Stocks
Stocks are one of the easiest and most common forms of passive income because once you've researched various companies or funds and decided how much to invest, you don't have to do anything more (though you should periodically check on your investments and make adjustments when necessary).
Although you can invest in individual company stocks, a better option is to invest in a fund which contains the stocks of many companies. The simple reason for this is that a fund is likely to be a 'safer' investment than a single company. If you invest all your money in a single company and that company goes bust, then you would lose all of your money. If you are invested in a fund of 40 companies and one of the companies goes bust, then you only lose a part of your money. Also, with a fund you may have a fund manager looking closely at the companies within the fund, essentially doing a lot of the leg work for you! Clearly this can come at a cost and funds usually have associated charges, but in my view they are well worth it.
You will need to do some initial research before investing money into stocks. Specifically, you'll want to find funds with reasonable costs and strong performance histories that offer the opportunity for growth. Similarly, you never want to set up a portfolio and then ignore it indefinitely. You should always keep tabs on your investments to make sure they're performing well. But you're still looking at a small amount of legwork relative to what your investments might produce.
Although you can invest in individual company stocks, a better option is to invest in a fund which contains the stocks of many companies. The simple reason for this is that a fund is likely to be a 'safer' investment than a single company. If you invest all your money in a single company and that company goes bust, then you would lose all of your money. If you are invested in a fund of 40 companies and one of the companies goes bust, then you only lose a part of your money. Also, with a fund you may have a fund manager looking closely at the companies within the fund, essentially doing a lot of the leg work for you! Clearly this can come at a cost and funds usually have associated charges, but in my view they are well worth it.
You will need to do some initial research before investing money into stocks. Specifically, you'll want to find funds with reasonable costs and strong performance histories that offer the opportunity for growth. Similarly, you never want to set up a portfolio and then ignore it indefinitely. You should always keep tabs on your investments to make sure they're performing well. But you're still looking at a small amount of legwork relative to what your investments might produce.
Bonds
Bonds are another easy way to get some passive income flowing. When you buy bonds, what you're essentially doing is lending an issuer a sum of money in exchange for interest payments. Once again, you can buy bonds within funds which spreads the risk and makes the whole process easier. Once bonds mature, the issuer repays the principal investment, and at that point you'll have ideally collected a fair amount of interest along the way. Although bond interest, like dividend income, is technically not guaranteed (you never know when a company might default), if you buy bonds issued by highly rated companies, the likelihood of experiencing a missed payment is pretty low -- which means you can sit back and let that interest keep rolling in. And, like stocks, there's always the option to sell your bonds at a price that's higher than what you paid for them, thus generating income that way.
Investment Platforms
There are a number of 'platforms' that make looking after your Stocks & Shares ISA a lot easier. I have listed some of the bigger ones below - click on the names for a direct link to their site:
1) Hargreaves Lansdown
2) AJ Bell
3) Interactive Investor
In addition, you can seek financial advice through Hargreaves Lansdown should you wish to do so. If you click on the following link to Hargreaves Lansdown and subsequently pay for their advisory service then both you and Finance55 will receive a referral bonus*: Hargreaves Lansdown Advice.
1) Hargreaves Lansdown
2) AJ Bell
3) Interactive Investor
In addition, you can seek financial advice through Hargreaves Lansdown should you wish to do so. If you click on the following link to Hargreaves Lansdown and subsequently pay for their advisory service then both you and Finance55 will receive a referral bonus*: Hargreaves Lansdown Advice.
* On this website there are a number of referral links which will pay out a bonus to both you and Finance55 should you click on the link and subsequently sign up for the service. This is a normal marketing strategy for many companies as it gains them new customers with minimal advertising. The amounts are not that significant, but if it's available you might as well have it and any money earned by Finance55 will help go towards paying for and developing this website.