What is better for passive income, a debenture or a bond?

Good question.

To avoid any confusion technically a debenture is bond.
The difference is a debenture is unsecured or non-collateralized debt often with longer maturities. Many government bonds are examples of debentures.
The interesting thing is government bonds are considered to have zero default risk since the government always has the ability to create more money so default is by definition zero. Although there is no collateral that backs this type of government debenture.
By contrast, secured bonds are backed by hard assets. The collateral backing the assets might be real estate or mortgage notes or it could be shares of ownership of the company offering the secured bond.
The secured nature allows a creditor to take these assets through a legal process if the money is not repaid.
Unsecured debentures (which are bonds also by definition) have no collateral that backs them. An example of a government debenture would be a US Treasury bond or US Treasury bill.
The answer to your question on which is better depends on many factors but they do all offer passive income. The best is often private company bonds since the rates of return are far higher and typically would have some collateral backing the bond.

Being a passive investor means the investor has mailbox money or automatic deposit money coming in where they are not working. If the investor stops working and the passive income stops coming in that is not a good passive income investment.

If you were to purchase bonds or a limited partnership interest in a large multifamily community where you are not involved in the management this would be an example of a passive income investment.

If your goal is passive income the best way is to look at the bonds of companies that are not publicly traded (as they often pay higher returns) or to look at investing as a limited partner in a multifamily apartment community.

If you would like to learn more about investing for passive income, just register for my free weekly training at the link below:

https://www.meetup.com/benjamin-z-millers-investor-networking-group/

I hope that helps and good luck with your investing!

Benjamin Z Miller
www.benjaminzmiller.com

Benjamin Z Miller
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