Financial independence is when you have enough income to cater for your living expenses without working. One of the routes to financial independence is through passive income, where you make money with very little time and effort by either engaging in activities or investments that do not require direct supervision or direct effort. For some time, passive income was a way to transition into financial independence before retirement. However, many people are now considering it as an option to either get off the rat race that is employment, increase their income streams, or supplement their income. Either way, passive income can catalyze the journey to financial freedom, provide more flexibility, boost income and increase work-life balance and eventually chart a course to financial independence.
Speaking of, where are you on your financial independence journey?
Passive income is anything but a new concept. Our parents were (and still are) suckers for either agriculture or commercial property as a source of passive income. Millennials and Gen Z-ers, on the other hand, are looking for less hands-on ways to make passive income like investing in capital market or money market instruments, either earning interests or dividends.
How Unit Trusts Can Generate Passive Income
One of the most popular investment products is unit trusts, where investors pool their funds and accredited fund managers invest the finances across a wide variety of products that earn interest at low risk. The fund managers can generate passive income for the investors by using their decades of knowledge to pick across a range of financial products to form a unit trust, just as a master chef picks various ingredients to build a pizza. This could be a mix of stocks, demand deposits, government bonds, and fixed deposits among other investment products.
Digital tools like Cashlet allow investors to generate passive income through unit trusts by investing their savings into unit trusts products managed by Genghis Capital, ICEA Lion, and Old Mutual whose current interest rate per annum range between 9.35 and 9.7%. The platform projects annual interest rates on savings of between 8-10%, allowing users to deposit as little as Ksh 500. The app will debut on Google Play Store on February 20th. Start your journey to financial independence by joining the Cashlet waitlist here.
