With Wall Street rattled by tariffs and recession alarms growing louder, many investment experts are warning of a coming bear market. Bloomberg recently reported that the S&P 500 almost hit bear market territory before President Donald Trump announced a 90-day reprieve on most tariffs.
Bloomberg went on to predict that there’s a high likelihood that tariffs against China will lead to a recession and falling stocks.
If there is an extended bear market, then you may need to adjust your investment strategy accordingly. That doesn’t mean you should pull out of stocks. Bear markets don’t last forever, and historically the markets have always bounced back.
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But it’s also a good idea to offset stock losses by earning passive income from your investments. Navy Federal Credit Union describes passive income as money that’s made without being actively worked for each day, though you will need to make some kind of upfront investment.
Here are four of the best ways to earn passive income from your investments during a bear market.
A company that pays regular dividends is your best friend during a bear market because you are guaranteed some kind of income no matter how the stock performs. Most of these companies are well established and produce steady profits and revenue growth.
Dividends are often paid quarterly, which provides a regular income stream throughout the year.
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Investing in real estate is a great way to earn passive income during a bear market, whether that investment comes in the form of a physical property or a real estate investment trust (REIT).
With a physical property, your passive income arrives in the form of rental payments. You can also earn passive income through REITs because by law, REITs must pay out 90% of their annual income in dividends, according to Charles Schwab.
Cash and cash equivalents are short-term investments. They require minimal effort and provide a return on a principal amount of money invested, per Ameriprise Financial.
One of the popular options is to invest in high-yield savings accounts — the best of which can offer annual percentage yields of 4% or higher. This provides risk-free passive income in the form of interest payments.
Putting your money into a small business means sharing in the profits, which can provide passive income in the form of monthly, quarterly or annual payments. This option will take some upfront effort, however.