Passive Income: 5 Ways To Invest Small Amounts Of Money (From $500 To $0)

If you think you must have a lot of money before you can start investing to generate passive income, think again, because in this post you will find 5 different methods through which you can invest your money with amounts as little as $0!

Many people are aware that they should invest their money to be able to secure their future and create a better life for themselves and their families.

But many people also assume that in order to be able to start investing and create a passive income source for themselves, they need to have a lot of money first, and that is a wrong perception.

If you really want to start investing and create some passive income sources for yourself, you can start investing right this second. Even if you have $0 in your bank account.


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Investing if you have anything between $500 and $50

1. Mutual funds

Investing in a mutual fund is like investing in a large group of stocks. The money is pooled from multiple investors to invest in these assets.

Many mutual funds require thousands of dollars as a minimum investment, but there are some that can be as low as $50.

What you will need to do to know if this is a good fund for investment or not is to track this fund’s performance over the years to see its pattern and how and when the rates of interest are affected.

You would also want to pay attention to the annual fees deducted from your account and compare it to the interest you would be getting to make sure that the fees are not too high.

While investing a 50$ in a mutual fund, where maybe your annual interest would be something around 7%-10% for most funds, does not seem like much of profit maker, if you can manage to increase this amount over time, like maybe add $50 every month to your profile, this would create a much better profit over time.

You may also want to read this breakdown of how studying the history of a certain fund and investing something as little as $500 can make you more than $520,000.

2. Real estate crowdfunding

Real estate crowdfunding is defined as an online pooling of capital from investors to fund mortgages secured by real estate, such as redevelopment of distressed or abandoned properties, equity for commercial and residential projects, acquisition of pools of distressed mortgages, home buyer downpayments and similar real estate related outlets.

So for someone who is looking to invest a small amount of money, there are a number of crowdfunding websites that work on connecting investors to these kinds of projects that need funding in exchange for a profit from the project.

One of the most well-known real estate crowdfunding websites is Fundraise where you could start with only $500 to invest in real estate and start gaining annual profits. For similar real estate online investing options check this article.
You can also find crowdfunding websites that would accept investments for as little as $100.

The above options are mostly available for US residents only, though. For European countries, you can check the options listed here.

I haven’t been able to find ones that would accept funds from other countries (specifically Egypt since this is where I am), if you happen to pass across one, please let me know in the comments.

3. Retirement account

A retirement account is a form of individual retirement plan, provided by many financial institutions, that provides tax advantages for retirement savings.

In the US, there is the 401(k) which in most cases is available for employees through their employers, and the good thing about this is that you can actually decide how much money you would like to have deducted from your salary to put into this account.

You also get to choose the kind of investment you would like to have your money put into. Investment options available include individual stocks, mutual funds, and ETFs. You can read more about the benefits of this plan here.

So if you do have that provided through your job, you already have an investment going, you should just decide how much of your salary you would like to deduct to make for a better long-term profit.

However, if you don’t have a retirement account, you probably should. You can start your own retirement plan by following the steps in this article.

Here, in Egypt, it’s not the same process. Because what employees get is mainly a pension. It is a fund into which a sum of money is added during an employee’s employment years, and from which payments are drawn to support the person’s retirement from work in the form of periodic payments.

So I would suggest starting your own retirement plan through any of the available insurance companies. I am more inclined to registering with ones that are advertised through banks, I don’t know if this makes any difference integrity-wise or security-wise, but it’s just a personal preference.

Some well-known examples include AXA (through CIB) and Allianz (through Emirates NBD). Some of these plans you can start with as little as a 600-pound payment per month.

Investing if you have $0

Now let’s say you don’t even have a dollar/pound to spare, you literally have no money, can you not start an investment that can bring you passive income?

Of course you can!

4. Airbnb

This is a company that facilitates tourists’ stay in a country by providing them with an online service to rent apartments, rooms, and hostel beds, etc, for the short period of their stay.

The best thing about Aribnb is that you don’t need to have a spare house to be able to make money renting, you can simply rent a room in the house you already live in and gain income with literally no extra cost on your part.

What you will be required to provide your guests with will all be things that you already have in your house which are the basic amenities for living.

You can read more about the requirements here.

One other great thing about Airbnb is that even if you don’t have a spare room at your place, you can still make money with them through providing an experience instead.

This is not exactly a passive investment; however, I couldn’t bring up Airbnb and not mention it, since you will be making really easy money.

An experience, as defined by Airbnb, is an activity designed and led by inspiring locals. They go beyond typical tours or classes by immersing guests in each host’s unique world. It’s an opportunity for anyone to share their hobbies, skills, or expertise without needing an extra room.

So, offering an experience can be anything from cooking them traditional home made dishes to taking them on special tours in places they wouldn’t be able to reach on their own, and many more examples.

This would be an easy and fun way to earn money. If you want to learn more about how you can easily make money with Airbnb, you can read this article I published earlier Passive Income: How To Make Money With Airbnb 

5. Use your skills

If you have certain skills that can be put into use (or are willing to learn) this could be a great source of passive income for you. But what kind of things can you create that would help you generate passive income?

5.1 The world of design

Design can be in more than one form. If you are a web designer, for example, you could create and sell website themes. You can find here the best markets where you could sell your themes.

If you’re a graphic designer, you have various options to make money, you can design and sell book covers, or printables that you can provide as PDF files (downloadable material) such as calendars and planners, or even create print-on-demand designs for notebooks, T-shirts, and mugs, etc..

5.2 Photography

You can make money simply by taking photos and putting them up for sale on the various websites available such as iStockphoto or Shutterstock.

All it takes is the camera which is already in your phone, given that most smartphones at the moment have a good camera quality, and a few videos, like this one, to help you take good photos, and probably some passion for photography in the first place.

5.3 Create an online course

Another option where you can make passive income is if you put together an online course. If you have a particular skill or an expertise in any field, you can put together a course material and upload it as a series of lessons on a teaching website. And every time someone enrolls in this course you get paid.

There are plenty of websites available where you could create and sell such course. Teachable is one great example where you would also find resources and a lot of useful material to help you create a professional looking course.

5.4 Write an ebook

The last and probably most time consuming option (maybe it’s a tie with the online course) on this list is to create an ebook.

This can be something as simple as a how-to guide to walk someone through using a certain device or create something DIY or anything else that you think someone might need help with and is not already available or that you think you can deliver in a better and easier way.

Or you can create a more in-depth book where you share extensive information through your knowledge and experience in a certain topic. Check this list of websites to see where you can sell your ebook.

You can also find more details on how to make money online in Passive Income: 5 Online Businesses That Work

Till next week, happy days!

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Passive Income: How To Make Money With Airbnb

In this post, I answer 7 questions that cover everything you need to know to start making money with Airbnb.

Previously, in the Passive Income: 4 Real Estate Investing Options post, I wrote about some of the many ways one can invest in real estate. And one of the methods mentioned there was buying a property and putting it up for rent.

Renting a property gives you a steady passive income source. However, some of the downsides to this was 1. you may end up with tenants who don’t pay and 2. the amount of money involved to actually buy a property.

But what if you can rent a spare room in the house you already live in and with a guaranteed payment?

Recently, I came across an ad for Airbnb, and I didn’t actually know much about the service other than that it’s one that provides houses for tourists and such.

I also didn’t know that the service was available in Egypt, which it is!


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1. What is Airbnb?

This is an American company that facilitates tourists’ stay in a country by providing them with an online service to rent apartments, rooms, and hostel beds, etc, for the short period of their stay.

The apartments and rooms available for rent is provided by the locals of that country. They put their available properties up for rent on the Airbnb website, and they get contacted once a tourist is interested in renting their place.

The website provides customizable search options for the guest to find the exact type of property with all the amenities they need. And it gives the host the option to set house rules for the guests to know and agree on before booking.

What you can provide as a host:

1. Place

You can list any kind of property. It can be a shared room, a private room, or an entire house.

The place needs to be clean, secure, and have essential amenities like a pillow and a towel for each guest. You can read more about the basic requirements for hosting here.

2. Experience

Airbnb Experiences are activities designed by locals. They go beyond typical tours or classes by immersing guests in a special kind of activity that they wouldn’t be able to experience on their own.

It’s an opportunity for anyone to share their hobbies, skills, or expertise without needing an extra room. Read more about experience hosting here.

2. Why do tourists use Airbnb instead of hotels?

For the tourists who are looking to spend a short time in your country, most of them want to get the most out of their stay with the least amount of money possible. Airbnb provides them with this option when they put properties or rooms for rent at quite low prices compared to any hotel room in that same area.

It also gives the tourist the ability to live like locals in the country which maximizes their experience.

Besides, many Airbnb hosts provide their guests with more than just a stay, but they help them make the most out of their stay by advising them of places to visit that only a local in that area would know.

That is of course beside the ability to actually book an experience; something that you can only have when touring with a local.

People don’t use Airbnb overtly to trust people more. They use it because they want to get a better sense of the culture and to save money. A by-product was that they live in someone else’s shoes.

Brian Chesky

3. How is Airbnb different from traditional renting?

There are huge advantages to renting through Airbnb instead of the traditional renting, but there can also be some disadvantages.

Advantages:

Guaranteed Payment

As opposed to renting your house the traditional way where you can face an issue like a non-paying tenant, when you rent through Airbnb, you will never have to deal with this kind of hassle because they handle all payments for you. And the guest makes the full payment through the website in advance.

Host Guarantee

Airbnb have insurance programs which secures you and your house in the rare case of any incident occurring that causes damage or injury.

Whenever a guest makes a reservation and stays at your place, you’re automatically covered by their Host Guarantee. You can read more about the terms and conditions of benefiting from this here.

Home Insurance

Host Protection Insurance program provides primary liability coverage of up to $1 million USD per occurrence. The program protects against liability claims that happen in a listing, or on an Airbnb property, during a stay.

You can read more about what is covered by this program here.

Experience Insurance

Experience protection insurance provides experience hosts with free liability insurance of up to $1 million USD to protect against personal injury or property damage claims.

You can read more about what is covered by this insurance here.

Disadvantages

Not a stable source of income

Unlike renting a house to a resident who is going to live there for at least a year and possibly more, renting to tourists will not provide you with that monthly stable income.

Some people can have guests booking their place every month but that is not necessarily the case with every host.

How often you would get a booking would mostly depend on the location of your place (how close it is from sightseeing areas that tourists would be interested in) and how appealing it is (the reviews you get).

Possible damage

There is still the possibility that you might encounter damage that is not covered by the Airbnb Insurance.

4. Is Airbnb safe?

This was an obvious concern when I first learned about the service. If you have a spare room that you want to put up for rent, is it really safe for you to invite complete strangers into your house? Or if you are the one looking for a place to stay, would you feel safe staying with a complete stranger in a foreign country?

“On any given night, 2 million people stay in homes on Airbnb in 81,000 cities all over the world. There are nearly 5 million listings in 191 countries to choose from —that’s more than the top five hotel chains combined.”

So how did this service actually manage to get so popular and have millions of users around the world, whether hosts or tourists? How do all these people trust this kind of service and feel safe using it?

Here are some of the measures taken to provide safety for the host:

They run hosts and guests against regulatory, terrorist, and sanctions watchlists. And for hosts and guests in the United States, they also conduct background checks.

Every guest is asked to provide their full name, date of birth, photo, phone number, email address, and payment information to Airbnb before booking. Home hosts also have the option to require guests to provide Airbnb with a government ID before booking their listing.

Reading reviews from previous bookings from that guest and what other hosts had to say about their stay with them can also be helpful. These reviews can only be added after the reservation is complete; so they are based on actual experience.

Every Airbnb reservation is scored for risk before it’s confirmed. They use predictive analytics and machine learning to instantly evaluate hundreds of signals that help flag and investigate suspicious activity before it happens.

And their customer service is available 24/7 in 11 languages.

You can read more about the Airbnb terms of safety and protection for both hosts and guests here.

Airbnb has proven that hospitality, generosity, and the simple act of trust between strangers can go a long way.

Joe Gebbia

5. Is Airbnb legal?

The service is legal to use in Egypt, so far. However, Airbnb services has been banned by a number of cities and countries due to housing and rental shortage and pricing issues.

So you will need to check whether or not it is legal to use this service in your city before you list your property for rental.

6. How do you become an Airbnb host?

All you need to do is visit their website to sign up and list your property for free.

When listing your property you will be asked to specify all the available amenities and facilities provided, and of course the exact address of the property.

You will then need to provide photos of the place and a short description for the guest to know what to expect.

After that you will have the option to set the price you want, the timing and duration this place is available for rent, any requirements you look for in the guests you will host, and any house rules you want them to follow during their stay.

You are also asked to provide your personal details, such as your full name, your phone number and your ID for verification.

There is a very good article I read by someone who has been an Airbnb host for a few years, advising on how to be a great host, you can read it here.

7. How do you get paid with Airbnb?

First, Airbnb takes a commission fee of 3% from the payment you receive as the host (and between 6%-12% from the guest booking).

As mentioned earlier, guests make the full payment for their stay through the Airbnb website in advance. This payment is held for 24 hours after their check-in, which is the time the guest has to report to the company if there’s anything wrong with the booking or if they couldn’t reach you, the host, in which case the money will be refunded to the guest.

However, in the normal case where you are there for the guest or provided the key for them, following whatever scenario you’ve both agreed on beforehand, you will have your money transferred to you after the 24 hours.

There are several payment options provided. You can have the payment sent to your Paypal or Payoneer accounts, or you can have it directly deposited into your bank account, or it can be mailed to you as a check. The time of the transfer will vary based on the method you choose.

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Conclusion

This is a service that can certainly make a difference to your income with little to no effort on your part. It can also be fun for you, if you like to meet new people from different countries and make connections.

And while using this service can come with a potential risk, especially if you will be sharing the place you live in; however, you still have control over the guests you accept and you can ask for all the information you need about them before confirming their booking.

It will be less risky if you will rent a spare property, as long as you make sure you keep any personal or valuable belongings in a safe place (preferably not in the same house).

For me, I think this can be a really good source to increase my income and I do love meeting people of different nationalities. So I plan on trying this myself soon and will be sharing my experience in a later post once I have had my first guest.

Till next week, happy days!

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