money
Sep 10, 20265 min read
5 Best ETFs to Help You Earn Passive Investment Income
What are the Best ETFs for Passive Income? You can earn passive investment income by investing in a diversified portfolio of stocks, bonds, or other
Based on reporting by Kiplinger Personal Finance. Research, structure, and fact-checking by Groundwork.
What are the Best ETFs for Passive Income?
You can earn passive investment income by investing in a diversified portfolio of stocks, bonds, or other securities through an exchange-traded fund (ETF). ETFs offer a convenient and cost-effective way to gain exposure to a particular market segment or asset class. However, with so many ETFs available, it can be challenging to choose the right ones for your investment goals.
Passive income from ETFs can come in the form of dividends, interest, or capital gains. Dividend-paying ETFs invest in stocks that distribute a portion of their earnings to shareholders, while bond ETFs earn interest income from government or corporate bonds. Capital gains arise when you sell an ETF for a profit.
To help you get started, we've compiled a list of the 5 best ETFs to consider for passive income. These ETFs are widely held, have a long history of success, and offer a range of investment options.
1. Vanguard Total Stock Market ETF (VTI)
The Vanguard Total Stock Market ETF (VTI) is one of the largest and most popular ETFs available, with over $200 billion in assets under management. It tracks the CRSP US Total Market Index, which covers over 3,000 stocks, including small-cap, mid-cap, and large-cap companies.
- Investment objective: Track the CRSP US Total Market Index
- Asset allocation: 100% stocks
- Expense ratio: 0.04%
- Dividend yield: 2.1%
- Average annual return: 10.5%
2. Schwab U.S. Broad Market ETF (SCHB)
The Schwab U.S. Broad Market ETF (SCHB) is another popular ETF that tracks the Dow Jones U.S. Broad Stock Market Index. It covers over 2,500 stocks, including small-cap, mid-cap, and large-cap companies.
- Investment objective: Track the Dow Jones U.S. Broad Stock Market Index
- Asset allocation: 100% stocks
- Expense ratio: 0.03%
- Dividend yield: 2.1%
- Average annual return: 10.3%
3. iShares Core U.S. Aggregate Bond ETF (AGG)
The iShares Core U.S. Aggregate Bond ETF (AGG) is a bond ETF that tracks the Bloomberg Barclays US Aggregate Float Adjusted Index. It invests in a diversified portfolio of government and corporate bonds.
- Investment objective: Track the Bloomberg Barclays US Aggregate Float Adjusted Index
- Asset allocation: 100% bonds
- Expense ratio: 0.04%
- Dividend yield: 2.6%
- Average annual return: 4.5%
4. SPDR S&P 500 ETF Trust (SPY)
The SPDR S&P 500 ETF Trust (SPY) is one of the oldest and most widely held ETFs available, with over $300 billion in assets under management. It tracks the S&P 500 Index, which covers the 500 largest publicly traded companies in the US.
- Investment objective: Track the S&P 500 Index
- Asset allocation: 100% stocks
- Expense ratio: 0.0945%
- Dividend yield: 2.1%
- Average annual return: 11.1%
5. iShares Core S&P Total U.S. Stock Market ETF (ITOT)
The iShares Core S&P Total U.S. Stock Market ETF (ITOT) is a total stock market ETF that tracks the CRSP US Total Market Index. It covers over 7,500 stocks, including small-cap, mid-cap, and large-cap companies.
- Investment objective: Track the CRSP US Total Market Index
- Asset allocation: 100% stocks
- Expense ratio: 0.04%
- Dividend yield: 2.1%
- Average annual return: 10.5%
How to Invest in ETFs for Passive Income
Investing in ETFs for passive income is a straightforward process. Here are the steps to follow:
- Choose an ETF: Select an ETF that aligns with your investment goals and risk tolerance.
- Open a brokerage account: Open a brokerage account with a reputable online broker.
- Fund your account: Deposit funds into your brokerage account.
- Buy the ETF: Use your brokerage account to buy the ETF.
- Monitor your investment: Regularly review your investment to ensure it remains aligned with your goals.
Risks and Considerations
While ETFs offer a convenient and cost-effective way to invest in a diversified portfolio of stocks, bonds, or other securities, they also come with risks and considerations. Here are some key things to keep in mind:
- Market volatility: ETF prices can fluctuate rapidly due to market volatility.
- Credit risk: Bond ETFs are subject to credit risk, which arises when a bond issuer defaults on their obligations.
- Liquidity risk: Some ETFs may have low liquidity, making it difficult to buy or sell shares quickly.
- Tax implications: ETFs can have tax implications, such as capital gains taxes.
Passive income from ETFs can be a great way to earn returns without actively managing your investments. By investing in a diversified portfolio of stocks, bonds, or other securities through an ETF, you can earn dividend income, interest income, or capital gains. The 5 ETFs listed above are widely held, have a long history of success, and offer a range of investment options. Remember to choose an ETF that aligns with your investment goals and risk tolerance, and to regularly review your investment to ensure it remains aligned with your goals.
Share via system sheet on mobile, or copy link on desktop
D
Editorial Analysis
David Sterling • Finance Analyst
“While ETFs offer a convenient and cost-effective way to invest in a diversified portfolio of stocks, bonds, or other securities, it's essential to carefully consider the risks and considerations involved. By doing your research and choosing an ETF that aligns with your investment goals and risk tolerance, you can minimize your exposure to market volatility, credit risk, liquidity risk, and tax implications.”
Frequently asked questions
What are the best ETFs for passive income?▼
The 5 ETFs listed above are widely held, have a long history of success, and offer a range of investment options. They include the Vanguard Total Stock Market ETF (VTI), the Schwab U.S. Broad Market ETF (SCHB), the iShares Core U.S. Aggregate Bond ETF (AGG), the SPDR S&P 500 ETF Trust (SPY), and the iShares Core S&P Total U.S. Stock Market ETF (ITOT).
How do I invest in ETFs for passive income?▼
To invest in ETFs for passive income, choose an ETF that aligns with your investment goals and risk tolerance, open a brokerage account, fund your account, buy the ETF, and monitor your investment.
What are the risks and considerations involved in investing in ETFs?▼
ETFs come with risks and considerations, including market volatility, credit risk, liquidity risk, and tax implications. It's essential to carefully consider these risks and choose an ETF that aligns with your investment goals and risk tolerance.
What are the average annual returns of the ETFs listed above?▼
The average annual returns of the ETFs listed above are as follows: VTI (10.5%), SCHB (10.3%), AGG (4.5%), SPY (11.1%), and ITOT (10.5%).
What are the dividend yields of the ETFs listed above?▼
The dividend yields of the ETFs listed above are as follows: VTI (2.1%), SCHB (2.1%), AGG (2.6%), SPY (2.1%), and ITOT (2.1%).
What are the expense ratios of the ETFs listed above?▼
The expense ratios of the ETFs listed above are as follows: VTI (0.04%), SCHB (0.03%), AGG (0.04%), SPY (0.0945%), and ITOT (0.04%).
Related research guides
money
3m
What a Fed Rate Hike Would Mean for Investors and Savers
A potential Federal Reserve rate hike has investors and savers wondering what this means for their money.
G
Groundwork Researcher
money
3m
Stocks Drop as Treasury Yields Hit New Highs
Understanding the Impact of Treasury Yields on the Stock Market The stock market experienced a significant decline on [current date] as Treasury yields hit
G
Groundwork Researcher
money
3m
Mortgage Rates Today, Thursday, September 10: A Little Higher
Mortgage rates have been trending upward over the past 30 days, with the average 30-year fixed mortgage rate standing at 4.625% as of September 10, 2026.
G
Groundwork ResearcherRelated Research & Topic Index (money)
Explore related evidence-based investigations, decision tools, and entity breakdowns:
Primary Research & Citations
Contextual evidence and verified documentation referenced in this research guide
Groundwork enforces a strict, independent verification standard. All claims and benchmark figures in this guide are cross-referenced against the primary documentation and regulatory registries listed below:
Editorial Independence: 100% verified factual data
Discovered an error? Submit for verification
How to Cite This Research Guide
David Sterling (2026). 5 Best ETFs to Help You Earn Passive Investment Income. Groundwork. Retrieved from https://gworky.com/article/best-etfs-for-passive-income
License: CC BY-NC 4.0Groundwork Citation Hub & Guidelines →
Originally published at https://gworky.com/article/best-etfs-for-passive-income — Groundwork Evidence-Based Research.
Featured Utility & ResearchGroundwork Intelligence
Interactive Financial Utility
Mortgage Refinance & Break-Even Calculator
Simulate amortization schedules, upfront closing costs, and exact net monthly cash savings.
Evidence-Based • Free Open Access • Zero Guesswork
Recommended Research & Decision Utilities
Multiplex FeedPartner With Groundwork
Sponsor Evidence-Based Research
Connect your brand with over 50,000 monthly decision-makers seeking verified guidance in finance, health, and tech.
View Media Kit Verified
Interactive Utility
Mortgage Refinance Break-Even Calculator
Find out how many months it takes for a refinance to pay for itself.
Launch Tool→
moneyWhat a Fed Rate Hike Would Mean for Investors and Savers
5 min readRead Guide →
moneyStocks Drop as Treasury Yields Hit New Highs
6 min readRead Guide →
moneyMortgage Rates Today, Thursday, September 10: A Little Higher
6 min readRead Guide →
moneyYour Beneficiaries Might Be Outdated. Here's How to Check
4 min readRead Guide →
Benchmarked MONEY Solutions At a Glance
Evaluated for performance, privacy protocols, and pricing transparency.
| Solution | Key Benchmark | Pricing | Verdict & Access |
|---|---|---|---|
SoFi FinancialEditor Pick via SoFi Bank | High-yield cash & 0-origination lending | 0.00% Fees | |
TradingView via TradingView Inc. | Institutional multi-asset charting | Free / $14.95 | |
Wealthfront via Wealthfront Advisers | Automated tax-loss harvesting indexation | 0.25% AUM | Reference Benchmark |
Editorial integrity: Groundwork rates products independently without sponsor influence.More Comparisons →
Written byLead AnalystPrimary Research
David Sterling is a personal finance writer covering mortgages, banking, insurance, and investing for Groundwork. He turns complex financial research into practical decisions.
Fact-Checked byReview BoardIndependent Audit
Elena Vasquez
Editorial Director
Editorial director and brand ambassador for Groundwork. Elena distills hours of cross-source research into one clear, evidence-backed takeaway — then points you at the tool that does the real work.
Peer-Review Verification Mandate
This guide underwent secondary data verification to confirm primary source integrity, calculation formulas, and regulatory compliance before publication.