Best Strategies for Passive Income

3 Top Passive Streams of Income

Passive income is the best kind of income to receive. With passive income, you have set up a cash flow that generates income without you having to work for your money. Initially, there is some amount of effort required to set up the "stream" of income. If you don't want to work every day, it's crucial to set up several forms of passive income to build your wealth.

Linear income is the type of income you receive when you go to a job, work and then get paid on payday. The effort you put in is directly related to the pay you earn. Unfortunately, if you cannot work anymore or don't want to work anymore, your income will cease.

Here are three of the best kinds of passive income strategies you can set up now and be paid for many years down the road.

More Stocks May Not Make a Portfolio Safer

By JASON ZWEIG NOVEMBER 21, 2009


Not putting all your eggs in one basket is the most basic principle of investing. It also may be the hardest to get right.

Investors have long been told by stockbrokers and financial planners that to have a properly diversified stock portfolio, you need shares in only 10 to 40 companies. Even the great investment analyst Benjamin Graham urged "adequate though not excessive diversification," which he defined as between 10 and about 30 securities.

As many studies have shown, at least 40% of the variability in returns can be reduced by moving from a single company to 20. Once a portfolio contains 20 or 30 stocks, adding more does little to damp the fluctuations in wealth over time.

Shop for Dividends in This Aging Bull Market

By BRETT ARENDS
NOVEMBER 22, 2009


Wall Street has rallied a long way since the dark days last winter. But there are still plenty of blue chips offering big dividend yields.

Screen the market for yields over 3% that are well-backed by earnings and a surprising number of big household names come up -- Kraft Foods, Clorox, Sara Lee, Sysco, Johnson & Johnson, Merck, BP, NStar, Verizon Communications and AT&T.

A lot of these steady Eddies have been left behind by this year's mad stampede for higher-risk, higher-excitement investments -- from China to the Cheesecake Factory.

It's a good time to remember that high-excitement stocks often end up providing investors with high drama and high blood pressure instead.

Investment Mistakes

By Christopher Davis November 24, 2009

Whether it's the Dutch tulip craze of the 17th century, the dot-com mania of the late 1990s, or the most recent rush into real estate, there's no shortage of examples of investors behaving irrationally.

In the world of traditional economists and finance professors, though, that's not supposed to happen. If investors are rational decision-makers, then emotion-driven bubbles shouldn't be possible. Yet human weaknesses can limit our ability to think clearly. Many studies of investor behavior have shown that investors are too willing to extrapolate recent trends far into the future, too confident in their abilities, and too quick (or not quick enough) to react to new information. These tendencies often lead investors to make decisions that run counter to their own best interests.