With no savings in January, I’d build passive income in these 2 ways now

We can finally make it back to January, a month that seems like a long time ago! I couldn’t save that much last month and in the previous few years I didn’t save anything in the first week of the year either. But even if I start now with zero cash, there are ways I can still earn passive income in 2023.

Generate money to then invest

There are two ways I can free up some funds to invest. One way is to reduce my spending habits. So when my paycheck comes in February, my reduced spending will be a net surplus. I can then take this amount and invest it in stocks to start the year off right.

Another way is to earn more income. Obviously, this is easier said than done. But some annual bonuses are paid at the end of January. So if I am in the lucky position to receive this, I can have extra money to put to work this month.

Although the second idea is more individual, the first concept (reducing expenses) will allow me to have a source of savings not only for February, but for the rest of this year.

Invest for potential profit

Now that I have figured out how to generate some savings, my focus is on investing. Of course, I want to generate as much income as possible, but I want to do it in a sustainable way. That’s why I have a few ways to take advantage of.

The highest risk option, in my opinion, is to invest now in growth stocks. I would choose a mix of US tech giants and UK companies. I can find some good values ​​here, because of the aggressive selloff from 2022. Even some big cap names fell by the amount of change (Amazon the stock is down 50%.

I can generate passive income here with reduced profits this year if my call is correct. If I buy now and we see a strong rebound (which we have started to see in January), the value of the investment will go up. Let me invest £1,000 and the shares rally to 20% by the end of the year. From this, I can bank £200 as income and leave £1,000 invested for 2024.

My risk is that if my opinion is wrong and the stock price goes down, I won’t get any income at the end of this year.

Banking on traditional dividends

A more traditional way to generate sustainable income is through dividends. Average now FTSE 100 The dividend yield is 3.54%.

When aiming for a sustainable income this year, I don’t need to shake things up too much. There are 19 FTSE 100 stocks that have paid dividends continuously for a decade, or more. I am going to choose the option with the highest yield so that I can make a profit in 2023.

Of course, the company may not give you a double percentage result. But I am more confident in receiving some income than the possibility of receiving nothing.

I aim to combine both ideas for income from my savings this year.