3 Easy Ways to Start Earning Passive Income by 2025

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Looking for simple ways to earn passive income? Check out a few proven methods that could start bringing in money quickly. [[{“value”:”

Passive income is a popular buzzword, because the idea sounds amazing. Instead of only getting paid when you work, you invest your money or time in something that earns income while you sleep.

Unfortunately, lots of passive income ideas aren’t all they’re cracked up to be. Contrary to what influencers say on social media, dropshipping is not some risk-free way to get rich, and owning rental properties is anything but passive.

If you’re looking for easy ways to earn a reasonable amount of passive income, here are the best options.

1. Invest in stocks the pay a high dividend

Investing in stocks is a widely recommended financial habit, because it’s one of the most effective ways to build wealth over time. While the U.S. stock market has its ups and downs, its long-term return has been about 10% per year. And if passive income is what you’re after, you could get that by focusing on stocks with a high dividend yield.

A dividend is when a company distributes a share of its profits to shareholders. The amount of the dividend depends on the company. Some don’t pay dividends at all, some pay 1% to 3%, but high-yielding dividend stocks could pay 4% to 5% or more.

Imagine you pick out a few companies you like with an average dividend yield of 5%. If you invest $100,000, you’d receive about $5,000 per year in dividends. That’s a basic example, and dividend amounts can change. But for those with money to invest, dividend stocks are a simple passive income stream.

2. Save money in a high-yield savings account

Another way to get a good return on your money is a high-yield savings account. Many of the best savings accounts have rates above 4%, and a few even earn over 5%.

Just like investing, saving is an important financial habit. You’ll need money for emergencies. The standard recommendation is having three to six months of living expenses in your emergency fund. It’s also wise to save for large future expenses, such as vacations, a new car, or a down payment on a home.

If you don’t have as much saved as you like, make saving money a goal for the final months of 2024. Even if you’re happy with your balance, don’t forget to put it in a high-yield savings account to earn a competitive amount of interest.

Let’s say you have $5,000 in savings right now. You focus on building that, and by 2025, you increase that to $10,000. In a high-yield account with an APY of 4.50%, you’d earn $450 per year in interest.

3. Rent out your car or a spare room

If you have extra space in your home or a car you don’t use all the time, you could turn either into a source of income. Airbnb lets you rent out a room or a guest unit on your property. For car rentals, Turo is a popular choice, and it reports that hosts could earn an average of $634 per month.

These options certainly aren’t for everyone, and they aren’t 100% hands off. If you rent out a room in your home, you need to clean it after each rental and prepare it for each new guest. If you rent out your car, it could require more frequent maintenance from the additional wear and tear.

With either option, you’ll need to assist renters when necessary. You’ll probably also need to get additional homeowners or auto insurance. But if you don’t mind that, you could potentially earn an extra $500 to $1,000 per month or more.

Dividend stocks and high-yield savings accounts are both reliable ways to earn passive income. You’ll only be earning a small percentage of the money you put in, but as you invest and save more, your earnings will get bigger. Home and car rentals are also options that could work well, if you don’t mind managing them.

Decide which ones you like, and you can start setting up passive income streams for 2025 and beyond.

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