Passive income is becoming increasingly popular with young investors (and other investors). Dividends are a great way to receive some of the investment returns and in this article, I'll talk about some of my favourite things about passive income.
That's an interesting result and shows things have certainly changed from a couple of years ago.
More options available
There are a variety of different options for people to utilise to generate good passive income these days such as savings accounts, term deposits, bonds, property, ASX shares and so on.
Interest rates have jumped higher and now we're able to get a better level of passive income in most places.
I love that I'm now able to get a solid amount of interest from my savings accounts.
Why is passive income so attractive?
The idea of passive income is that we don't need to do any ongoing work to generate that money.
Once the money is in the savings account, the bank just pays the interest each month.
We don't need to work in the businesses we're invested in for it to make a profit or pay dividends to us.
I can only write so many articles in a week, but the passive income from ASX dividend shares could (in theory) be significantly more than what I earn from my work. Obviously, I need to do the hard work of earning money to invest and then choose the investment. But I don't need to lift a finger for those ongoing dividend payments to hit my bank account each year.
Not all the income eggs are in one basket
A lot of the Australian adult population works to make a living. A household may be entirely reliant on their job to pay the bills, afford holidays, get a pet and so on.
How awesome would it be for a household's income to be supplemented by passive investment income?
What if passive income could pay for a tenth of a household's expenditure? A quarter? Half? All of it?
If a household didn't have to rely on their job, they could invest some time in education/skills to improve their earning potential. Someone could choose a job they'd prefer to do, even if it didn't pay as much. Financial independence could mean someone didn't have to work at all, if their finances (conservatively) allowed that.
Diversifying our income seems like a smart thing to do so that we're not so reliant on that particular work, especially if the earnings are relatively short-term (such as for sports stars), cyclical or not reliable in some way.
I continue to invest regularly in ASX dividend shares from the S&P/ASX 200 Index (ASX: XJO) which I believe can pay me growing passive investment income for the foreseeable future.