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Passive income ideas so you can earn more

A couple enjoys having passive income.
November 01, 2018

By Kathryn Pins

Passive income seems like the ultimate dream. Sitting on a beach as your money simply makes money for you, without you lifting a finger. Sounds ideal, right? Well, many passive income opportunities require a lot more work than it might seem. Many times, the greater the “passive” income, the more effort or collateral you may need to keep the income coming in. But don’t let that scare you away. Let’s talk about the many ways that you can enjoy some passive income.

Easy-to-start passive income ideas

Certificates with a high APY can help your money make more money. At the very least, it can offset the rise in inflation every year. You should really consider certificates if you want to save safely for a year to five years or more. As interest rates go up, certificates with shorter terms such as a one-year or two-year certificate will help maximize your income. Why? Once you put money in a certificate, the rate at that time is the rate for the entire term. If interest rates are rising, when your term ends and you put your funds in a new certificate, it will be at a new, higher rate. If you want to lock in a rate and not have to worry about your funds, a longer term may be best for you. Compare your certificate options and find the one that works best.

A savings account can be the easiest way to enjoy passive income and is often overlooked. Many savings accounts at large banks offer a very small APY. Choosing to put your money in a high-rate savings account can make a really big difference. The key is to find an account that does not have monthly fees or large balance requirements. If you don’t already have a high-rate account, the switch is easy and worth it because as your money sits in your savings, it makes more money. You still have the access you get with a low-rate account, just a better payoff.

Cash back on a credit card, believe it or not, is considered passive income. If you have the right kind of card, you can really maximize the money you spend. A card that will reward you for most, if not all, of your purchases is best, whether it’s a card that will give you two points for every dollar or 3 percent cash back on everything. Switching to a new credit card could feel like a chore, but in the end, the transition may be easier that you think—and worth it.

Passive income ideas with a bit of work

Stock dividends often come to mind when people think of passive income. When you’re a shareholder in an organization, you can receive quarterly dividends on your investment. These dividends are not guaranteed and can vary greatly depending on a company’s earnings. Purchasing stock is not a heavy lift, but the research behind which stock to buy can make this income less passive. If you diversify your portfolio, your income from dividends could be a bit easier to manage.

Rental property can bring in a lot of income, but some months the income is passive, other months it requires a lot of work. As a landlord, it is recommended that you check in on your property every six months to make sure things are running smoothly. You also have to be prepared financially if something breaks or if you cannot find a tenant. There are many things that can go wrong, but so many that can go right. As you are renting out a place, the property value could be going up. Also, over time, that income can be set aside for college tuition or simply paying the bills. Purchasing a place is a heavier lift than the options above, but the payout can also be significantly greater.

Renting out to vacationers has become more popular with sites like VRBO or Airbnb. Again, it may be difficult to originally finance this purchase, but this is a property that you can enjoy too. Before you buy, think about the amount of time you will need to spend organizing visitors, clean-ups and mishaps. Depending on the property, management could become a part-time job. Pro tip: consider renting out a vacation home for month at a time instead of a week. It may be harder at first to find people, but the place may require less organization and time. If you are serious about getting a vacation property, check out our tips to make a vacation property work for you.


Kathryn Pins is a marketing content specialist at Alliant. She’s passionate about finding and communicating meaningful financial information with Money Mentor readers. Kathryn is a saver who gets more excited about certificates and her Roth IRA than shopping. When she does spend her earnings, it’s on furthering her education, travel, unique experiences, and loved ones.