Making money in your sleep may sound far-fetched, but it’s actually not as unrealistic as it seems.

While most of us think of our day jobs as the income generators, it’s possible to earn some types of money without a lot of regular effort. These are known as passive income streams, and although they often require an initial investment of time and money, the whole point is you shouldn’t have to do much once you establish them.

In fact, the simplest source of passive income — earning interest on your savings — is about as low-effort as it gets. And between interest, shareholder dividends, and rental income, a fifth of U.S. households were earning a median of $4,200 a year in passive income in 2019, according to U.S. Census Bureau data cited by the Chamber of Commerce. (That’s about $5,400 in today’s dollars.)

So what? Setting up passive income sources can be a smart way to help recession-proof your finances and have something to fall back on if you ever lose your day job. And there are many options if you have the financial resources, time, and patience.

Here are a few options of varying risk level:

Open a high-yield savings account. Again, it doesn’t get more passive than this. A high-yield savings account may be the easiest and safest way to explore passive income, especially with interest rates still relatively high. Put your money to work by finding a savings account with a competitive annual percentage yield. Even if you only earn a few hundred bucks in a year, it’s a super low-maintenance way to collect some extra cash. And thanks to the power of compound interest, even your interest will earn interest. (This calculator can help you see how much). Check out SoFi’s high-yield savings offering.

Loan money. When you put your money into a high-yield savings account, you’re essentially loaning it to the bank for interest. In much the same vein, you can loan money to a company or the government by buying bonds. Just keep in mind it’s all about risk vs. reward. For example, buying a bond issued by a struggling company may pay higher interest than a U.S. Treasury bond, but there’s also a bigger chance you won’t get repaid.

Invest in dividend-paying stocks. If you’re taking a long-term buy and hold approach to investing for your future, consider buying stocks that pay regular dividends. Companies usually pay dividends on a quarterly basis, and the more shares of a company you own, the higher the dividend payout. If you want to be extra passive, you can set up automatically recurring investments into stocks or funds of your choice. (Or, to invest in real estate portfolios without actually having to buy and manage properties, consider Real Estate Investment Trusts, which typically pay regular dividends.) Just remember: There are no guarantees you won’t lose money when you sell your stocks.

Rent a property. Rental properties can generate significant amounts of money, but they usually require a large upfront cash commitment and more work than other forms of passive income. (For example, you’ll probably have to screen tenants and manage repairs.) Renting out a spare room in your house may or may not be less work.

Rent other stuff. If being a full-fledged landlord isn’t feasible, consider what else you can rent out. Use sites like SpotHero and Neighbor to rent your parking spot or driveway. Or list your garage or shed on a peer-to-peer storage site. If you’re out of town for a while, you may want to list the car you left behind on Turo. You can even rent out your bike on Spokeo.

House sit. As long as it doesn’t interfere with your daily routine, house sitting can be an easy way to earn money without doing much. Especially if it’s just watering plants and collecting mail. Ask friends and acquaintances if they’ll need a housesitter during the holidays, or list your “services” on sites like HouseSitter.com.

Sell online courses. Maybe you’re an expert in a hot topic like digital marketing, web development, or AI. Share your expertise by creating online courses on platforms like Udemy, Teachable, or Skillshare. This takes a lot of effort upfront, but once you've created a course, you can focus simply on selling it.

Need more inspo? Check out more ways to earn passive income.

Related Reading

Active vs. Passive Income (U.S. News & World Report)

Side Hustles That Don’t Feel Like a Hustle (SoFi)

39-Year-Old Makes $8,200/Month in Passive Income While Reinventing Her Business (CNBC)

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