How to Invest $100k With Automatic Passive Income as a Busy Professional

Larry, Managing Editor

How to Invest $100k With Automatic Passive Income as a Busy Professional

Are you a busy professional with $100k to invest? Want to generate automatic passive income without spending time or money? Investing in virtually risk-free assets such as brokered CDs, Treasuries, and money market funds is the best way to generate passive income without effort. These investments will generate over 5% yield a year, meaning you could generate over $5,000 by just clicking a few buttons online. However, it’s important to note that rates can fluctuate. In this article, we will show you how to make money work for you with easy, intelligent cash investing.

Requirements for Passive Income

We should consider what we will go through and our requirements for generating that income. Some questions to ask yourself include:

  • Am I willing to put any capital at risk to earn more than I’m risking?
  • Am I willing to spend significant extra time managing this passive income stream? Some side hustles require more time than others.
  • Do I have to do marketing or sales to find clients or customers?
  • Is there any physical or manual labor involved?

At YieldAlley, we look for passive income streams that can run on autopilot, with little need for constant monitoring or active involvement.

As a busy professional, you may not have the time or energy to dedicate extra money to manage your passive income hustle actively.

Intelligent cash management is the most optimal way to generate passive income.

What is Intelligent Cash Management?

Intelligent cash management is a system that optimizes the best use of your cash to earn yield while maintaining liquidity to cover any day-to-day expenses.

Most folks will park their cash in a checking or savings account to ensure they have enough money for daily expenses. The biggest drawback is that the cash is not “useful” while sitting there. It’s not being put to work to generate more income for you! 

To intelligently manage your cash, you should seek out cash equivalents that offer a yield on your cash. 

Here is a list of cash equivalents, in no particular order:

  • Treasury bills
  • Commercial paper
  • Money market funds
  • Certificates of deposit
  • Short-term government bonds
  • Banker’s acceptances
  • Repurchase agreements
  • Short-term corporate bonds
  • Cash on hand or in bank accounts

For most investors, a low-risk investment option such as brokered CDs, Treasuries, and money market funds can provide a virtually guaranteed way to earn 5% while keeping your money government-insured. 

We recommend investing in these cash equivalents as the most optimal to secure passive income with basically no extra effort,

Low to No-Risk Assets Are Your Best Bet To Make Passive Income

Why would someone invest your cash into cash equivalents, instead of pursuing another side-hustle alternative such as setting up an e-commerce store, doing real estate rentals, or another idea?

The key advantage of these investment options is the minimal time commitment required, and close to zero effort. Once you have made your initial investment, you can sit back and let your money work for you. Unlike other investment strategies that may require constant monitoring and adjustments, such as real estate or art investing, brokered CDs, Treasuries, and money market funds provide a hands-off approach, allowing you to focus on your busy professional life.

For example, you can choose from a range of maturities and interest rates with brokered CDs, allowing you to customize your investment portfolio. On the other hand, treasuries are backed by the US government and offer a safe haven for your money. Money market funds provide another option, offering a combination of low risk and potential returns by investing in a portfolio of short-term securities such as Treasury bills, certificates of deposit, and commercial paper.

These investment options may not offer the highest rates compared to riskier investments, but they provide a reliable and stable income stream. If you can lock in a brokered CD at 5.6% or a 1-year Treasury bill at 5.5%, that return is guaranteed, ensuring you can count on a steady flow of passive income. Additionally, these investments have favorable tax implications. Interest earned from Treasuries is exempt from state and local taxes, providing you with potential tax savings.

Brokered CDs Offer a Guaranteed 5.6%

You can make a guaranteed amount with brokered CDs, which currently offer the highest rates in a decade. Brokered CDs are a great option for investors looking for a safe and reliable way to earn passive income and allow you to manage all your investments from a single brokerage account, thus saving you even more time. 

One of the main benefits of brokered CDs is their higher interest rates compared to traditional CDs. With some brokered CDs offering rates of 5.6%, you can maximize your returns and grow your investment faster. With $100k, you would make $5,600 from the interest alone!

In addition to higher rates, brokered CDs offer more flexibility than traditional CDs. You can choose from various terms and maturities to customize your investment strategy. This flexibility can help you align your investment with your financial goals and risk tolerance.

The U.S. Government Is Obligated to Pay You 5.5% Every Year

With Treasuries, the U.S. Government must pay you the interest on the bond. Today, a 1-year Treasury bill will generate close to 5.5%. With $100k, you would make $5,500 from the interest alone!

Treasury bills are backed by the full faith and credit of the U.S. government, making them one of the safest investments available. When you invest in Treasury bills, you essentially lend money to the government in exchange for regular interest payments.

One of the biggest advantages of investing in Treasury bills is their low-risk profile. Since they are backed by the government, the chances of default are near zero. This makes them an attractive option for investors who prioritize capital preservation.

Another advantage of Treasury bills is that they are highly liquid, meaning that investors can easily buy and sell them without incurring significant costs or experiencing delays. This liquidity makes treasury bills an attractive investment option for individuals and institutions looking for short-term, low-risk investments.

Furthermore, Treasury bills offer tax advantages. Unlike other forms of income, such as interest from savings accounts or stock dividends, the interest earned from Treasury bills is not subject to state or local taxes.

Additionally, the tax rate on Treasury bill interest is often lower than the rate on other investment income.

Investing Is the Easiest Way to Make Passive Income

For busy professionals with $100k, investing in low to risk-free assets like brokered CDs or Treasuries is the best way for you to generate automatic passive income as a busy professional. By choosing these options, you can ensure a guaranteed return of 5% without taking on unnecessary risks, by simply clicking a few buttons on your computer.

If you have more time and capital on your hands, you can also consider real estate investments, dividend stocks, peer-to-peer lending, index funds, and rental properties as alternative passive income opportunities. 

However, while they may offer higher returns, they do not guarantee returns, unlike some of the cash equivalent products we mentioned with brokered CDs, Treasuries, and money market funds. 

This is the easiest way to make annual passive income with a “set it and forget it” mindset, which is perfect for busy professionals who want to make money while they sleep!