How to make passive income in 2026

Passive income is money earned with little to no daily effort, often from investments or side ventures that continue to generate revenue over time. This article explains how passive income works and shares practical ways to start earning it for yourself.

Key takeaways:

• Passive income is money you can earn without much ongoing time investment.
• Your best asset to generate passive income are the skills you already have.
• There are many investment options to generate passive income, but they require capital.

How to create passive income

Looking to earn money with minimal effort? Aren’t we all. Unfortunately, there is no “quick fix” easy solution to earning passive income, and there are innumerable scams and unscrupulous people that will try and take advantage of you. If generating passive income were easy, everyone would be doing it. 

There is a timeless saying: It takes money to make money. That is mostly true, particularly for passive income investing. For example, if you invest $10,000 in a 1-year CD with a 5% annual percentage yield (APY), you will earn $500 in interest after one year. However, that can scale and grow over time. What might only be $500 a year now, could turn into much more years down the road. You just need to start small and put in the work. If you’re looking for ways to make money, the key is to be creative and use the skills you have.

What is passive income?

Passive income can come in many forms. A writer or musician usually gets a few cents every time someone buys their work. A photographer with stock images on a website gets paid every time someone licenses that picture. If someone on social media shares a link to a product, they are probably making passive income on sales of that product. Below, you’ll find plenty of ideas on how to get started, but first a definition:

 Passive income:

Money earned regularly with minimal ongoing effort, often from investments, rental properties, or automated business activities.

The most important aspect of this is that “minimal ongoing effort” does not mean “no effort.” Almost all of the following options have start-up time investments of varying levels, and you may even need to learn an entirely new skill.

The benefits of passive income

The primary way to make money in our economy is a salary. In order to earn a salary, you are functionally trading your time for money. Unfortunately, time is a limited resource. You only have so many hours in a day. Passive income is a way to earn money without spending time. That means, if it’s scalable, you can earn more than you would otherwise. Starting out small and growing a business is one of the best ways to increase your wealth and happiness over time.

5 beginner passive income ideas

Unlike investment options (see below), these ideas don’t take a lot of initial upfront capital to get started. Instead, they rely on your ingenuity and creativity. Most involve creating something once, that can continue to sell or provide income over time. That’s easiest when you are monetizing something you are already good at or enjoy doing. So, take a look at your current skills and see how you can turn one into a passive income opportunity. Or think about something you’d like to learn how to do.

Create digital products or content

Content creation covers much more than having social media followers and making funny videos. There’s a whole world of content that people are willing to purchase, from niche content for tabletop games to stock photography and beyond. Sites like Getty Images, Patreon, and Substack allow people to find your work or support you directly. The key here is to lean into skills you already may have or turn a hobby that you love into a potential revenue stream. Here are a few ideas, but there are many more:

• Self-publish a book
• Design logos or illustrations
• Stock photos, music, or sound clips
• Code and code snippets
• Game content
• Digital learning courses
• Spreadsheets for particular tasks
• Print-on-demand shops

Affiliate marketing

If you’re active on social media and have a fair number of followers, you could consider affiliate marketing. By promoting other companies’ products or services, you can earn a commission each time someone makes a purchase through your unique referral link. This can be done through a blog, social media, review sites, YouTube, or anywhere else you can build an audience. The key is to focus on products you genuinely believe in and that align with your audience’s interests. There are many affiliate programs you can attempt to join, and over time, a well-placed affiliate link in a piece of evergreen content can continue earning income long after the initial work is done.

Car ads

Have you seen cars driving around with company names and info on them? They don’t always belong to the company owner. You can get paid for putting their business on your vehicle, turning your daily commute or errands into an income opportunity. Wrapping your car with a business advertisement is a low-effort way to earn passive income simply by driving as you normally would. Just be sure to work with a reputable ad wrap company that offers clear contracts.

Use points or cash-back credit cards wisely

Using a cash-back or points credit card to pay your regular bills can be a smart way to earn passive rewards on money you’re already spending. By charging expenses like utilities, subscriptions, or groceries to a rewards card—and then paying off the full balance each month—you can avoid interest charges while accumulating benefits. The key, though, is to stay disciplined and never carry a balance; otherwise, you are undercutting any value you get from the rewards.

Simply save money

This may sound silly, but there are lots of simple ways to reduce your monthly spending. While this technically isn’t passive income, cutting bills by $200 is just as good as generating an additional $200 with passive income. Start by tracking your spending to see where you can cut back. You can also do simple things like turn off lights when you leave a room and lower your heat a degree or two to reduce utility costs. Or go through all of your media subscriptions and cancel any ones you barely ever use. Every little bit helps.

7 passive income investment types

Investing is a very common way to create passive income. However, not every investment opportunity does so, and when they do, it is sometimes at the expense of growth. Because everyone’s current situation and future goals are different, the information in this article, or any article for that matter, should not be taken as individual investing advice. Instead, use this information as a guide as you discuss your investment options with a financial professional, preferably a fiduciary . If you don’t have one, we can connect you with an experienced financial professional in your area.

Learn more about investments to grow your passive income.

Dividend stocks

Dividend stocks are stocks in particular companies that have a consistent history of providing cash dividend payouts. Basically, the company shares some of its profits with everyone who owns a small piece of that company through stock shares. It’s usually paid quarterly but can also be annually. You can often take the payout as cash or reinvest it into more shares. Dividends are usually expressed as a yield percentage. For example, if a company has a current share price of $100 and it declares a dividend of $5 per share, then the dividend yield will be 5%. If you owned 10 shares, you’d receive $50.¹

Dividend mutual funds and exchange-traded funds

Mutual funds and exchange-traded funds (ETFs) that provide dividends operate in a very similar way to dividend stocks. However, they usually provide more diversification because they group (sometimes many) different investments together into one bucket. These types of funds can also come with management fees that range from a very small percentage on things like index funds to higher amounts on actively managed mutual funds. Learn more about the differences.  

Bonds

Bonds are kind of like you giving a loan to a government or corporation in exchange for scheduled interest payments over a set period. Once the bond reaches maturity, you also get your initial investment back. While bonds generally offer lower returns than stocks, they tend to be less volatile. That makes them a popular choice for conservative investors seeking steady income. However they are subject to interest rate risks, which can cause their value to lower as interest rates rise.

Rental properties

If you have the ability to invest in real estate to earn rental income, it can build a sustainable long-term passive income source. Once a property is purchased and set up, it can provide ongoing cash flow with relatively minimal day-to-day involvement—especially if you hire a property manager to handle maintenance and tenant issues. Real estate also has the potential to appreciate over time, adding long-term value in addition to the rental income. That said, there are always risks. Maintenance, multiple mortgages, and tenant issues can all provide extra stress and work. If you think this may be an option for you, consider how much house you can afford. Another, perhaps more accessible, way to get passive income is to rent out a spare room in your home. Taking on a roommate isn’t for everyone but can provide considerable income immediately, depending on the space and your location.

Real estate investment trusts (REITs)

If you don’t want to purchase and manage your own rental property, REITs offer another way to get passive income through real estate. You can invest in REITs either directly or through mutual funds or ETFs. REITs are essentially buying shares of a real estate portfolio, instead of company stock shares. Different REITs may specialize in various types of real estate such as apartment buildings, shopping centers, office space, or warehouses. Like other investments, REITs carry risk. They are subject to interest rate changes, home affordability, and can fluctuate in value in response to changing economic conditions.

Money market funds, high-yield savings, and CDs

These are all low-risk ways to earn passive income through interest, but the returns are typically modest. Usually, they work best for short-term savings or as a safe place to park cash while still earning something. High-yield savings accounts offer flexibility and easy access to funds, while CDs lock in your money for a set term in exchange for a slightly higher rate. Money market funds are a type of mutual fund that rely on specific short-term investments. While these tools won’t generate substantial income, they can provide stability and a small financial boost without much effort or risk.

Peer-to-peer lending

Peer-to-peer lending allows individuals to lend money directly to other people through online platforms, cutting out traditional banks. While this does require some upfront capital to invest, the returns can be attractive. However, this can be riskier than many other methods as a borrower can default on the loan and you could lose what you’ve put into it. Peer-to-peer lending should not be entered into lightly and works best when approached with caution and a solid understanding of the platform’s terms.

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¹The investment return and principal value of dividend stocks, mutual funds, and ETFs will fluctuate and investment losses are possible.