Passive Income Challenge Update 1

By | November 17, 2012

As promised, I am providing my first update on my attempt to find the best source of passive income. It was a month ago (almost to the day) that I set out on a goal to develop multiples passive income streams. While a lot of things have been set in motion, I am still far away from having a great view on which stream is best.

Passive Income Results:

In the past month, one of my four investments has paid me dividends. The other three are either still developing or pay dividends on a quarterly basis. The one that has paid dividends already is the peer to peer lending with Lending Club.

P2P Lending: 13.7% Net Annualized Return

Despite my initial hesitation, I’ve seen a lot of promise in this form of investing. This is especially true when you consider the other poor performance of my other investments (so far). I am going to keep putting a little bit of money into this each month so that I can develop a nice sum of money over the long term. I do have one loan that is late right now. The borrower has contacted Lending Club, so I expect to see payments caught up in the next month. If not, it might take away from my good returns. The key is going to be to spread out my investments over many loans.

Real Estate: N/A

While I have funded my investment in a Real Estate Limited Partnership, this is the one that is going to take the longest to produce some steady dividends. The managing partner informed me that he expected to have some profits by the end of this fiscal year. I can’t wait to see the money start rolling in each quarter. 🙂

Online Real Estate: N/A

This too has yet to earn any money. I did receive a page rank by Google in the last update and I expect to see income start flowing in, but I’m not going to start this too early and risk compromising the long-term productivity of the site. More news in the coming months.

Dividend ETFs: N/A

This too won’t be paying out until sometime next month. I expect to have an annual return of 3-5% in just the dividends (not to mention the increase in value of the price), but I will have to wait and see what my progress looks like in the coming months. While the stock market has plummeted after the presidential election, I am glad that the source of income from dividends will continue. That’s another benefit of dividend stocks/etfs. Don’t get me wrong, it still hurts to see a drop of a few percentage within a day or two, but it’s nice knowing that I don’t need the money now and that I will still get some income.

While I have yet to see actual returns on some of my investments, it is nice to realize that I am being pro-active. I am not sitting around doing nothing or wasting my money on unnecessary items. I am starting early with high hopes. It will take some time to develop significant income streams through this passive income strategy, but it’s also exciting to watch it grow.

How have your passive income streams developed? Any significant ups or downs?