The idea that money arrives in your account every month without having to go to work sounds great. That is exactly what the promoters of passive income promise. The reality is more complicated. Passive income is not a miracle that happens overnight, but the result of a well-thought-out strategy, patience and work at the start. In this article we will look at what passive income really means, what the realistic options are and how even a complete beginner can build it step by step.
Let's take a step back: What types of income are there?
According to Kagan from the Investopedia portal (2025), there are essentially 3 main types of income:
- Active income: Income that you receive in the form of a salary from an employer; it is also the most common type of active income.
- Passive income: If you receive income from a business in which you do not actively participate, this income is considered passive.
- Portfolio income: Portfolio income is then a separate category - it is the returns from investments, for example dividends or capital gains.
The definition of passive income
According to the Corporate Finance Institute (n.d.), passive income is a type of income that can earn money for you over time even without you paying attention to it every day. In the ideal case, you set up a strategy, an investment or a business - and it then generates money for you with minimal effort.
Typical examples include income from renting out a property, dividends from shares or royalties for copyright.
The reality of passive income, or Beware of scammers
Passive income sounds like the investment holy grail: I set something up once - and then I just lie in a hammock and the money pours into my account by itself. The reality? A good deal more complicated.
This term is often used far too lightly. Yes, there are ways to create, over time, an income that does not require daily work. But that does not mean that the whole thing will be effortless or without an initial investment - whether of money or of time.
Most "passive" incomes actually start out as a rather active project.
- You buy a property,
- you build an online product,
- you set up advertising systems,
- you invest in shares.
All of this requires plenty of effort and knowledge.
If someone offers you passive income without effort, be on your guard - it is quite probably a scam.
Why secure a passive income?
There are more than enough reasons to secure a passive income, for example:
- Financial independence: You don't have to rely on just one salary.
- Stability: In times of crisis or job loss, passive income will support you.
- Freedom: You can work less, travel or devote yourself to your hobbies.
- A financial cushion: It helps you build a financial reserve.
- Retirement: You build up a reserve for old age.
And above all - you gain time. And that is the most valuable commodity these days.
How to create a passive income?
How to secure a passive income when you are starting completely from scratch? Patiently. You can even start with minimal resources - but you must have a plan and persevere. Creating a passive income is not about a miracle idea, but about a combination of strategy, knowledge and also patience.
Building a passive income: the first steps
- Think about your possibilities - do you have time, money or know-how?
- Choose an area - investing, business, real estate or something else.
- Start with small steps - for example by creating an e-book or investing in an ETF.
Ways to earn a passive income
There are a number of ways to create a passive income. Each has different entry requirements, returns and risks. Let's take a look at an overview of 25 of them, which we have categorized for you into 5 sections.
1. Passive income from real estate
The best-known form - you buy an apartment, rent it out, earn money. Passive income from real estate can be very stable and predictable. At first glance it sounds simple, but the reality is often different. Renting need not be as passive as it might seem. All it takes is for a tenant to stop paying or for technical problems to arise, and suddenly you are dealing not only with paperwork, but also with repairs, legal steps and extra stress.
"Even if you have a tenant who is fine, you are still keeping a bit of an eye on whether they are paying, and at least once a year you deal with the statement of accounts. And when it picks up a bit, it can quickly turn into a very active business. Of course, you can outsource it to a manager, but that again costs more money," says Lukáš Přikryl, CMO of InvestBay.
Tip: To start with, consider investing in real estate funds, shared investment platforms or, for example, crowdowning such as InvestBay. In this model you remain a co-owner of the property, but without the worries of operations, paperwork or finding tenants. Take a look at the investment properties currently available.
2. Dividend shares and ETFs
You invest in companies that regularly pay dividends. These then represent a passive income that is credited to you automatically. A big advantage is the liquidity and the option of reinvesting.
Reading tip: Long-term investments can be the key to safely growing your money
3. Online business
Create an e-book, an online course, a blog with affiliate links or a YouTube channel. The profits from sales, views or advertising will come to you even while you sleep.
4. Automated e-shops and dropshipping
You set up a system once that then generates orders without the need for your own warehouse or employees. Great for the technologically skilled.
A further 17 ways:
- Renting out premium spaces (e.g. archive cellars, wine storage)
- Renting out land to solar farms
- Renting out a whole apartment or part of it (Airbnb, sublet)
- Storage of specialized vehicles (e.g. caravans, boats, vintage cars)
- Renting out land to wind power plants
- Renting out equipment (tools, cars and so on)
- Investing in REITs (real estate funds)
- Bonds and bond funds
- Loans through peer-to-peer platforms
- Index funds
- Developing a mobile application
- AI tools and applications
- Designing and selling your own physical products (e.g. T-shirts)
- Selling stock photographs
- Licensing music
- Creating a subscription box (e.g. with cosmetics)
- Buying and running a vending machine (e.g. with drinks)
Source: Gratton (2024)
How to achieve passive income in practice
Having a plan is a good start. But without action and long-term thinking, it will remain just a matter of ideas. If you want your passive income to really earn money for you - and not just look good on paper - you need to go about it smartly. Here are four basic principles that make the difference between "having an idea" and "having results".
1. Don't bet everything on one card
Passive income is not about finding one perfect source of money that will support you forever. The risk can always be minimized by spreading your income - by what is known as diversifying.
Ideally, combine various paths - for example real estate, digital products, shares or a small online project. When one income falls away, you still have something to lean on.
2. Automate what you can
The less of your daily work the system needs, the closer it comes to being passive. Whether it is automatic investing, managing advertising campaigns or the fulfillment of an e-shop - what software can handle, you don't have to deal with. Clear rules, well-set processes and smart tools will free up your hands and your head.
3. Stay alert - the world changes fast
What worked a year ago may have no impact today. Technology, algorithms and consumer behaviour change, and you either keep up or fall behind. Follow trends in AI, FinTech, automation or investing and adapt. Passive income is not static - it is a system that needs to be kept running.
4. Hold on. Not everything comes right away
This part is easy to say but hard to do. Most people give up at the very moment when it is starting to get interesting. Creating a functioning income that does not need your presence 24/7 takes time - often months, sometimes years. But if you don't give up, your work will start to multiply. And that is the moment when you say to yourself: "Yeah, it was worth it."
The 3 most common mistakes when creating a passive income
1. Excessive expectations: It is not getting rich quick.
Passive income sounds tempting, but a lot of people enter into it with unrealistic expectations - and then comes disappointment. The most common mistake is the belief that it is a path to getting rich quick. It isn't. It is more of a marathon than a sprint. If someone promises you "millions without work", take note - it is usually more marketing than reality.
2. A lack of information: Investing without knowledge often ends badly.
Another common error is a lack of information. Investing blindly, without knowledge of the market, the risks or the return models, is a recipe for trouble. Today's world offers an enormous number of opportunities - but also traps. Without a basic overview and ongoing education, passive income can turn into an active problem.
3. Passivity in the wrong sense of the word Even passive income occasionally requires maintenance and monitoring.
And finally: Let's not confuse the word "passive" with "uninvolved". Every income - even a passive one - needs to be checked occasionally, adapted to the conditions or even set up again. It simply cannot be done completely without your attention. But if you put energy in at the start and do it smartly, the reward will come - and it can be very pleasant.
Frequently asked questions (FAQ)
1. Passive income? What is it?
Passive income is a cash flow that you receive without daily work. It arises on the basis of one-off effort or an investment - for example from rent, dividends or the sale of a digital product.
2. How to create a passive income without money?
Start with time and knowledge - write an e-book, set up a blog, create a course or get into affiliate marketing. Instead of capital, you invest your energy and know-how.
3. How much can I earn with passive income?
It depends on the chosen method, the investment and the time. Some people earn a few hundred a month passively, others tens of thousands. The key is scaling and patience.
4. Is passive income really work-free?
Not entirely. Most of the time, initial effort is needed (for example to write a book, create a website) and then occasional management. But compared with active work, the involvement is significantly smaller.
5. What is the best way to earn a passive income in the Czech Republic?
Among the most popular forms are passive income from real estate, investing in ETFs, selling digital products and affiliate marketing. The ideal thing is to start with what you enjoy and where you have knowledge.
The journey to passive income starts today
Building a passive income is not just for the chosen few. You too can start - step by step, with minimal costs. Whether you choose passive income from real estate, online business or investing, the important thing is to take the first step.
✅ Want to know more?
Follow our blog and learn how to create a passive income that will give you a calmer and freer life. And if you are already on your way, write to us - we will be happy to publish your experiences as inspiration for others!
Sources used:
- Corporate Finance Institute. (n.d.). Passive income. https://corporatefinanceinstitute.com/resources/accounting/passive-income/
- Gratton, P. (2024, October 24). Passive income. Investopedia. https://www.investopedia.com/terms/p/passiveincome.asp
- Kagan, J. (2025, February 21). Active income. Investopedia. https://www.investopedia.com/terms/a/activeincome.asp
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