Plenty of people fantasize about getting paid to do nothing but don’t take the necessary steps to turn fantasy into reality. It’s not as hard as you might think — as long as you have a little money to invest in passive income sources. As the name suggests, passive income is money you earn with little or no effort. The main thing you need to earn passive income is capital, but even that’s not required if you already own certain assets (like a car or house).
In a recent video, financial influencer Vincent Chan discussed some of these passive income streams. Here are six passive income streams to build wealth in 2025, as recommended by Chan.
Real Estate: Contrary to what you might believe, it doesn’t take a massive capital outlay to get involved in real estate. You can actually get started for as little as $1,000, $100, or even $10 with a real estate investment trust (REIT). REITs are companies that own income-producing real estate and are required to pay out 90% of their income to shareholders. Many REITs are publicly traded and can produce decent returns. For instance, the Dow Jones Equity All REIT Index produced an 11.3% return in 2023, according to S&P Global. Investing in “future-proof” REITs, such as those specializing in data centers, may be particularly beneficial due to the rise of AI and technology.
Small Businesses: With about 34.7 million small businesses in the U.S., there are numerous investment opportunities. For passive income, focus on businesses that don’t require your active participation. Consider investing in businesses that can run with minimal effort, like FBA (Fulfillment by Amazon) stores or affiliate marketing sites.
Car Rentals: Think of Turo, a car rental marketplace, as the Airbnb for cars. You can put your car on their marketplace for others to rent it out. When considering this option, location and vehicle type are key factors. Cars in tourist hotspots or bustling cities tend to get more bookings, and higher-end cars generally earn more.
Dividend Stocks: Investing in dividend stocks provides passive income in the form of dividend payouts. It’s important to consider the dividend yield and the payout ratio, which indicates how much profit a company pays in dividends. The S&P 500 often includes large, established companies that offer decent dividend-paying stocks.
Dividend Index Funds: If you’re not keen on picking specific stocks, consider investing in dividend index funds. These are pools of dividend-paying stocks that allow you to enjoy a diverse range of companies without having to select them individually. Pay attention to the expense ratio, as a lower ratio means a better return.
High-Yield Savings Account: This is Chan’s favorite passive income stream. High-yield savings accounts offer significantly higher annual percentage yields, particularly from online and fintech banks. When choosing one, evaluate the interest rate, fees, and whether the account is insured by the Federal Deposit Insurance Corporation (FDIC).
Exploring these options can help you establish multiple streams of passive income, contributing to your overall financial growth in the coming year.
Source: GOBankingRates
