The Best Passive Income Investments in 2025 (for U.S. and Canadian Investors)
By 2025, there are ways to make money that don’t require trading your time. The right form of passive income can earn you money during your sleep and ensure your investments generate capital for you.
This guide explores the best ways for investors from the USA and Canada to achieve reliable, steadier earnings with only moderate effort. You can use these strategies for both beginners and investors interested in mixing their portfolio for profits and solid growth in years to come.
How Passive Income Will Matter in the Years to Come
- When inflation is higher, your money will decrease in value if you don’t use it.
- Because of remote work, people can now earn money from anywhere.
- If you invest wisely, you may end up retiring early or living freely.
- Thanks to passive income, people can support their side jobs, start their own enterprises and adjust their lives accordingly.
The Best Ways for U.S. and Canadian Investors to Earn Passive Income
1. Dividend Stocks
- Johnson & Johnson, Bank of Montreal and Coca-Cola are companies that give dependable dividends.
- Regular payments are made.
- Best suited for long-term development.
- ✓ Roth IRA and TFSA accounts help you save on taxes.
2. Real Estate Investment Trusts (REITs)
- When you invest in a public REIT, you can participate in the real estate market without owning a property.
- Payouts are made each month or every quarter.
- ✓ Enjoying high liquidity
- ✓ Main REITs you could consider are Realty Income Corp and Vanguard Real Estate ETF (VNQ).
3. High-Yield Savings Accounts or GICs
- If rates are expected to rise in 2025, putting your money in savings accounts or GICs won’t require much attention.
- ✓ There is a low risk involved.
- ✓ Good for achieving goals in the near future.
- These accounts are protected by both the U.S. FDIC and Canadian CDIC.
4. Peer-to-Peer Lending
- You can offer loans to individuals or businesses using services such as LendingClub or goPeer.
- ✓ Later charges more interest than the bank.
- − Moderate risk
- Dividing the assets between different borrowers reduces the risk of default.
5. Index Funds and ETFs
- You can get passive exposure to the market by investing in ETFs based on the S&P 500 such as VOO or SPY.
- ✓ The ability to increase your capital over the long term
- Managing these funds is easy.
- You can use them through platforms such as Wealthsimple (Canada) or Vanguard (USA).
6. Digital Products & Royalties
- One creation can generate ongoing earnings. You can choose from ebooks, online courses, templates or stock photos.
- You need to put in some initial effort.
- The app is available in every country.
- Moving something 100% digitally means no need for logistics.
7. Covered Call ETFs
- If you’re looking for regular income, you can try QYLD or ZWC (Canada), as they offer options strategies that give out monthly income.
- People who need income should consider this investment.
- ✓ More income than traditional ETFs
- A bit more complicated than the previous ones, but still requires no action from you.
How to Pick the Best Passive Income Strategy for You
- Factor in what kind of risks you can take and the length of your investing period.
- Have several different sources of income.
- Make use of accounts that offer tax exemptions.
- Check results every quarter, but try not to control everything on a day-to-day basis.
- Make use of your profits to help them grow further with time.
✀ Tools You Will Need
- M1 Finance (USA) makes it straightforward to set up automatic investing.
- Wealthsimple (Canada) provides a high-quality robo-advisor for dividend reinvesting.
- Fundrise (USA) allows you to invest in real estate without getting involved.
- Questrade (Canada) is a platform for managing your own ETF and stock portfolio.
- Use sites such as Canva or Gumroad to create and distribute products passively.
Frequently Asked Questions (FAQ)
In 2025, what is the safest way to make passive income?
Choosing either high-yield savings or dividend-paying stocks allows for a safer and consistent rate of return.
Is it smarter to invest in REITs than rental property to earn passive income?
Usually, the answer is yes. You do not need to manage REITs and they naturally provide diversification, along with convenient buying and selling.
Would I be able to make passive income if I start with $100?
Absolutely. Some options for you include ETFs, buying small shares of dividend stocks or setting up a small digital product.
Is passive income taxed in the U.S. and Canada?
It is possible, though setting money aside in a Roth IRA or TFSA can reduce or get rid of the taxes for investment earnings.
How much time do I need to wait before I see the benefits of passive income investing?
Some returns come to you quickly (as with dividends), while others gradually increase over a longer period. Better results are achieved when you start your education early.
