4 Easy Ways to Earn Passive Income

Want to make some money without having to lift a finger? If so, you're looking to earn what's called "passive income."

Simply put, that means money you earn without having to work for it. And while some passive income strategies take a little risk, there are safe options, too. As someone who's written about personal finance for years now, I've learned how to take advantage of a few of them myself.

Here are four ways to earn passive income that are worth exploring.

1. High-yield savings accounts: Safe and flexible

A high-yield savings account (HYSA) is one of the easiest ways to earn passive income in 2025.

Right now, there are online banks offering savings accounts with annual percentage yields (APYs) of 4.00% or higher. That's more than 10 times higher than the national average of 0.38%.

If you put $10,000 in an HYSA with an APY of 4.00%, you'd earn $400 in a year -- just for letting your money sit in the account.

Just like a traditional bank account, your money is FDIC-insured up to $250,000. You can also withdraw your funds anytime, making HYSAs perfect for emergency savings or short-term goals. I've had an HYSA myself for a few months now, and I love the mix of earning potential and constant access to my cash.

2. CD ladders: Lock in a guaranteed return

Certificates of deposit (CDs) are another great passive income tool. In exchange for locking in your money for a fixed period of time, you get a guaranteed interest rate.

Simple enough -- but what is a CD ladder? It involves dividing your money across multiple CDs with different terms, like 6, 12, 18, and 24 months.

As each CD matures, you can then reinvest in a new CD or cash it out, giving you a consistent stream of passive income. This strategy gives you access to long-term CD rates without tying up all your money at once.

3. Fixed deferred annuities: Guaranteed income for the long haul

A fixed deferred annuity is another way to lock in a high interest rate -- often even higher than what CDs offer.

These are insurance products that work similarly to long-term CDs: You make a lump-sum deposit and earn a fixed interest rate for a set period. However, annuities give you the option to turn your investment into an income stream. Instead of cashing out all at once, you can get regular payments (usually monthly) for a certain number of years -- or for the rest of your life.

Many top fixed annuities offer 5% to 6% annual returns, with no market risk. And with deferred annuities, you don't pay tax on your earnings until they're paid out.

Before you commit, check that the annuity includes a death benefit so your heirs can receive any remaining funds if you pass away before all payments are made.

4. Dividend stocks: Passive income with growth potential

Lastly, dividend-paying stocks provide regular income through quarterly cash payouts to their shareholders, along with the chance for the stock price to grow over time. Companies with strong financials and a history of consistent dividends make for great picks here.

Even smaller dividends can add up over time, especially if you reinvest them in more shares and hold the stock for the long run.

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