4 great ways to target a magnificent passive income in 2024!

Christmas is always a tough time for the bank balance. But things are more than difficult than usual thanks to the cost-of-living crisis. So now could be a good time to think about how to make a passive income.

Here are four popular ways that Britons are tipped to continue making money with in the New Year.

1. Switch bank accounts

The retail banking market is highly competitive, and banks and building societies are throwing cash at current account holders to encourage them to switch.

Right now First Direct is offering £175 for customers to switch over to them. Nationwide is offering an even-better £200! More opportunities are likely to spring up as 2024 rolls along.

Changing accounts is simple and quick thanks to the seven-day switching guarantee, though individuals should check T&Cs to check they are eligible for the bonus.

2. Rent out things we don’t use

Many of us have valuable assets that we don’t make the most of. Letting out a room, a garage or a parking space are already popular ways that people make extra cash.

But the cost-of-living crisis has created a market for many everyday commodities that people can’t afford to buy outright. Cars, bikes, cameras, furniture, even clothing can all be rented out to make a second income.

3. Use a savings account

The impact of Bank of England interest rate hikes — along with huge competition amongst banks and building societies — has lifted savings rates to their best since before the 2008 financial crisis.

Challenger bank Metro Bank currently offers the best easy-access savings rate, at 5.22%. Savers can get an even better rate if they choose to lock their funds up in a notice account.

Some banks also offer higher-yielding savings accounts to current account customers. In all of these cases be aware of deposit limits and other T&Cs.

4. Buy FTSE 100 dividend shares

I myself plan to use some or all of methods to make a second income next year. But I’ll devote most of my time and effort to building wealth by investing in UK shares.

This is a no-brainer decision for me, given the excellent long-term returns that British stocks have provided. Total returns from the FTSE 100, for instance, averaged 7.48% per year between 1984 and 2022.

Past performance is no guarantee of future success. However investing in some choice Footsie-listed dividend stocks could provide me with a healthy passive income in the New Year (and potentially beyond).

Let’s say that I decide to invest a lump sum in the following UK blue-chip shares. Each carries a dividend yield north of the 3.8% forward average.

If I invested £10,000 equally across these dividend stocks today, I could make healthy passive income of around £767 during 2024.

And if I choose to hold on to these shares I can expect to make a passive income from them every year thereafter. Each of them looks in good shape to grow their dividends over time, providing me with an increasingly large second income. Not that this is guaranteed, of course.

I already own Aviva, DS Smith and Legal and General shares in my Stocks and Shares ISA. And I’ll be looking to add more dividend heroes to my portfolio in the coming weeks and months.