20 Passive Income Investments You Can Start to Grow Your Wealth

Imagine earning money while you relax, travel, or sleep. Building wealth doesn’t have to mean late nights, stress, or giving up precious time. Passive income streams can work in the background, adding cash to your account with minimal effort. But with so many options out there, where should you begin?

According to a 2024 Bankrate survey, over one-third (36%) of US adults earn extra money through side hustles. Starting with dividend stocks to real estate, this article will break down how much you could earn, the initial steps, and how to keep those earnings growing.

Curious which passive income options might boost your bank account? Keep reading to find out and let us know which strategies you want to try!

Dividend Stocks

Dividend stocks pay a portion of company profits back to shareholders regularly. Many large corporations, like blue-chip stocks, consistently pay dividends. Investors typically receive these payments quarterly. 

Many companies pay dividends that typically range between 1% and 5%, though some riskier stocks or sectors can offer yields over 10%, which may reflect higher risks. Starting with dividend stocks requires a brokerage account. 

Popular platforms like Vanguard, Fidelity, and Charles Schwab provide easy access to a range of dividend-paying stocks. An initial investment of $10,000 in a stock with a 4% annual dividend could yield $400 each year. Reinvesting dividends often helps grow earnings.

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Real Estate Investment Trusts (REITs)

REITs allow you to invest in real estate without purchasing properties directly. Publicly traded REITs often focus on income-generating assets, including shopping centers, apartments, and office buildings. 

By law, they must distribute 90% of taxable income to shareholders, making them a popular choice for passive income. Investors can buy REIT shares on the stock market, much like stocks. 

An investment in a well-performing REIT might yield anywhere from 4% to over 10%, depending on market conditions. If you invest $5,000, you could earn anywhere from $200 to $500 yearly. REITs offer a low-cost entry into real estate with potential for high dividends.

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Peer-to-Peer Lending

Peer-to-peer lending platforms match borrowers with investors willing to lend money at an interest rate. Through platforms like LendingClub or Prosper, investors can fund loans and receive payments monthly, often at higher rates than traditional banks.

Investing in peer-to-peer lending requires creating an account on a lending platform. Many start with as little as $25 per loan, allowing small contributions to diversify risk. Interest rates vary by loan and borrower creditworthiness. 

Many peer-to-peer loans can offer returns between 6% and 12%, but higher returns often come with greater risk of borrower default. For instance, a $1,000 investment with a 10% return could yield $100 in interest each year.

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High-Yield Savings Accounts

A high-yield savings account offers a low-risk way to earn interest, though inflation may erode the purchasing power of your savings over time. Online banks typically offer higher interest rates than traditional banks, sometimes exceeding 4% annually. 

While earnings are lower than stocks, they are virtually risk-free, with the added security of FDIC insurance. To open a high-yield savings account, visit any online bank with high rates. Interest payments compound monthly, growing over time. 

With a $10,000 deposit at a 3% interest rate, you’d earn about $300 in interest each year.

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Certificates of Deposit (CDs)

Certificates of Deposit (CDs) are time deposits offered by banks. They provide a fixed interest rate for a set period, such as six months, one year, or five years. CDs are low-risk investments that provide predictable returns but may not keep pace with inflation.

Investing in a CD involves choosing a bank and the preferred CD term. Interest rates vary, with longer terms generally offering higher rates. A $5,000 investment in a one-year CD at 2% interest would yield $100 by maturity. 

While returns are lower than other investments, CDs offer security and predictability.

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Residential Rental Properties

Owning residential properties provides regular income through tenant payments. Although it requires a larger upfront investment, rental income can yield significant returns over time. Location, property condition, and market demand all affect earnings potential.

To start, consider working with a realtor or property management company to find profitable rental properties. If a rental property brings in $1,500 monthly and costs $1,000 in expenses, it could net $500 each month. The passive income potential grows with each additional property owned.

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Crowdfunding Real Estate

Real estate crowdfunding lets investors pool funds to buy larger properties. Platforms like Fundrise and RealtyMogul allow non-accredited investors to start with as little as $500, making it accessible to many.

Crowdfunded real estate investments typically offer dividends based on property performance, averaging around 6% to 10% annually. A $1,000 investment might yield around $60 to $100 yearly, depending on the platform and property performance. 

Crowdfunding provides real estate exposure with lower entry costs than direct ownership.

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Index Funds

Index funds passively track the performance of a stock market index, like the S&P 500. These funds spread investments across numerous companies, providing broad market exposure and reducing individual stock risks. They also tend to have low fees and offer steady returns.

To invest in index funds, open an account with a brokerage or investment platform. A well-performing index fund might average 7% to 10% annually according to historical averages. With a $5,000 investment, you could earn $350 to $500 each year, depending on market performance.

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Bond Funds

Bond funds pool money to buy various government, municipal, or corporate bonds. They offer predictable returns and are less volatile than stocks. Bonds provide interest payments regularly, making them suitable for passive income.

Investing in a bond fund is simple; many brokerages offer them as mutual funds or ETFs. Bond funds typically return around 3% to 5% annually but still subject to market fluctuations. A $2,000 investment in a bond fund earning 4% would yield $80 each year. They offer stability but with lower returns compared to stocks.

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Automated Investment Platforms (Robo-Advisors)

Robo-advisors manage investments based on personal preferences, such as risk tolerance and goals. Platforms like Betterment and Wealthfront handle everything, from rebalancing to reinvesting dividends, making them a hands-off option.

Opening a robo-advisor account requires an initial deposit, with fees averaging 0.25% annually. Investors might see 5% to 8% returns with robo-advisors, though these are dependent on market conditions and the portfolio’s risk level. 

A $10,000 investment could yield $500 to $800 annually, with minimal ongoing involvement required.

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Digital Products

Creating digital products, such as e-books, courses, or printables, can generate passive income long-term . Though initial creation can be intensive, digital products require little maintenance while generating income each time they sell. 

Selling digital products often involves creating a platform on sites like Etsy, Gumroad, or Amazon. Earnings vary widely based on demand and product quality. 

If priced at $15, a digital product that sells 100 times monthly could generate $1,500. Digital products offer an income potential limited only by sales volume.

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Writing Royalties

Similar to digital products where the effort is mostly at the start, authors also earn royalties on books sold through traditional or self-publishing. Earning passive income this way requires upfront work to write and publish a book, but royalties continue as long as sales persist.

Self-publishing platforms like Amazon Kindle Direct Publishing make it easy to start. Royalty rates vary, with self-publishing often offering around 70% of each sale. An e-book priced at $10 could earn $7 per sale. If it sells 100 copies a month, it could generate $700 monthly income.

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Investing in Precious Metals

Precious metals, like gold or silver, retain value over time and can appreciate. Many investors use them as a hedge against inflation. Although not traditionally income-generating, precious metals add diversity to a passive income portfolio.

Precious metals are accessible through ETFs or physical bullion. Prices fluctuate, so returns vary, but some metals appreciate significantly in unstable markets. A $1,000 investment might grow to $1,100 or higher if gold prices rise. This investment serves as a stable, long-term store of wealth.

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Invest in Art or Collectibles

Art and collectibles can appreciate in value, allowing you to earn when sold later. Items like paintings, vintage toys, or rare coins often grow in worth over time. Holding art and collectibles offers both enjoyment and financial benefits as value accrues.

Though the market is speculative and not guaranteed, researching the market can yield high profits. Earnings vary, with some pieces appreciating significantly if demand rises. Well-chosen collectibles can bring sizable returns when sold, rewarding your patience.

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Invest in Agricultural Land

Investing in agricultural land can provide rental income and long-term appreciation. Land rented to farmers generates income without requiring day-to-day involvement. Agricultural investments offer stability, as land values often appreciate with demand.

To invest, research local farmland or look into agricultural investment funds. Rental yields vary by region, but farmland can generate 3% to 5% annually. Over time, appreciation may add value to your investment, creating both passive income and asset growth.

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Invest in Startups for Equity

Startup investing provides a chance to earn equity in new businesses. Platforms like SeedInvest and AngelList connect investors with high-potential startups across industries. This approach offers growth potential, with possible returns if the startup succeeds.

Begin by researching startup investment platforms and reviewing company pitches. Returns can be substantial, with early investments in successful startups generating large gains, but this is a high-risk investment, and most startups fail.

Though high-risk, startup investing offers strong passive income for informed investors.

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Investing in Digital Real Estate

Digital real estate, often linked to NFTs (non-fungible tokens), refers to owning virtual property, like land or assets in metaverse platforms such as Decentraland or The Sandbox. These digital spaces can be bought, sold, or even rented out, with transactions secured through blockchain technology.

Investing in digital real estate involves purchasing virtual land or unique assets on trusted platforms. Prices for popular locations or properties can rise significantly, with some parcels selling for six figures. 

Though this can be quite volatile depending on market conditions, owning a piece of this virtual world offers potential for high returns.

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Buying Art with Growth Potential

Art investments offer a way to earn as pieces gain value over time. Emerging artists or limited-edition works can appreciate substantially. Many art investors purchase works through galleries or auctions, then hold them until the value increases.

To begin, research artists and work with galleries that support emerging talent. Art appreciation rates vary, with certain pieces growing 5% to 20% annually depending based on artist and market trends. Selling art later can yield high returns, offering both enjoyment and income.

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Buy and Lease Storage Units

Investing in storage units provides a consistent income as people need secure storage options. By buying storage units, you earn income without active management. Rental demand remains high, as people store belongings without ongoing commitment.

To invest, purchase a storage facility or units in high-demand areas. Monthly earnings vary, with each unit bringing in around $50 to $150 in rent depending on location. As demand for storage rises, this investment offers a reliable income stream.

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Purchasing Private Resorts for Rental Arbitrage

To close this list off, purchasing a private resort to lease to rental arbitrage operators offers lucrative opportunities. These operators often seek high-quality properties with established amenities to attract guests.

By leasing to them, you maintain ownership while generating regular income without the hassle of daily management. Your resort’s appeal and exclusive features could set premium rental rates. 

High demand for unique getaways means steady interest from arbitrage operators, ensuring consistent revenue. A clear contract outlining responsibilities also minimizes risks, giving you control over property use.

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Building Financial Freedom with Passive Income

Passive income streams can bring you closer to financial independence with less daily involvement. By choosing investments that suit your lifestyle, you can grow wealth steadily and with fewer stressors. This approach gives you the freedom to focus on what matters most in your life.

Starting with just one or two passive income sources can open up new financial possibilities. Be it you’re investing in dividend stocks, real estate, or digital products, each income stream builds your financial resilience over time.

Remember, patience and consistency make a big difference. With the right strategies, your passive income can help you achieve long-term financial security, peace of mind, and the flexibility to enjoy life on your own terms.

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