6
  • Return: 7
  • Feasibility: 10
  • Liquidity: 8
  • Activity: 10

Total Score: 41

Private Equity Investing

  • Risk: 4
  • Return: 7
  • Feasibility: 4
  • Liquidity: 2
  • Activity: 10

Total Score 27

Real Estate Crowd sourcing

  • Risk: 7
  • Return: 8
  • Feasibility: 10
  • Liquidity: 7
  • Activity: 10

Total Score: 42

Creating Your Own Products

  • Risk: 10
  • Return: 9
  • Feasibility: 7
  • Liquidity: 8
  • Activity: 9

Total Score: 43