18 Passive Income Ideas for 2025 and How Much You Can Make – NerdWallet

You can earn passive income through investing in certain financial assets or by starting businesses that, after an initial investment, start to generate income without regular work. The taxes you’ll pay on passive income may vary depending on the source of the money, so make sure you keep careful records of your earnings.

Passive income is money you can earn with little effort and without working a traditional job. You can earn passive income by renting out property, through dividend stocks or a high-yield savings account.

Most ways to generate passive income require an upfront investment of either money, time or both. But once you’ve made that initial investment, passive income can pay off for years to come.

Here are a few different types of investments that pay dividends, which can create a passive income stream.

One way to build an income stream is to invest in dividend stocks, which distribute part of the company’s earnings to investors on a regular basis (typically quarterly). The best dividend stocks increase their payout over time, helping your future income grow. (Learn more about dividends and how they work.)

As a bonus, dividend stocks typically are less volatile than growth stocks, so they can help diversify and even stabilize your investment portfolio. Investors can also choose to reinvest dividends back into the stock, potentially increasing their investment if the stock does well.

Dividend stocks range in their payout: Currently, the stocks on our list of dividend aristocrats (historically stable dividend stocks) range from less than 1% to over 6%. Say you split the difference and found a stock that paid a 2.28% dividend. If you started with $10,000, after one year you would have made about $230. That does not include stock growth or account for taxes owed.

This is a form of passive investing for those who prefer a more hands-off approach.

Index funds hold a well-rounded selection of many stocks that aim to mirror the performance of a given index, such as the S&P 500. A dividend ETF or index fund will invest in a selection of stocks that pay dividends. Index funds can help balance portfolio risk, as market swings tend to be less volatile across an index compared with individual stocks.

Dividend ETFs offer the diversification benefits of index funds while mimicking the ease with which stocks are traded. To invest in dividend stocks, index funds, ETFs or other publicly traded assets, you’ll need to open a brokerage account if you don’t already have one.

Similarly to dividend stocks, dividend funds vary in their payout. Currently, the stocks on our list of the best dividend ETFs range from about 3.5% to almost 8%. Say you picked a fund that paid 5%. If you started with $10,000, after one year you would have made just over $500. That doesn’t take into account for the growth of your ETF over time or your taxes owed.

Rather than buy an ownership stake in a company through stock, bonds are a way for investors to lend money to companies — as well as federal, state and local governments — and collect interest income. Bonds are considered a safer investment than stocks, but also generally earn a lower return on your investment.

Experts suggest investing a portion of your portfolio in bonds because of their lower volatility and relative safety compared to stocks, then having a higher ratio of bonds in your portfolio the closer you are to your investing goal (such as retirement).

Depending on the bond you buy, and the amount of time you hold it for, the amount you can earn can range. In 2024, the annual average return for a U.S. Treasury security with a 10-year constant maturity was 4.21%^[0]

If you want to build passive income from real estate without the fuss and bother (not to mention the hefty down payment) of buying and managing properties yourself, REITs may be the answer.

Similar to mutual funds, REITs are companies that own commercial real estate, such as office buildings, retail spaces, apartments and hotels. REITs tend to pay high dividends, but they vary in complexity and availability. Some are publicly traded on stock exchanges; others are not.

New investors may want to stick to publicly traded REITs, which you can purchase through an online broker. You can also diversify your real estate holdings by investing in mutual funds or ETFs that track multiple REITs.

The FTSE NAREIT All Equity REITs Index, similar to an equity index, tracks the performance of equity REITs. From 1972 to 2019, REITs returned an 11.8% annual return compared to the S&P 500’s 10.6% annual return^[0]

Let’s say that you invested in a REIT fund that had a dividend yield of 3.68%. That means if you invested $10,000 and held it for a year, you would make around $373 dollars.

Like high-yield savings accounts, money market funds are currently paying lucrative interest rates — you can find rates upwards of 4%. Money market funds are mutual funds that invest in lower-risk securities like short-term government debt or corporate bonds that pay income. In some cases, that income may be tax-exempt. Keep in mind that money market funds are not the same as money market accounts, which are more similar to a savings account and typically come with FDIC insurance.

At the time of this writing, the highest money market fund rate on our list of the best money market funds was 4.20%. If you started with $10,000, and let it sit for a year with monthly compounding, you could make just over $428.

These interest-based ideas are less risky than investments since their rates are set by the Federal Reserve, and there’s no risk of loss of principal. Your money doesn’t risk losing value in these types of interest-based investments the way it does in a stock or fund.

Another way to earn passive income (albeit at a lower level than stocks and bonds) is a high-yield online savings account, which can be ideal for growing your emergency fund. The interest paid by savings accounts is added to your balance.

High-yield accounts are a type of federally insured savings account that earns an interest rate that’s often much higher than the national average. The APY of these high-yield accounts may vary slightly, and over time, those small differences add up to real cash, so it pays to shop around for where you put your savings.

At the time of this writing, the best high-yield savings rate on our list of the best high-yield savings accounts was 4.75%. If you started with $10,000, and let it sit for a year with monthly compounding, you could make just over $485. That does not account for any taxes owed. High-yield savings accounts are a great way to earn some interest while still having easy access to your money.

A certificate of deposit is a type of savings account that’s used for a fixed period of time. For example, you might deposit funds in a three-year CD, and in exchange, you’ll receive a fixed interest rate for those three years. This is in contrast to a high-yield savings account, which typically has a variable interest rate.

CDs often pay higher interest rates than savings accounts, because they require you to lock up your money for a set period of time. (You’ll pay a penalty if you want to access your funds before the CD term ends.) If you’re willing to do that, locking in interest rates while they’re high can be well worth it — especially if you expect them to come down soon, as many experts do.

At the time of this writing, the best annual CD rates on our list was 4.50%. If you started with $10,000, after one year you could earn $450. That does not account for any taxes owed.

These ideas revolve around owning and renting physical property. Some, like buying a rental property, may feel out of reach, but if you have a spare room you could consider renting it out.

Investing in real estate to earn rental income is another way to build passive income. Long-term rentals can provide a reliable source of cash if they are located in a healthy market for renters, but they also carry long-term stressors like maintaining those properties, as well as paying multiple mortgages, property tax bills and other costs.

How much you can make on a rental property is difficult to determine, since every property has a different value. In 2024, the average landlord claimed to make just over $16,000 from leased property^[0]

If you can’t afford to buy an entire rental property you can consider renting out your own residence while you’re away on vacation. AirBnb and Vrbo allow you to set exact dates when people can rent your spot. If you’re away for the summer or over the holidays, it may be an opportunity to earn some extra cash.

It’s maybe a little easier to quantify how much you could make as an AirBnb or Vrbo host versus buying a rental property, but it will still depend on your location, the size of your home and the quality of your listing.

According to AirBnb, the typical host from around the world earned approximately $14,000 in 2022^[0]

If you’re looking to get into real estate, you can also start small: Rent out a room. Getting a roommate will provide regular, most likely monthly, passive income. Unfortunately, it may mean you have to share a bathroom and fridge space.

Depending on where you live, you could earn a few hundred dollars to over a thousand dollars a month versus living alone. For example, in New York City, the median price for a one-bedroom apartment is $4,370 a month. The median price for a two-bedroom is $5,550. If you split that with a roommate you’d only have to pay $2,775 (a $1,595 monthly savings versus if you lived alone). If you live somewhere less expensive, like Sacramento, your savings may be more like $560 a month. Akron, Ohio, is on the low end, with a savings rate of $275 per month^[0]

Starting a vending machine business is a relatively inexpensive venture. You’ll want to think about where to put it and what types of inventory you would want to stock it with.

You can purchase a used or refurbished machine for between $1,200 and $3,000, and the machines, on average, make around $300 a month. That being said, machines in high-traffic, safe areas can make more than double that.

These investments are quite a bit riskier than stocks and bonds, so be sure to read the fine print and make sure you fully understand them before diving in.

An alternative to traditional bank loans, peer-to-peer lenders, like Prosper and Lending Club, match investors who are willing to lend money with borrowers who are vetted by the platforms for creditworthiness. It’s riskier than putting cash in a high-yield savings account or money market fund, but also potentially can earn more interest — as much as 5% or more.

According to Prosper, the average historical return for their loans is 5.3%^[0]

Perhaps the original form of peer-to-peer lending, another common form of passive income is funding a private business you believe has the opportunity to generate future income. For high-net-worth individuals, this might be investing in private equity funds, which are typically only available to accredited investors who meet certain net worth or income requirements.

Another way is to back a family member, friend or other trusted partner to help fund their business with an agreement to earn returns from any future profits. But beware: No matter how large or small, investing in a single business is an inherently risky, long-term bet. Never invest more than you can afford to lose.

Private equity can vary widely in its return. But last January, famed investment firm Blackstone launched a private equity fund, Blackstone Private Equity Strategies (BXPE). BXPE returned 9.2% through September 2024 — and had an exceptionally high investment minimum. Another fund, managed by the private equity firm KKR, had a 10.66% annualized return as of November 2024 with an investment minimum of $1 million.

Say you invested in KKR’s fund with $1 million dollars. After one year, you could have potentially made $106,600 less any taxes or fees.

Crypto staking is a way of growing your holdings in certain cryptocurrencies by using them to help verify activity on an underlying blockchain network. When you stake a cryptocurrency, you can be rewarded with more cryptocurrency.

Staking, for most people, involves delegating your cryptocurrency to someone who is compiling records of transactions on the network on which it runs. Those verifiers need to put some tokens at stake to guard against fraudulent transmissions. By giving the voting power of your tokens to a reputable verifier, you can get a share of the rewards they receive for carrying out their job accurately.

But there is some risk: If the verifier you’re working with is penalized, you may be as well. And staking sometimes requires you to commit your holdings for a set period of time, meaning you can’t sell or trade them.

Several crypto platforms offer staking programs, though these arrangements have recently experienced regulatory scrutiny in the U.S. It’s important to note that staking is not available on all cryptocurrencies — notably Bitcoin does not support staking.

According to Coinbase, you can earn up to 12% through crypto staking on their platform, though that rate is subject to change^[0]

These ideas are based on creating something, such as content for a blog or an online course, and then allowing the sales of those items to happen in the background. While these ideas require significant initial effort, they may make money for you for years to come.

A way to build passive income at home is through payments for the use of intellectual property that you have created yourself, or for which you’ve purchased the rights.

Creating content can be a lot of work, especially for work that is engaging and reaches a large enough audience to generate income.

But once you’ve created something that people are using, it’s possible to generate revenue through display advertising, using a program such as Google Adsense, or to run sponsored content, which means companies pay you a fee to publish a post on your blog.

Another way to monetize a blog is affiliate marketing, which allows you to earn commissions if your readers purchase a product or service you’ve recommended or linked to. You may, however, find that creating content is not as hands-off as you might expect; there’s always pressure to create more content or update what you have to keep it viable.

Blogging or creating online content, like most forms of passive income, can have a wide range of payouts. According to a survey by Productive Blogging, bloggers are rewarded for their perseverance: While survey respondents with a blog less than one year old said they made $1.07 per month, those who had a blog for one to three years, on average, made $74.89 per month. Those numbers jumped to $1,935.02 for those with three to five years in the business.

The age of the blog, the number of blog posts made per month and the specific niche of the blog were also important^[0]

Have a unique skill? You can create and publish an online course teaching others to do what you do — whether that’s watercolor painting, coding or closet organizing. Keep in mind, creating a course may involve a lot of upfront work. You may have to write lesson plans, film videos and update the courses depending on the platform where you publish your course.

It’s also difficult to know how much you can make from an online course. Some course instructors publish many courses and can make a full-time living on their work. Others may only make a few hundred dollars a month — if that.

Similar to writing a blog, making money off a digital course depends on how much effort you’re willing to put into it. According to one analysis, the average instructor on digital course platform Udemy is making $3,306 per year, with 75% of instructors making less than $1,000 a year. The top 1% of instructors make more than 50% of all Udemy earnings^[0]

If you’ve got a car or a parking spot, you could try to make some extra income through ads or renting out a parking spot.

Did you know you can get paid to have your car wrapped in advertising? Be careful when vetting companies as there are lots of scams when it comes to car wrapping. Check out Carvertise and Nickelytics — but be aware that these companies do have some negative online reviews.

According to Carvertise, drivers can make between $100 to $500 a month just for driving around.

If you live in a city, near a concert venue or any area that can attract a crowd, the Spacer app allows you to rent out a parking spot. You’ll need a few photos of the spot, the dimensions and details on the spot’s security, access and distance from public transit.

While how much you make will depend on where you live, according to the website, the average host earns around $200 a month for renting out their driveway.

These ideas may not technically create passive income, but one of the best ways to make money is to not spend the money you have. Easier said than done, but so are some of the ways to make passive income. Here are the easiest ways to save money — meaning you can start right now with zero initial investment:

Eat less meat. Did you know that it’s cheaper to be vegetarian? According to a 2021 study from Oxford University, vegan diets reduced food costs by as much as one-third^[0]

Reduce your electric bill. Lowering your electricity bill isn’t just about turning off the lights. Changing your showerhead, using smart power strips and doing an energy audit can make a big difference.

Cancel unnecessary subscriptions. According a CNET survey, U.S. adults spend around $91 per month on subscription services^[0]