Passive income is money you earn regularly without having to work a traditional job to keep it coming in. This kind of income often comes from things like investments, real estate, or side businesses.

Passive income is money you make without needing to be active in a job every day. You can earn it by putting money into investments or starting a business that makes money even when you are not working on it all the time.

Common sources of passive income include rental income from real estate, dividend-paying stocks, or interest earned from high-yield savings accounts. Some less common options include owning vending machines or writing online content that keeps earning over time.

Usually, you’ll need to put in money, time, or both to start generating passive income. But once you’ve made that first effort, the income can keep coming for years. The taxes you owe on this type of income depend on where it comes from, so it’s important to keep track of your earnings.

Ways to Make Passive Income

1. Dividend Stocks

You can earn passive income by buying dividend stocks. These stocks give you part of the company’s profits, usually every three months. Many top dividend stocks increase their payouts over time, which helps your future income grow.

Dividend stocks are often more stable than stocks that focus only on growth. They can also help make your investments less risky. You can even choose to reinvest your dividends to grow your holdings over time.

How much does it pay?
Dividend stocks pay different amounts. Some pay under 1%, others pay over 6%. If you invest $10,000 in a stock that pays 2.28%, you would earn about $230 in a year, not including stock price growth or taxes.

2. Dividend Index Funds and ETFs

Instead of picking individual stocks, you can invest in index funds or dividend ETFs. These funds hold many dividend-paying stocks and are a good option if you want a hands-off approach. You’ll need to open a brokerage account to get started.

How much does it pay?
Dividend funds also pay different rates. If you choose a fund with a 5% payout and invest $10,000, you could earn a little over $500 in a year. This doesn’t include any growth in the fund or taxes owed.

3. Bonds and Bond Index Funds

Bonds are loans to companies or governments that pay interest. They are generally safer than stocks but usually earn less. Experts suggest having some bonds in your investment mix, especially as you get closer to your financial goals.

How much does it pay?
In 2024, a 10-year U.S. Treasury bond returned about 4.21% yearly. So if you invested $10,000, you might earn about $210 every six months.

4. Real Estate Investment Trusts (REITs)

REITs let you earn from real estate without owning or managing property yourself. These companies own real estate like office buildings and apartments. Some are traded on the stock market and can be bought through a broker.

How much does it pay?
From 1972 to 2019, REITs returned about 11.8% per year on average. If you invest $10,000 in a REIT with a 3.68% yield, you could make around $373 in one year.

5. Money Market Funds

Money market funds invest in low-risk items like short-term government debt. They are not the same as money market accounts, which are more like savings accounts. Some money market fund earnings are even tax-exempt.

How much does it pay?
Top money market fund rates are near 4%. With $10,000 invested, you could earn about $400 in a year, assuming monthly compounding.

6. High-Yield Savings Accounts

These online savings accounts pay more interest than regular savings accounts. They are great for storing emergency funds and letting them grow.

How much does it pay?
At 4.66%, a $10,000 balance could grow by over $430 in a year with monthly compounding. These accounts also let you access your money easily.

7. Certificates of Deposit (CDs)

CDs lock your money for a set time in exchange for a fixed interest rate. They often pay more than regular savings accounts, but you may pay a penalty if you withdraw early.

How much does it pay?
If the best CD rate is 4.5%, then $10,000 would earn $450 in one year.

8. Peer-to-Peer Lending

Instead of using a bank, you can lend money to others through platforms like Prosper or Lending Club. It’s riskier than a savings account, but it can pay more.

How much does it pay?
Prosper reports an average return of 5.3%. So a $10,000 loan might earn you about $543 in a year, not counting fees or taxes.

9. Cryptocurrency Staking

Staking means using your crypto to support a blockchain network. You give your tokens to someone who validates transactions, and you earn rewards in return.

How much does it pay?
On Coinbase, Ethereum staking pays around 2% per year. So staking $10,000 worth of ETH could earn about $200 annually. Keep in mind that staking can lock up your funds for a time.

10. Save More, Spend Less

Saving money isn’t technically passive income, but it has the same effect — more money in your pocket. Reducing spending helps you keep more of what you earn.

Ways to save include:

• Tracking what you spend
  
• Lowering your electricity bill with a home energy check
  
• Canceling unused subscriptions
  
• Reducing time on social media to avoid impulse spending
  

11. Vending Machines

Buying and placing vending machines can be a simple business. Choose a good location and stock it with the right items.

How much does it pay?
Used machines cost $1,200 to $3,000. Many earn about $300 monthly, and those in busy places can earn much more.

12. Digital Courses

If you have a skill, you can turn it into an online course. It may take a lot of work upfront, but once set up, it can continue to earn with minor updates.

How much does it pay?
Income varies. Some people make a full-time living. Others earn a few hundred dollars a month. On Udemy, most instructors earn less than $1,000 per year, but top instructors earn much more.

13. Car Wrap Ads

You can earn money by letting companies place ads on your car. Check companies like Carvertise and Nickelytics, but be careful of scams.

How much does it pay?
Carvertise says drivers can earn $100 to $500 a month for driving with ads.

14. Rent Out Parking

If you have a parking spot in a busy area, apps like Spacer can help you rent it out.

How much does it pay?
Hosts often earn around $200 per month, depending on the location.

15. Create Online Content

Writing blog posts or creating videos can lead to passive income. Once your content gains traffic, you can earn through ads, sponsored posts, or affiliate links.

How much does it pay?
It varies a lot. Some bloggers earn just a few dollars a month, while others make thousands. For example, bloggers with 3–5 years of experience average about $1,935 per month. Those in the personal finance space tend to earn more.

16. Rental Properties

Buying a property to rent out can give you steady income, but it also comes with ongoing costs like repairs and taxes.

How much does it pay?
In 2024, the average landlord earned over $16,000 from renting. Your own earnings depend on your property costs and the local rental market.

17. Rent Your Home While Away

If you’re going on vacation, consider renting your home through Airbnb or Vrbo to earn extra income.

How much does it pay?
In 2022, the average global Airbnb host made around $14,000. In the U.S., hosts made an average of $44,235 in 2021. These numbers depend on location, setup, and fees.

18. Take in a Roommate

Renting out a room is a simple way to bring in monthly income. You’ll have to share your space, but it can save or earn you hundreds each month.

How much does it pay?
In cities like New York, you could save or earn over $1,500 a month. In smaller cities, the savings might be closer to $300 or $500.