Passive Income Barriers

Many Americans, especially younger generations, say they want their investments to generate additional income in the short term. According to a recent survey of American investors by Connect Invest, investors care about high returns and stability when investing, which is not very surprising as most investors are looking for more profitable returns. But what was most important to them was earning passive income. 

The popular definition for Passive income is “income resulting from receiving cash flow regularly, requiring minimal to no effort by the recipient to maintain it.” The key things to take from this are: “receiving cash regularly” and “minimal to no effort.” Passive income is money that flows in at regular intervals without the need for any added effort in generating it. The problem with passive income is that it is not so easy to find investment options that require little to no effort.

Barriers to Earning Passive Income

Passive income, while desirable, poses a variety of barriers for investors to overcome that ultimately lead to an investment that requires no effort to maintain and brings in returns regularly. Below, we’ll walk through some of the common barriers to earning passive income to help you understand how to incorporate a better investment strategy, allowing you to gain additional income regularly with minimal to no effort. 

1.Knowledge

Like other investments, research and due diligence should be part of the process. This means that you should always consider what your goal is, the risks that may be associated, and what your exit strategy would be before spending your hard-earned money. 

However, as more investment vehicles are entering the market, especially with the rise of fintech and blockchain, there are more details to learn, more processes to adapt to and more options than ever, making it more challenging to make decisions. Our survey of American investors showed that Gen Z and Millennials are often struggling the most to determine just where to start with their investing strategy. And by throwing alternative investments into the mix, on top of traditional banking options and stock markets, is enough to make any investor's head spin, let alone an inexperienced investor. 

Our advice is to start small and not to put all your eggs in one basket but spread out your investments across several options and adjust as you learn more about your options and the markets you're involved in. Additionally, consider investment platforms that make it easy for you to understand and do most of the work for you with little to no overhead fees. 

2. Capital

You may have likely heard the phrase, "it takes money to make money,” and have often thought about high-net-worth individuals or institutions and millions of dollars. What you may not know is that it is not exactly true. It is true that you need capital to invest, but the amount can be as much or as little as you are willing to invest. Our survey of American investors showed that the two top barriers to investing are lack of knowledge and lack of capital, and most investors do not believe they have enough to begin investing. 

Investing with traditional banks does not often provide the higher level of returns you might be looking for when pursuing passive income strategies - it just takes too long. If you are worried about not having enough capital, look for investment options that have a low barrier to entry, and start there. If you are looking for additional income, do not spend too much time waiting for more money to invest - let your money work for you.  

Fixed-income investments are a great place to start if you are worried about capital. Fixed-income offerings, like Connect Invest, provide you with a low barrier of entry method for generating stable and predictable returns in short time frames - letting your money grow for you, with little to no effort, i.e. passive income in your pocket! 

3. Time

Most investors considering passive income, especially retail investors, want to see returns sooner rather than later. Many investors would like shorter terms and investments that they can cash out within two years or less. If you’re looking for a passive income strategy, you’re likely trying to bring in additional income every month, i.e. very short-term. An effective way to do this is to invest in an offering that gives you expected monthly returns at a fixed rate and provides you with a defined exit date. 

4. Access

Investment opportunities that are effective in helping you reach your financial goals are often dismissed because they are thought of as “only for high-net-worth investors”. 

Investors, experienced or not, have concerns about access to investment opportunities, so you are not alone if this is a concern for you. You may have the capital, the investment goal and the length of time figured out, but are unsure where to invest outside of traditional banks and financial advisors. Well, as we mentioned before, options are available to you that do not require overhead fees, so you can get started by simply creating an account, funding it, and watching your monthly returns roll in. 

Connect Invest, for example, is an all-servicing investment tool that was designed to be accessible and easy to use.

How can you make passive income with Connect Invest? 

Connect invest provides an easy and flexible investment option to start generating passive income through Short Notes. Short Notes are short-term investments, with periods ranging from 6 months to 2 years. We know that knowledge, capital, time and access are concerns for many investors, and our investment offerings solve those problems and more.