Waning job satisfaction or the desire for more out of life may drive many Americans to ditch their job. Leaving the 9-to-5 grind is understandable, but replacing your paycheck with other income is necessary to continue to pay bills. In a recent YouTube video, personal finance expert Jaspreet Singh shared five assets Americans can pursue that could provide sufficient investment income to leave their job.
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It sounds pie in the sky, but it is possible. “This is not going to be easy. It’s not going to happen overnight. It’s going to take money, and it’s going to take sacrifice. But if you’re willing to put in the work and stick with it, it’s 100% possible,” Singh said. For Americans wanting to replace income from their day job, here are five ways to do it.
Also see seven paycheck hacks to build wealth faster, according to Singh.
Treasury Bonds
Not all income streams are difficult to create. For people wanting to start out easy, Singh recommended investing in Treasury bonds. This allows you to lend money to the federal government and earn interest.
Singh explained that Treasury bonds are relatively risk-free. Singh also highlighted that the interest is typically excluded from state taxes, and they can provide monthly income. On the downside, however, Singh explained that there’s no growth in principal, the returns are lower and they’re not insured by the Federal Deposit Insurance Corporation.
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Dividend-Paying ETFs
Dividend-paying stocks can be lucrative, especially for retirees looking to create an income stream. While it’s possible to invest in individual dividend-paying stocks, that requires significant research, and you may be at risk if the company faces challenges.
Thankfully, there’s a good alternative. “A simpler way to start if you want steady, consistent income without the headache, without all the research, without all the work, is to consider investing your money into dividend-paying ETFs,” Singh said.
He suggested the possibility of a Dividend Aristocrat exchange-traded fund (ETF) as an option. Such an investment may offer relative protection against wild market swings and provide a steady income. As Morningstar noted, dividend stock funds are often resilient during recessionary periods and are “solid portfolio additions.”
Real Property
There’s something confidence-inducing about investing in hard property. Singh noted that there are multiple ways to do this, namely investing in property yourself and investing in syndicate or crowdfunded deals.
Key to real estate investing is the distribution of cash, which is the cost you put down divided by what your net return is annually. Singh said he aims for a 7% return at minimum.
And he noted that paying significantly less in taxes is achievable, thanks to depreciation. “With real estate, you get to first file what’s called a depreciation deduction, which means you get to tell the IRS, ‘Hey, my property is one year older. And because it’s one year older, I deserve a tax break on my property,'” Singh said.
According to SmartAsset, there are many real estate deductions that can help investors lower their taxes, including mortgage interest, insurance, property management expenses and building repairs.
Singh recommended getting a good accountant to help you with your taxes and optimize your tax strategy.
Business Investment
Owning a business sounds great, as profits generally go to owners, Singh explained. He highlighted two options: starting your own company or purchasing a business.
Running a business is difficult at best, but it can be incredibly lucrative. “There’s a ton of potential. You can make a lot of money. You could see a ton of success and a lot of fulfillment doing it. But you got to be willing to put in the work. If you’re not going to put in the work, you’re not going to see the return and that business will die,” Singh said.
According to the Bureau of Labor Statistics, only 34.7% of businesses started in 2013 lasted a decade. Therefore, due diligence before starting a business is necessary.
Peer-to-Peer Lending
Operating as a bank to private individuals can be a profitable way to create a revenue stream. Sites like Prosper and Kiva let Americans borrow funds from private individuals.
Risk is inherent, but interest rates can make peer-to-peer lending worthwhile in the right situation. “Ideally … I would want to lend money to somebody where it’s backed by some sort of collateral. Ideally, some sort of real estate because if they default and go bankrupt, you want to have some way to at least get some of your money back because there’s a chance that they will not pay you back,” Singh said.
Replacing your paycheck isn’t easy, but it is achievable. Use due diligence before pursuing any opportunity to learn the risks and ensure it fits your risk tolerance.
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This article originally appeared on GOBankingRates.com: 5 Assets To Replace Your Paycheck, According to Jaspreet Singh
