I like Acorns and its blog. However, some posts have good ideas but do not really cover the caveats. So today I will talk about some issues about the 6 ways to make money while you sleep.
- High dividend stocks. Also known as dividend aristocrats seem to be good investments but remember that the market already priced in the dividends. Also, you still need to do your due diligence. High dividends are not always a good sign. There is a reason that firms payout this money. Well, it could be being nice to investors but it could also mean that they don’t have much growth opportunities. Plus, remember that dividends can be always cut, do not assume that they are forever.
- Bonds. Yes, typically safe investments. But remember that there is a bond bubble and yields are pretty low. So please do consider the yield.
- Rental properties. Rental properties are also in a bubble. So you might not be getting it cheap. Also, remember that real estate may not be as liquid and you may get a liquidity crunch if you have put substantial amount of money in real estate and you can’t cash out.
- Rewards Credit Cards. Yes, an extra 3-5% return is good when your bank pays you les than 1% in interest. Just make sure you don’t go on a spending binge.
- Peer-to-peer lending. I am a big fan on Lending Club. However, remember that peer-to-peer has not gone through a crisis period, and it is uncertain how it will deal with a shock. Also, p2p investing is not automatic. You still have to do some due diligence to generate reasonable returns.
- Renting unused space. Airbnb is great! This one is easy to do and can generate good income. However, just make sure that it doesn’t become too burdensome and watch out for criminal activities such as prostitution rings and drug deals.