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: Investing In Index Funds For Beginners

If you have no clue what an index fund is or how to invest in one, in this post, I answer 7 questions that briefly cover all you need to know to start investing.

Let me begin by saying that investing in the stock market is one of the topics I have been avoiding to get into (there’s a list of them) because of how intimidating it felt. I had absolutely no clue what to do with this and every time I try to read about it, I get a headache!

However, eventually, I reached a dead end because I couldn’t find another topic for this week. And I figured I’ll have to get into this eventually if I wanted to properly create a diversified investment portfolio.

If you look at any established investor, you will find that they have to have money in the stock market, one way or another.

Diversification is a protection against ignorance.

Warren Buffett

But since I am a beginner, I’m not going to jump in and start buying individual stocks all by myself, then cross my fingers and hope for the best. I figured I should start with the beginner’s level for stock investments: Index Funds.

Investing in index funds is the easy and safer route to take if you want to invest in the stock market but lack the experience and knowledge it takes, or if you simply don’t feel like taking the risk.

And it seemed like the second best investment to get into after real estate for me. So I decided to look more into this as someone who has never been anywhere near the world of stock market.

If you too have no idea how to start in this kind of investment and maybe considering giving it a try, then this post is for you.


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What are index funds?

An index fund is a type of mutual funds, it is like a collection of funds that follow the performance of a number of different markets/companies, packaged together into a single fund called an index fund.

So, instead of making a choice and buying a fund in individual stock (which requires a great knowledge of that specific stock and its chances of rising or falling in price), you buy a bunch of them into one single fund.

This means more exposure to the stock market, however, with less risk.

Who should invest in index funds?

Anyone can invest in index funds, you don’t need to have extensive knowledge in the stock market as a whole.

You do, however, need to have some basic understanding of how this works and how to choose where to buy your index funds and which funds to buy.

The lower the price of the fund and the account expenses, the higher the profit you will make. And the more broad and diverse the stocks held by the index fund, the less likely you are to face losses.

You also need to know that investing in index funds is mostly a long term investment. Meaning that you need to be willing to hold on to that fund for a while (5-10 years and sometimes more) before you see real profits.

This is usually the long-term investment suggested for retirement, similar to retirement accounts.

What are the types of index funds?

Index funds can be classified into:

  1. Stock index funds
  2. Bond index funds
  3. Commodity index funds

In this post, I’m mainly focusing on the stock index funds. However, I briefly went over the commodity ones in both Investing In Gold (ETFs & stocks)and Investing In Real Estate (funds). You can check them out for a quick overview.

As for stock index funds, these can also be classified into a number of types:

1. Broad market index fund

This is when an index fund is following the performance of an entire market. Famous examples of such funds are ones following the performance of the S&P 500 or Dow Jones.

2. Sector index fund

This is an index fund that follows the performance/profits of a certain industry in the country, such as the banking sector, the real estate sector, or a more broad sector like technology, etc.

3. International index fund

This one is an index fund that follows a number of companies from different countries.

It does not follow the performance of the stock market of these countries, but the performance of the companies whose stocks are part of the fund.

4. Global index fund

This follows the performance of the stock market of a number of countries. This index fund has main stocks from different nations, such as the FTSE 100 for Britain or the EGX 30 for Egypt.

How to choose an index fund?

There are a few things you need to consider and decide on before you take the step and buy an index fund.

Type

First thing you need to decide which type of stock you want to follow.

Do you want to follow the global stock for multiple countries? Or would you rather go for a certain industry’s performance, like banking? Or ones that track currencies or metals, like gold and silver?

There are plenty of options, and if you are not sure which one is to choose, you should go for ones that cover a bigger and broader market.

Fees

Before you buy an index fund, you should check first what kind of fees you will need to pay.

There are commission fees that gets deducted from your profits periodically, you may need to check the percentage and see if it is low enough for you to still be making a profit.

There are also some brokers or index fund companies that charge you to create an account, you will also want to consider this charge.

One last thing is the trading charges. How much you will need to pay to buy or sell your funds (you can buy or sell an index fund at the end of the trading day only).

Broker

In most cases, you will need to buy a certain index fund through a broker or a brokerage firm. You can invest through a brokerage firm locally or go with an online broker.

It is important that you first research this broker and read what other clients have to say about their service.

You can read more about how to choose the right broker here. Or you can find out about international online brokers instead.

How much money do you need to invest in index funds?

Investing in an index fund is known for its low cost. And this is because it is basically holding all the stocks in one package instead of hiring a professional to pick the right stocks to buy. So, that leaves you with not much expenses to pay.

The price for an index fund varies based on where you are buying it from and which fund type you are going to invest in.

Some index funds has no minimum amount required to start and others can have a minimum starting amount of $2000, $3000, or more.

So you can invest with an amount anywhere between $10 and $10,000. But it goes without saying that the more money you put in, the more profit you will make along the years.

However, you can start out with a small amount and keep adding to it every few months or so. You can check this list of the cheapest index funds to buy.

If you invest in a very low cost index fund-where you don’t put the money in at one time, but average in over 10 years-you’ll do better than 90% of the people who started investing at the same time.

Warren Buffett

What are the best index funds to buy in 2019?

Since I’m no expert, I did what any beginner would do and started doing research. And I found that there are a number of index funds that are always at the top of every list of best index funds to invest in. They are mostly the ones with the lowest fees and low to moderate charge for opening an account.

This is a list of index funds that are suggested by most stock experts/advisers (in order from lowest to highest annual expense ratio).

  1. Fidelity Spartan 500 (0.015%)
  2. Schwab S&P 500 (0.02%)
  3. Schwab Total Stock Market (0.03%)
  4. Vanguard S&P 500 (0.04%)
  5. iShares Core S&P 500 (0.04%)
  6. Vanguard Total Stock Market (0.04%)
  7. Vanguard Total World Stock (0.10%)
  8. Bloomberg Barclays High Yield Bond (0.4%)

Some of these funds you can invest in from anywhere in the world; however, depending on your country, you may need to invest through a local brokerage firm and not directly through the index fund provider.

What are the available index funds in Egypt?

As one of the largest and most developed countries in the MENA region, Egypt has a huge potential for economical growth and many opportunities for investment.

If you are a resident of Egypt and want to know which funds you can invest in locally, or if you are not a resident and simply want to invest in funds in Egypt, below is a list of some of the funds you can consider:

You can also check this article out to have an idea of the top ranking funds in Egypt for this past year and how much profit each made.

Till next week, happy days!

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Passive Income: 4 Real Estate Investing Options

This post introduces the meaning of passive income, the different sources where you can achieve it, and 4 ways through which you can invest in real estate as a passive income option.

Real estate is considered one of the major sources of generating passive income. Anyone who is looking to get into the realm of financial freedom has to have real estate at the top of their investments list.

However, not everyone knows how to get involved in this business and most people think that you need to have a huge capital to start in such investment, but this is not true.

In this post, you will learn more about passive income in general, plus 4 different ways you can invest in real estate depending on how much money you are willing to start with.


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First, What Is Passive Income?

Passive income is income resulting from cash flow received on a regular basis, requiring minimal to no effort by the recipient to maintain it.
Some of them, however, would require quite the effort in the beginning, just to give it the required push to start off, and then it starts giving you that regular income later on.

What Are Some Passive Income Sources?

After lots of research and comparisons, I was able to come up with the below list. I would say most of them are safe methods, ones that has the least amount of risk and don’t really require a crazy amount of money to start. This is not everything out there, but those are the ones I found so far which seemed possible to start with. I will be adding more along the way.

Here are the risk-free ones (in no particular order):

  • Real estate investments
  • Google AdSense/Affiliates
  • Online business
  • Retirement accounts

And then there are the methods which can be a little bit risky, but not so much if you know what you’re doing:

  • Real estate investments
  • Stock market
  • Index funds

Ho Do You Choose The One To Start With?

When it comes to making a choice, you would mostly just need to check which of these options you can afford or which of them you have the access to try and invest in. Also, if you already have some sort of knowledge or know someone who can help you get started.

For me, I decided to start with the real estate investment option. And I have listed the real estate option in both the safe category and the not-so-safe one, this is because investing in real estate has multiple methods, some of which can be risky and costly, but others not so much. I will briefly explain the details of each one below.

The 4 Real Estate Investing Options

1. Buying Property

This is the typical type of real estate investment where you would need to have a sum of money that is enough to buy a property (residential, industrial, or commercial) and you would then decide to either rent it and have a fixed monthly income or renovate and sell it with a higher price.
You can check out this video on how to buy at a lower cost so you can make a profit in reselling.

Usually the trick in this one is that it could take a long time to find a buyer for a property; and if you rent, you may end up with tenants who do not pay. So, it’s got a bit of risk to it if you’re not experienced in that field I guess.

Learn how to choose the right property for investment.

2. Real Estate Funds

And there are three types of funds: there is the Exchange Traded Funds (ETF), the Real Estate Mutual Funds, and the Real Estate Investment Trusts (REITs).

ETF and Mutual Funds are somewhat similar in many aspects. However, deciding on which fund to invest in would typically rely on the cost vs the profit you will get, and also the flexibility of the trading and how long you plan to hold your shares. If you’re interested in the topic, you can find a more in-depth comparison between the two here

A REIT, however, is a company that owns, develops, and manages real estate properties that produce income. The benefits of investing in REITs include their lower investment entry costs;  and that they are highly flexible, allowing investors to invest in a range of real estate from commercial properties to shopping malls. Check out this article for a comparison between REITs and Mutual Funds including their pros and cons.

Interestingly, I found out that real estate funds were only introduced last year in Egypt (where I live) and apparently there are only two launched at the moment one of them is Naeem Holding fund which provides an annual profit of 26%; and they accept both local and foreign investors with minimum share price of LE 50K. And it looks like there will be more launching soon too. (I am so excited!) More on this here.

3. Online Real Estate Investment

I came across this gem of an option, but sadly I couldn’t find one that accepts funds from where I live (and I will be saying this sentence frequently along the way).

Basically these are online websites where you can buy shares with whatever amount you want, starting with as little as $100 for some websites, and they search for properties to buy and sell and you get an annual profit.

For example, I found this website called Fundrise where you can start investing with $500 and it is not required to be a professional like other websites. This one is limited to investments from U.S. residents only, though. I couldn’t try it, but I have read a lot about it and they were mostly good reviews. There are plenty of other similar websites listed here.

4. Home Construction Companies

This would be investing in a company that builds houses. You can find homebuilder companies in your city or online. And this is the real estate investment option I started with. 

I myself am not a realtor and I cannot afford something like buying a property to rent or renovate and sell, for example. (And I only found out about the Egyptian real estate funds when I was writing this post, so it was a bit too late..)

However, luckily, I found another way to get involved in real estate investments which is through a local construction company where I can buy shares and they use the money I pay along with many other investors to build properties and then sell them; and the investors get a fixed amount of yearly profit.

It was easy for me to choose this one also because I already knew a realtor in that company. I started with the least amount of money to buy only one share for LE 50K (that is about $2800) which is all the money I had on me, literally. And I could have waited until I had some extra money, but I thought the earlier I start, the earlier I will be getting a revenue, and so I just did it.

It is hassle-free and almost risk-free, so it is a good start for me to have some kind of investment to generate a passive income. My plan is that throughout this coming year, I would try and save up money so by the next year I would be able to buy a second share.

(Side note: I would not recommend spending all you have on a single investment option unless you are certain that it is a safe and trusted investment. I did that because 1. I know the people involved and know people who are long-term investors with them, and 2. I knew if I’d kept that money it would have been spent on meaningless stuff especially since it’s SALES season!)

The best time to plant a tree was 20 years ago. The second best time to plant a tree is today.

Chinese Proverb
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The other investment options I’m considering

One of the other passive income options mentioned in the lists above which I also find interesting is the index funds. Index funding is a type of mutual fund with a portfolio constructed to match or track the components of a market index. It is said to provide broad market exposure, low operating expenses, and low portfolio turnover.

I’m planning on trying this as a next step. I’m currently still searching for the best index fund to invest in in Egypt. But the good thing is there are options to invest in international index funds even if you are not a resident of the country.

Although, it seems to have a more complicated procedure, but it is possible. So, I will be doing more research on the matter and will be sharing my findings in a later post.

The other passive income option which I found possible and somewhat easy to start is the online business. Online business however is an umbrella term for a huge number of businesses that you can try.

In my next post,  I will be sharing all the online businesses that most people sort of have agreed to have been the most helpful and which ones I myself have tried so far.

Till then, happy days!

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