Let Money Work For You!


I come from a background where saving money for the future is the only way to actually make use of money. This money that is saved is never used by you but left for your generations to come. Where I come from, being a doctor or an engineer are two godly professions that would make u successful in life or an utter failure if you are not one of those.

I being the rebel that I am, chose business as my education first, and it didn't feed my brain enough, it looked too easy for me. I soon left it for Information Technology, and then I had my fill of logic and science. I had to work my algorithms and design my applications the way I perceived them. I became a programmer eventually, not the brightest one, but one of them.

So coming back to the topic, let me bring someone important between us, I will let him explain why this is so important.

“If you don't find a way to make money while you sleep, you will work until you die.” - Warren Buffett

Passive Income

The most important thing that someone can do to his life is, "let one's money make more money for oneself". I can not stress enough about the importance of this but there comes a time in life when you want to relax, go on vacations, spend time with family, do things you always wanted to do, and let the money find its way to your bank account on its own.

For this, like all my other write-ups, I would like to take an example to make you understand this concept better.

Let's say we have a $1000 and we want to earn passive income from it. This is of course a very little amount of money and it can never change your life but a $1000 invested somewhere making you some passive income is better than a $1000 in bank account making income.

Here are some of the ways you can earn passive income. The key is how much money you invest and $1000 is just an example.

1. Dividends

There are publically listed companies that share their profits in terms of dividends with all their partners. If you are a shareholder of such a company, you are a partner and you deserve that dividend. This is not something expected or required by law from those companies but at the end of the year or quarter they are left with so much money that they have to decide between keeping the cash, investing the cash, or sharing some of those profits with shareholders for being loyal and trusting these companies and investing in them.

Dividends may change to higher or lower yields based on the company's overall performance, but if the performance is good the share price will go up and give you profit any way even if the dividends become lower. Dividend in no way should be the criteria to choose a stock. There are companies that would pay you 15% of dividends but this does not mean it's a good idea to buy those stocks. One should only invest in companies that are stable and don't expect losses in terms of share prices.


At the time of posting this article, Mcdonald's is paying 2.29% annually as dividends per share. A $1000 worth of shares of McDonald's will give you roughly $24.00 every year. It's not a lot, but share prices are likely to give you 5% of gains annually.


At the time of posting this article, IBM is paying 4.78% annually as dividend yield per share. A $1000 in IBM shares will give you roughly $48 every year. The history of IBM stock suggests that this had a bumpy ride with gains as much as 20% and losses of a similar size. But the dividend price adjusts based on the same.


At the time of this writing, AT&T is paying a 6.94% dividend yield per share per year. A $1000 will give you around $70.

2. REITs

Real Estate investments are a pain if you know what I mean. If you are an investor in real estate, you buy a property to rent it or sell it, or you are a fixer-upper, or you are involved as a lender in this whole process. In any way, you are doing a lot of work and there are risks of getting sued for one thing or other or for just having greedy renters. REITs (Real Estate Investment Trusts) are companies that own or finance real estate that produces income in the shape of rents or property sales. These companies by law have to share 90% of their profits with investors.

The NAREIT (FTSE) Equity REIT Index is used to compare the performance of real estate in the United States. Between 2010 and 2020, the index's average annual return was 9.5%. The three-year average for REITs between November 2017 and November 2020 was 11. 25% which is well above both the S&P 500 (9.07%) and the Russell 2000 (6.45%). REITs own about $3 trillion in real estate assets and are so far generous in yields and have outperformed the S&P 500 over the past 20- and 30-year periods.

A $1000 in REIT index fund would give you around $95.

3. Index Funds

Just like the REITs index fund above, there are other index funds that track a sector or a stock market. An index fund tracks a market index and the performance of a market made up of stocks or bonds. It is invested in all the components that are included in the index they track, and their fund managers make sure that the index fund performs the same as the index does.
Examples of Index funds are S&P 500 index that tracks 500 top companies and invests in them, or Russell 2000 for small-cap 2000 companies, or an index fund that tracks international markets like MSCI EAFE, MSCI Emerging Markets.

Let's take some as our example here, FNILX (Fidelity ZERO Large Cap Index) has no fees, no expense, or no costs. The Fund In 2019 gained over 31.79%, and in 2020 it gained 21.12%. In 2021 YTD it has gained 5.06%. Considering it gives an average of 15% per year based on limited history we have,

A $1000 investment into this fund would give you $150 per year.

4. Crowd Funded Real Estate

It's relatively a new method of investing in real estate that generates investment and capital by crowdsourcing and crowdfunding. This opens doors to a wide variety of properties without having to deal with mortgage brokers, real estate agents, contractors, or tenants.
Websites like crowdstreet, diversyfund, equitymultiple and many more generate funds through retail investors like you and me and invest our money in real estate of any nature. They have their fee structure so you have to pay some fees on your gains for their trouble of managing the properties that you are invested in. They also have some minimum cap on investment you can make and they give you estimated gains annually, i.e. between 11.5% to 26.4%, depending on the investment. Considering an average of 15% RoI,

A $1000 will give you $150 every year in passive income.

5. Municipal Bonds

These types of bonds mean that you are lending your money to the local government to spend on local infrastructure. The local government in turn sells you Munciple Bonds with guaranteed gains on them for a period of time.
Municipal bonds have high yields, making them more attractive than U.S. Treasury bonds. Municipal bonds are typically exempt from federal income taxes, and if they are issued within your state, they are exempt from state income taxes too. This means, if you are in NY and you buying local municipal bonds of NY, you will be tax-exempt by federal and state both, but if you are in NJ and buying NY bonds, you might not state tax-exempt. Tax-free municipal bonds have roughly a yield of yield 5%, so

A $1000 invested in a tax-free municipal bond would give you $50 you don't have to pay taxes for.

Please do not follow the advice of any random guy like me for your investments. Use this as a tool to help you make a decision rather than blindly following these suggestions. Do your research for any investment because your money is your responsibility. I am not a financial adviser, neither am I trying to be. This is just for information and knowledge purposes.

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