Lifestyle gurus and girl bosses everyone are touting the advantages of earning passive income by doing relatively nothing. While many of these claims are false, it is possible to make a steady stream of passive income — if you know where to look.
One of the best ways to earn passive income is through dividend-yielding investments such as mutual funds, stocks, and even dividend paying whole life insurance plans. Let’s take a closer look at how it works and how you can use it to provide long-term financial security for your family.
What Is a Dividend?
A dividend is a portion of a company’s earnings paid to shareholders regularly. The dividend amount you receive depends on the company’s profits and the number of shares owned by each shareholder. As a shareholder, you can receive dividends in cash or additional shares. That’s why many investors consider dividends legitimate wealth-building passive income opportunities. They’re paid out regularly — without requiring any additional effort from you.
Mutual Funds and Stocks
One way to access dividend-yielding investments is through mutual funds or stocks. Mutual funds are baskets of securities (stocks, bonds, etc.) managed by a professional fund manager who takes care of the buying and selling for you.
When you invest in a mutual fund, you can choose from different options such as index funds (which track an index like the S&P 500), growth funds (which focus on companies that have high growth potential), or dividend funds (which invest in companies that pay out dividends). Investing in one or more mutual funds allows you to access investments with high yields easily, and you don’t need to spend time trading for yourself.
Whole Life Insurance Plans
Another option for earning passive income is through whole life insurance plans that pay dividends. (Participating plans do, and non-participating plans do not.)
Participating whole life insurance policies offer both death benefits and cash value accumulation over time. Your premiums are invested into stocks and bonds, generating yearly dividends. Dividend amounts vary depending on the performance of underlying investments. Additionally, since dividends are not directly taxable when you receive them, you can use them to help cover costs associated with owning a policy (e.g., premiums and administrative fees).
Conclusion
Dividend-yielding investments offer an excellent opportunity for families looking for long-term financial security. Whether through mutual funds, individual stocks, or whole life insurance plans — dividend-yielding investments can help provide a steady stream of passive income that will grow over time as your portfolio grows in value.
If you’re looking for ways to protect your family’s future and secure your long-term financial health, consider adding dividend-yielding products to your portfolio today.
