The most successful people don’t just make money per hour. They create passive income streams so they can also earn money while they sleep. But you don’t have to be rich to do this. Below, you’ll learn a few ways to earn passive income with a $1,000 investment.

To be clear, you’re not going to earn a lot of passive income by investing $1,000. If it were possible, everyone would do it. But you can get the ball rolling and build on that foundation as you have more money to invest.

1. Invest in a REIT

Traditional real estate investing is out of reach when you’re on a tight budget. You can’t exactly buy a building with $1,000. But you can invest that money in a real estate investment trust (REIT), a company that owns income-producing real estate. You can buy REIT shares through a stock broker, just like you invest in stocks.

REITs are legally required to distribute at least 90% of their taxable income to shareholders. This is why they tend to pay high dividends. Their average dividend yield is around 4%, and on a $1,000 investment, that would be around $40.

Our picks for the best high-yield savings accounts of 2024

American Express® High Yield Savings APY 4.00% Pricing information Annual percentage yield of 4.00% as of November 2, 2024 Member of the FDIC.	APY 4.00% Pricing information Annual percentage yield of 4.00% as of November 2, 2024	Min. earn $0
Capital One 360 ​​Performance Savings APY 4.00% Pricing information Check the Capital One website for the most up-to-date pricing. The Advertised Annual Percentage Yield (APY) is variable and accurate as of October 23, 2024. Rates are subject to change at any time before or after account opening. Member of the FDIC.	APY 4.00% Pricing information Check the Capital One website for the most up-to-date pricing. The Advertised Annual Percentage Yield (APY) is variable and accurate as of October 23, 2024. Rates are subject to change at any time before or after account opening.	Min. earn $0
CIT Platinum Savings APY 4.70% APY on balances of $5,000 or more Pricing information 4.70% APY on balances of $5,000 or more; otherwise, 0.25% APY Min. earn $100 to open an account, $5,000 for maximum APY Member of the FDIC.	APY 4.70% APY on balances of $5,000 or more Pricing information 4.70% APY on balances of $5,000 or more; otherwise, 0.25% APY	Min. earn $100 to open an account, $5,000 for maximum APY

If you don’t yet have a brokerage account, Robinhood is a beginner-friendly option. You can use this broker to invest in REITs, stocks, ETFs and more, with $0 commissions. Click here to learn more and open an account today.

2. Buy Treasury Bills

The U.S. government sells Treasury bonds to finance its operations. You can buy them through TreasuryDirect, and because they’re backed by the U.S. government, they’re as safe as possible. There are three types of Cash available:

• Treasury bills (T-bills) with maturities ranging from four to 52 weeks
• Treasury bonds (T-notes) with a duration ranging from two to 10 years
• Treasury bonds (T-bonds) with a duration of 20 to 30 years

The interest rates are reasonable for the level of security they offer. As of this writing, 20- and 30-year Treasury bonds pay over 4% and you receive interest payments every six months.

3. Put it in a high-yield savings account

For a simple option, you can deposit money into a high-yield savings account. Although most savings accounts don’t earn much interest, high-yield accounts are the exception. Many of them earn 4% or more per year.

On a $1,000 deposit, you could earn over $40 in annual interest. And the best part is that it’s a risk-free return. You don’t have to worry about losing money, which can happen with investments.

If you’re not earning at least that much from your savings, you’re leaving money on the table. To maximize your income, consider the UFB portfolio savings account. It has a spectacular 4.57% APY, with no monthly fees and no minimum balance requirements. Click here to learn more and open this savings account today.

4. Invest in dividend stocks

Earlier we discussed REITs and how they can generate passive income in the form of dividends. There are many other types of companies that also pay dividends.

If you want investments that will earn you money on a regular basis, look for stocks with a high dividend yield. You can normally find this information through your brokerage account. Leading stock brokers include dividend yields in each company’s fundamentals.

Keep in mind that a large dividend isn’t everything. The business must also be a profitable investment. Reputable companies with high dividend yields typically pay around 2% to 4%. It’s not a huge passive income, but the money you invest can also grow with the business.

5. Open a CD

Certificates of deposit (CDs) are another simple passive income strategy. When you deposit money into a CD, you earn a fixed interest rate until the CD matures. You decide how long the CD you want. The most common options range from one month to five years.

The best paying CDs currently offer 4-5%, enough to earn $40-$50 per year on a $1,000 deposit. Note that you must keep your money deposited for the entire term to get the most out of a CD. If you remove it early, there will be a penalty.

These are all pretty simple passive income streams that you can start with $1,000. You won’t make enough money to quit your day job, but you’ll take the first steps toward building long-term wealth.