How To Invest $500 To Start Earning Passive Income

ways to start earning passive income

It doesn’t take millions of dollars to start generating passive income. In fact, sometimes it doesn’t take any money at all if you turn a side hustle (like a blog or ebook) into a passive business. While the latter takes a lot of time and effort, the former is easier to start than you might think. Heck, you can even start earning passive income with as little as $500 (and in some instances, even less than that). Do you have $500 to invest?

How To Earn Passive Income With A $500 Investment

Today, we’re going to look at Real Estate Crowdfunding, Investing in dividend ETFs or stocks and peer-to-peer lending. If you have $500, you can start your journey into generating passive income with these three powerhouses in the passive income game.

Real Estate Crowdfunding

When you’re just starting your investment journey, you might feel like real estate is an investment that you’re priced out of. But with starter portfolios that have only a $10 minimum investment, platforms like Groundfloor (house fixing and flipping) you can start generating passive income almost immediately.

What Groundfloor Offers

  • Earns an average 10% return annually
  • Only need $10 to invest
  • You choose the deals and your level of risk
  • No investor fees
  • Non-accredited investors are welcome
  • Automatically reinvest returns
  • Learn more about Groundfloor here


Dividend Stocks or ETFs

ways to start earning passive income

One of the best, and most passive ways to earn income is dividend investing. All you need to get started is open an account with a low-minimum online broker like Public ($0 minimum) or M1 Finance ($100 minimum). And the easiest way for new investors to build passive income is to focus on ETFs that pay dividends. Check out our list of 11 ETFs with high monthly dividends for passive income.

One of the major pros of dividend investing is that you can access your money or liquidate your investment rather quickly. That is why a lot of investors choose dividend stocks as their favorite passive income stream.


Peer-To-Peer Lending

It’s not out of the ordinary for peer-to-peer lending (P2P) to produce higher returns – 10-20% at times. P2P, with companies like Lenme is a great option for anyone who doesn’t shy away from a little more risk and who is also looking for a high yield.

Most P2P loans mature over a 3-5 year range, so you can create your own portfolio of loans that can drive you monthly income for years to come. With P2P, the notes you choose can be catered to your specifications and requirements. Meaning, you can pick notes based loan term, loan type, debt-to-income ratio, credit-score range. This will give your portfolio as much or as little risk exposure as you’re looking for.

The glaring issue with investing in Peer-To-Peer Loans is they are A) very illiquid and B) unsecured and susceptible to default. Most P2P platforms carefully vet potential customers, but defaults — especially in times of economic uncertainty or a global recession – can happen.


If you don’t know what to do with $500, don’t just let it burn a hole in your pocket, or worse, waste it. Instead, use these $500 investment ideas to put your money into cashflow generating assets. Use your money to make more money.

C. James

C. James is the managing editor at Wealth Gang. He has a degree in finance and a passion for creating passive income streams and wealth management.