Financial Freedom - 4 Long-Term Investments That Offer Maximum ROI For Minimum Effort

To make a complex topic deceptively simple: genuine financial freedom is to be found in income sources that require minimum effort while offering maximum returns. Of course, if it were really that simple, everyone would be wealthy and overstocked with free time. 

So, to help you get your head around this meaty topic and set yourself on a path to achieving your financial goals, we’ve done the hard yards for you and pulled together a list of the four most effective long-term investments for developing a sizeable passive income: 

1. Real estate

While there’s nothing new in suggesting real estate as a long-term investment, there are many different angles and strategies to take within the real estate realm. For example, commercial property investment is far more suited to certain personalities, lifestyles, and financial goals, while residential property tends to perform better during economic downturns. 

Then there are newer strategies, like Real Estate Investment Trusts (REITs), that allow you to dabble in the real estate market in a whole new way (and with a smaller upfront investment if that suits you). With a host of options available, your best bet is to do some research, find the option that suits you best, and then go for it. 

2. Crowdfunded real estate

To whet your appetite a bit for the research we’ve just suggested, here’s an innovative approach to real estate investment that allows you to take advantage of the long-term ROI without having to come up with the capital traditionally required: 

Crowdfunded real estate investments allow you to be surgical in your decision-making, allocating as little as $500 to any commercial or residential property on the market that takes your interest. Returns tend to be in the  7% – 13% region annually, making your ROI better than most CDs and dividends. 

3. Peer-to-Peer Lending

While real estate has been a staple in the financial diets of savvy investors for centuries, peer-to-peer lending is a newcomer on the fiscal scene. The first peer-to-peer lending company (Zopa) launched in 2005. From there, the industry has taken off, allowing those with funds to submit as much or as little capital as they wish while those in need of a small cash loan are able to access the money they need. 

The best peer-to-peer lending companies offer a safe platform for investors, allowing you to spread your capital in small increments over hundreds of loans, thus avoiding the proverbial “eggs in one basket” mistake. 

4. Dividend-paying stock

Yes, we did just mention that crowdfunded real estate tends to have a better ROI than dividend investments. However, dividends are still one of the most effective ways to build a reliable passive income. 

Generally speaking, dividend stocks come from more mature companies that are past the stage in which they’re growing rapidly and investing all profits into said growth. This means the companies in which you’re investing are less volatile, so the returns are more reliable. As with all other investment strategies, research is essential to ensure you get the best returns possible from your dividend investments. 

While traditional real estate investment, REITs, crowdfunded investments, peer-to-peer lending, and dividend-paying stock may be the cream of the crop, there are endless options for taking any amount of capital you have on hand and transforming it into a long-term investment that will win you a lifetime of financial freedom. Start with the suggestions above and then forge your own path, developing a diversified portfolio that suits your personality, risk profile, and lifestyle.