what's up you guys it's graham here so we're going to be talking about something that i have not mentioned for a very long time here on youtube and it's a term that either gets people really excited or makes them feel as though they're about to be invited to an mlm seminar to best western hotel and that is the term passive income it's the concept that you could essentially just do nothing all day while you sit at home and make money from anywhere in the world and it's an interesting idea to say the least after all who wouldn't want to make a lot of money without having to work well the good news is that there are actual legitimate ways to make passive income that don't require a big lump sum investment that don't involve you being sucked into a multi-level marketing scheme and don't involve you being sold into a pipe dream and you could do that with as little as five hundred dollars however i want to be upfront and set some expectations that 500 most likely is not going to end up making you filthy rich to the point where you could quit your job and stay home all day watching youtube videos anytime soon but the good news is that once you earn any amount of passive income from a 500 investment that's going to be enough to get you so excited to want to grow this to something bigger so the strategies that you end up learning today should really just become the catalyst that leads you to much bigger numbers in the future anyway here's where you could start with as little as 500 and everything i'm about to mention is something i myself have done personally and all i ask in return if you find this helpful in any way is just to smash the like button for the youtube algorithm it helps me out tremendously and also just promise one day in the future you're going to give me a thumbs up from your ferrari because hopefully this would have worked and you would have made a lot of money and that's it that would make me very happy so with that said let's begin the video here so first it's really important to understand that when it comes to passive income there are two very different types that you could generate for yourself the first one is by investing your money and the second one is by investing your time i'll break down and give you options for both of them in this video so don't leave any of you hanging but because the title of this video is how to make passive income with 500 we're going to be starting with how to invest your money the point of this is to get your money working for you so that your money could make you more money to then make you more money to then make you more money think of it like every one dollar you invest is like sending a little worker off there to find pennies to deposit back in your bank account initially that might not seem like a lot to put a dollar to work just to go and bring you back pennies but all of a sudden when you get hundreds and thousands and then hundreds of thousands of workers out there all bringing you back pennies it begins to add up to a substantial amount and then on top of that once a penny joins your army that penny's new job is to go and find other pennies to recruit into your bank account and that makes you even more money that's really the basis of investing your money for passive income and it all begins right here one invest 500 within an index fund this is just an investment that covers a wide variety of stocks and markets and you could buy into that for a very low price for example vt sacs is going to cost you under eighty dollars a share and for that small price you will own a tiny piece of the entire u. s equities market and the good thing with these indexes is that there's an index for pretty much every single market out there and here's how you could use that to make some passive income if you want to invest in the top 500 publicly traded companies in the united states you can go and invest in s-c-h-b f-x-i-a-x or v-o-o and all of a sudden you'll get access to 500 companies for one very low cost and the good news with this fund is that you could make passive income in two different ways the first is from the stock price going up over time and the second is going to be through their dividends now in terms of how much this stock goes up over time you could see historically it's averaged about a five to seven percent return adjusted for inflation now obviously some years you're going to end up making way more money than this and other years you're going to end up losing some money but long term historically it's always trended upwards and then on top of that like i mentioned you have a dividend and in most of these cases it pays anywhere from 1. 3 to 1.
8 annually give or take a bit which really might not seem like a lot of money initially because with a 500 investment we're only talking about making like five six or seven dollars a year but when you also consider that the stock price is going up by another five to six percent on top of that that'll bring your overall return on a 500 investment to about 30 to 40 dollars per year with no work on your end whatsoever and there are other funds that you can invest in that pay you a much higher dividend if that's what your main focus is for example you have high income funds for the entire fund's purpose is just to pay you out as much money as possible like with this one fix they'll give you a 4. 7 return on your money for every 500 you invest that's 23 of passive income for no ongoing work on your end whatsoever plus you get to see the price of the index fund go up over time the options don't just end there either there's an index fund for pretty much any market or industry that you can think of all you got to do is go to google type in your industry type index fund and then your brokerage here and as long as you do a search for that you will find an index fund that meets whatever you want for me personally i just do vt sax and schb but i also throw in some international index funds in there as well with swiss sex and that one currently pays out a three and a half percent dividend and yes i get it with five hundred dollars it's not like you're going to be making bank and even if it goes up ten percent a year fifty dollars in passive income is not life-changing but all of this really just begins right here and trust me when i say this but once you see that first dividend payment being deposited into your bank account for doing absolutely no work whatsoever besides just making the investment it's addicting and you're going to want to send even more of your money to work just so that they can make you even more passive income in the future then imagine over time if for example you invest 500 a month into an index fund vt sacs over 35 years that'll turn into a 1. 2 million dollar investment that's going to be bringing you about 22 000 a year in passive income plus the fund itself is going to be going up in value on average by about 60 000 a year so trust me it all begins with something small but it's gonna grow to something substantial over time and it all begins here today now second we have another option if you want to end up making a little bit more passive income and don't mind taking on a little bit more risk and that would be through buying dividend stocks now for anyone who's unaware with how this works instead of going and investing your money in an index which basically just encompasses a whole bunch of everything you could invest in a specific company which will typically have a much higher payout when they're doing well not to mention some of these companies have been especially hard hit lately due to the illness so you're buying them already to discount and some of the dividends they're paying are substantial for example look at exxon stock which is currently paying just above eight percent that means that you could invest 500 and potentially make 40 dollars a year back in passive income simon property group is another one which got hit very hard recently because they own malls in retail space but their dividend is just over eight percent att is another option which pays just about a seven percent yield however it's really important to realize that companies like this that pay a much higher dividend are a much riskier investment and on top of that many companies have reduced and altogether suspended their dividend because they just can't afford them anymore for example ford recently suspended their dividends and wells fargo reduced theirs however you could still absolutely build up a portfolio of dividend stocks that will pay you on a consistent basis with a 500 investment as just a few examples here you have realty income or o stock which pays close to a five percent dividend verizon is over four percent and johnson and johnson is just under three percent obviously these are riskier options and the dividend could be cut down or reduced if the company decides it can't afford them anymore and the stock price of the actual company itself could end up going down in value but if things recover the price of these stocks could equally go up just as much as well just understand as with anything the more money you could potentially make the more money you have the potential of losing and even though a company might have a high dividend it doesn't guarantee that company is actually going to be doing well so just keep that in mind and always invest in safe companies that you know well with strong fundamentals with the intention of holding them long term oh and also speaking of stocks the free stock trading app weevil is holding a promotion where they will give you two free stocks when you deposit 100 on the platform with one of those stocks potentially worth all the way up to one thousand four hundred dollars so if you want two free stocks you may as well just get them down below in the description because they're free it helps with the channel and uh yeah they're free the third another way you could invest 500 to get passive income is to invest in real estate but not in the way that you think instead of going and buying a house for yourself and then dealing with banks and tenants which usually takes a lot of time and a lot of money you could invest in a real estate fund known as a reit which stands for real estate investment trust think of this one like instead of going and buying a stock in a company like i just mentioned you could buy a stock in a real estate portfolio see real estate investment trusts basically just get money from a pool of investors and then buy buildings within a certain category like medical buildings shopping centers senior citizen centers or residential apartment buildings and then they pay out a portion of their rental profit as a dividend for you this means you can own a tiny percentage of a real estate portfolio without any of the headaches of actually managing any real estate like you don't need to deal with any tenants fix any toilets or manage anything you just buy into it and they'll do the rest and also reits tend to pay decently well for example you have realty income corporation and they have almost 6 500 properties including some large tenants like walgreens 711 fedex and so on and they're paying out a 4.
8 dividend annually or you also have national health investors which is another company that is very hard hit they pay out a 7.
