Money / Making Money

How To Generate Passive Income With Just $1,000

July 3, 2024

3 min Read

Written by Gabrielle Olya

Edited by Chris Cluff

A woman holds a pen while looking at her laptop during her work day.

Drs Producoes / iStock/Getty Images

Commitment to Our Readers

GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.

20 Years
Helping You Live Richer

Reviewed
by Experts

Trusted by
Millions of Readers

It’s always a smart idea to have multiple income streams, including both active and passive sources of income. There are many ways to start earning passive income, and some don’t require much starting capital.

Here are a few ideas for generating passive income with only a $1,000 initial investment.

Invest In Property You Can Rent Out

You may not be able to buy an apartment building with $1,000, but there are smaller, more affordable options that you can buy to start generating passive income.

“You can use $1,000 to invest in a shed, build a detached garage or parking space, or make some minor improvements to your home that will allow you to rent out space in it,” said Ryan Barone, co-founder and CEO at RentRedi. “You can then create passive income by renting parts of your home to people who need extra storage, parking or workspaces.”

Invest In Real Estate Investment Trusts

Another way to invest in real estate for passive income without a ton of cash is to invest in Real Estate Investment Trusts (REITs).

“These investments, by law, must pay out cash flow to all their investors,” said Ashley M. Fox, financial education specialist and CEO at Empify. “By investing $1,000 in REITs, you can own stock in real estate companies that own shopping malls, casinos, billboards, grocery stores, office buildings, movie theaters and more. You can initially expect to receive anywhere between 4% and 17% in annual income.”

Invest In the Stock Market

If you’re looking to make money over the long term, investing in the stock market can produce passive income on an initial investment of $1,000.

“By opening a brokerage account, you can take your initial $1,000 and invest it in the appropriate mix of low-cost cash, fixed-income and equity ETFs that best suit your needs and risk profile,” said Nicholas Gerber, CEO at Marygold & Co., a global holding company. “[The] average yield on the stock market is above 2% today, and over 20 years, the stock market has never lost money. ‘Set it and forget [it’ is] the best way to easily make passive income.”

Put Your Funds Into a High-Yield Savings Account or CD

If you want guaranteed returns, consider putting your $1,000 into an interest-bearing bank account.

“Putting your money in a high-yield savings account or a CD can provide safe, if small, returns,” said Dre Villeroy, CEO of Beyorch, a retirement planning and wealth management firm.

Lend Your Money to Peers

“Peer-to-peer lending sites such as LendingClub and Prosper allow you to lend small amounts to multiple borrowers, diversifying risk and increasing possible rewards,” Villeroy said.

When you lend money through these sites, you will receive your $1,000 back, plus interest.

More From GOBankingRates