How much was your first passive income? I\’m not talking about the first investment you made, but about the return it generated for you. How much was it?
I was asked this question by a reader this week, and the answer is a simple one.
I was 18 years old, and had recently started pursuing income-producing assets. I\’d been saving money since I was in my teens, but it took me years to do much more than stick it in my savings account. At the time, I didn’t have much capital to invest in anything other than P2P lending with Zopa Loans. I couldn’t afford to trade stocks because I was going to be incurring crazy costs to trade through the brokerage on commissions and stamp duty. I also hadn’t discovered the value of investing in entrepreneurs. So, I did what I thought was my only option and invested in something with a higher returns that the 2% I was earning with my bank.
Zopa Loans was a P2P platform that amalgamated the savings of hundreds of individuals across the UK, and then lent them out to other individuals that needed money. Rather than charging the borrower the 15 or 20% like the big banks did, it charged 12 or 13%, taking a few percent for itself and giving the rest to the investor. I remember how excited I was to make this investment. A month later, I received my first portion of passive income and I reinvested it right back into the fund.
That £1.67 might not have been the biggest sum of capital I\’d ever earn, but it was definitely some of the most important. I saw first-hand the potential benefits of passive income and was inspired to continue.