How to Earn Passive Income by Micro Lending Online

by Contributor ; Updated July 27, 2017
earn passive income

Items you will need

  • a computer with internet access
  • a small amount of money to invest

Passive income is money in your pocket without any ongoing effort. You put in some initial investment and you receive regular payments over an extended time.

You can earn passive income from the comfort of your own home using your own computer with minimal starting investment.

There are many ways to create and earn passive income. One new way is micro lending online. Learn how.

Step 1

Get online and find a micro lending website.

Passive income doesn't just happen. You need to make it happen. The first step is the most important. Get online and do your research regarding micro-lending for earning passive income.

Also called peer-to-peer or person-to-person lending, micro loans are loans made between individuals versus a bank loan. Typically, a micro loan is for a small amount of money and paid back over a short period of time.

Search the internet using terms like: peer to peer loans, person to person loans, p2p loans, micro loans.

Step 2

Register on the site.

Once you've decided to use micro lending as your source of passive income you need to sign up. You will be required to provide some personal information like name, address, social security or Tax ID number and bank account information.

This level of information is necessary for three main reasons. 1) Taxes. You'll have to pay taxes on your passive income.

2) Transfer of funds. You'll need the bank account information to send funds for a micro-loans and also to receive your monthly income.

3) Fraud prevention. This information is used to make sure people are not running scams on lenders and borrowers.

Step 3

Decide what type of micro lender you want to be.

There are two types: 1) Self-managed. This means that you manually pick the borrowers you want to lend funds to. This method gives you the most control of your investment.

2) Auto invested. Most micro lending websites provide a feature where you set up the parameters you want lend under and your funds are automatically invested for you. This feature is great for diversification. The program spreads your investment over many borrowers reducing the risk of losing your entire investment.

Step 4

Fund a micro loan.

Once you've registered and decided how you want to invest, you need to actually do it.

Once you take this final step, you're on your way to receiving monthly passive income directly into your bank account -- at a profit of course.

Tips

  • Passive income takes time to build up, but if you make some good investing decisions you'll be able to see a fair amount of monthly income. You can pick your own rate of return when you are micro lending. Just remember that the higher rate of return to you means more risk.

Warnings

  • Don't invest any money you can't afford to lose.

About the Author

This article was written by PocketSense staff. If you have any questions, please reach out to us on our contact us page.

Photo Credits

  • clker.com
Cite this Article A tool to create a citation to reference this article Cite this Article