You may have heard or read Warren Buffett’s famous quote, ‘If you can’t find a way to make money while you’re sleeping, you’ll be working until you die.’ What he meant by this is that we need to save, invest, and build income streams that generate money without actively working for it. This provides financial freedom, stability, and security in your life and reduces dependence on the monthly paycheck.

This means that you can make money at any time of the day or night, even while you sleep! Passive income is the result of a system that you first work for and then collect your profits over time. However, an upfront investment in the form of time, effort and money is required. Nowadays, many employees and entrepreneurs are looking for such ways to make money to provide themselves with financial security and to increase cash flow with little active involvement.

What does passive income mean?

Passive income is money that is received without regular work and with minimal investment of time and effort. Some common examples are dividends, rent, affiliate marketing and royalties.

Why are passive sources of income so important?

Compared to a normal employment relationship, a passive income allows you to become your own boss without having to take the risk of full self-employment. If you build up such an income, it can help you improve your financial stability and build up additional financial buffers for emergencies and unforeseen events. In other words, less stress and more time for yourself.

In the long term, you will gain the freedom to work less and have more time for your hobbies, travelling and simply a better quality of life. If you are even able to replace your full salary, then you will have the opportunity to live wherever you want.

Is passive income just a scam or can you really generate money?

As you read this blog, you may notice that it is not easy to generate a passive income. You first have to invest a lot of time, money or both, and this applies to almost all strategies for building a passive income stream.

You need skills, money, time, real estate, or a combination of all four to make a decent amount of money. For example, to develop an app, you need programming skills and also time and money. However, apps only very rarely generate enough income to replace your full-time salary.

To invest in a property or securities, you need a corresponding amount that you can invest over the long term.

So, Passive Income is not a get-rich-quick scheme. You need to plan for the long haul and stay motivated along the way. Scammers often claim that they can effortlessly generate this income. They work hard to promote these scams and make them enticing in order to get their hands on money.

Fraud/scam: Watch out for pyramid schemes!

Unfortunately, online fraudsters often prey on beginners looking to supplement or build their passive income.

Protect yourself from fraudsters by watching out for the following warning signs before investing time and money:

• Fake websites are operated by fraudsters who do not sell genuine products or services.
• The promise of easy money without having to make an effort.
• Tight deadlines: “You only have a few minutes, hours or days left to invest“

A good example of fraud is the so-called ‘pyramid scheme’. Pyramid schemes are business models that require a constantly growing number of participants to function, for which you receive a ‘bounty’, analogous to a snowball rolling down a slope and constantly growing in size. Profits for participants arise almost exclusively from the fact that you recruit new participants, who in turn invest money without receiving any service or product.

In the end, the only winner is the one ‘above’ you. If you get into a model like this, your dream is being severely abused.

How does passive income differ from active income?

Basis	active income	passive income
significance	It is a fee for providing services as part of an agreed task within a specific time frame. This could be a full-time job, a part-time job, a contract job, a freelance job. In other words, you work for money.	It’s about making money without actively participating in an activity. In other words, you make the money work for you.
Example	Salary, hourly wage, allowances, commissions, fees	Dividends, rent, blogging, selling digital products
reward	You will receive the reward once.	You will be rewarded multiple times in the future and generate income over the long term.
active participation	You have to keep working to keep earning money.	To receive passive income, no active involvement or participation is required. You earn money even when you are sleeping or travelling.
time and effort	It requires a considerable amount of time and effort.	It requires little or no effort and time.
consistency	It ensures a steady income because you work regularly.	It can take months or years to develop a passive income stream, and it is also volatile.
financial growth	The potential for income growth is limited.	There is unlimited potential for income growth.
Freedom	There is less freedom and little time to pursue your passion.	Since there is no fixed schedule, you have the freedom to pursue your passion.
risk and return	There is a lower risk and a lower return.	You can get a higher return for a higher risk.

41 Ways to Build Passive Income

There are numerous ways to generate a passive income and ensure your financial independence. You can choose any of the following options that makes sense for you.

1. P2P loans

Peer-to-peer lending involves extending credit to borrowers who do not qualify for conventional credit. You will receive interest on the money lent until the entire principal amount has been repaid.

The advantage of peer-to-peer lending is the high interest earned on investments compared to other forms of investment such as bonds or dividend stocks, and the quick access for borrowers at lower costs than bank loans and lenders to achieve higher returns on their investments.

It is a high-risk endeavour because there is no guarantee that the borrower will be able to repay the money. It is recommended that you lend your money to licensed and reputable P2P lending websites that conduct due diligence and establish the credibility of borrowers on your behalf.

You should also diversify and, for example, invest in real estate loans that offer higher returns but are still well secured by mortgages. The safest platform is EstateGuru: read my EstateGuru experience here!

I have presented the top 10 P2P providers in my P2P platform comparison. If you want your interest paid out daily, then check out my Bondora experiences and Bondora Go and Grow experiences.

2. dividends from ETFs and shares

Investing in dividend stocks and ETFs is one of the most well-known options. After all, you don’t have to work for dividends, you just have to provide your capital. The term ‘dividend’ refers to payments that companies make to their shareholders to share in the profits. Investors receive a return in the form of dividends and capital appreciation on the share. In this article, you will learn 10 ways I would invest $1000.

The risk here is that companies are not obliged to distribute dividends. Also, a company can go bankrupt or experience difficult financial circumstances and be unable to pay these dividends.

In this article, you will find my top 10 best ETFs for more returns in 2022.

3. Sell stock photos online

This opportunity involves passive income that is possible without a lot of capital investment, but requires a lot of personal work. Bloggers, graphic designers, publishers, small and medium-sized companies, and even large corporations buy and use photos online. If you are a creative amateur or professional photographer, you can consider selling original photos. You simply photograph or film people, objects, scenes, nature, and more, and offer them for sale online.

You can create your own websites for this or offer your photos on other popular platforms such as Etsy, Shutterstock, Alamy, Adobe Stock and more. You receive a share of the profits or a fixed fee for each sale. The sales figures depend on the SEO keywords used and the uniqueness of the images.

A good example of this model is drone video creation. You only need to invest a small amount of capital to film relevant video material, such as nature shots and locations, even when you are on holiday.

4. Create online courses

Are you good at public speaking, do you have expertise in a particular area and are you passionate about teaching? Creating and selling online courses is a lucrative way for you to generate a passive income from home, as e-learning products are in high demand.

Thanks to technological innovation, the education industry is growing rapidly. The digitisation of content will further increase demand for online training programmes among students and professionals. But of course, this requires a certain level of expertise in the relevant field.

For example, you can teach programming, finance, marketing, content writing, video editing, or graphic design. You can then offer your courses on leading online marketplaces such as Coursera, Udemy, Skillshare, Thinkific, Teachable, Podia, Kajabi, Learndash, Ruzuku. These platforms guide you through the entire process and help you build a base of potential students. Every time your course

5. Sell insurance

Selling insurance doesn’t seem particularly attractive at first, but it is an interesting source of income that can also help you learn soft skills. You learn how to communicate with people and how to sell.

You can earn money actively and passively through insurance. By concluding new contracts, you generate short-term revenue and, through portfolio commissions and commissions from premium dynamics, long-term revenue.

6. Participation in co-operatives

Cooperatives are widespread in Germany and generally do not stand for profit maximisation, but for maximising the benefit of their members. Participation in cooperatives is successful, for example, in Volksbanken.

So far, no cooperative bank has gone bankrupt in German history, but your investment is not guaranteed.

You can also invest your savings in housing associations and cooperative banks, often earning quite a decent return.

7. Affiliate-Marketing

If you run a blog or a website, affiliate marketing can be a good source of income for you. You can promote a third party’s product by providing links to your website, blog or social media account (Facebook, Instagram, Twitter, Youtube). Every time a visitor buys the product, you receive a commission.

8. Buying and renting out real estate.

If you own a property that you do not live in yourself, you can generate a regular income by renting it out. You will need to cover the maintenance costs, municipal taxes and property management costs.

You can make money in the long term by renting out an investment property. However, regular maintenance and upkeep of the property is required. You can generate a regular income stream once you find tenants.

Alternatively, you can also list your property (house, apartment, backyard, guest room) on Airbnb and earn money when it is booked.

9. Books and e-books

If you are creative and good at storytelling, you might be interested in writing a novel in any genre, such as comedy, romance, action, crime, thriller, horror, historical fiction, crime fiction, fantasy, or even a non-fiction book on a particular topic such as programming, finance, entrepreneurship, psychology, content creation, graphic design, or marketing.

The royalties depend on the number of clicks, views and downloads. You also need to know how to design an appealing book cover and how to conduct niche and keyword research.

Amazon Kindle Publishing (KDP) enables you to become a published author and create and sell paperbacks, e-books, hardcovers, and ACX audiobooks. In general, this investment pays off better if you already have a wide reach or good contacts to the target audience.

10. Workbooks

You may still remember so-called workbooks from school. Many of these notebooks are sold in digital form today and are also e-learning products. They are aimed at a large target group (depending on the topic).

11. Design (e.g. T-shirt)

Do you love graphic design and enjoy spending your free time creating new illustrations and patterns? Then you can earn extra money from this hobby. There are a number of websites that will transform your designs into fashionable T-shirts, pretty coffee mugs and more, and give you a share of the profits when your design is sold.

Some of the websites where you can sell your t-shirts, for example, are Amazon Merch, Red Bubble, Tea Public or Design by Humans. You have to upload the designs, and the company manufactures, packages, sells and ships the product to the customer.

12. Start YouTube channel

If you are creative and have certain skills, you can set up a YouTube channel and publish videos on a regular basis. You can create videos on topics such as health and fitness, music, education, entertainment, challenges, parodies, book reviews, motivation, instructions, art.

You need at least 4000 hours of watch time and 1000 subscribers to join the YouTube Partner Programme and get approved for AdSense.

You earn money from your videos for as long as people watch them. Your earnings increase the more videos you create. The first few days are very exhausting and require a great deal of effort, but it’s worth it in the long run.

You need to optimise the videos for SEO (Search Engine Optimisation) and promote them on blogs and social media to increase online visibility and gain subscribers.

There are a number of ways you can earn money, including:

• advertisements
• Sponsorship and endorsement
• affiliate links
• Sale of own goods or digital products
• Channel Memberships
• Super chat and super stickers
• YouTube Premium Subscription fee

13. Licencing of audio tracks

Similar to the sale of stock photos, you can also license music. This can be outros, intros and jingles – right up to entire albums. People buy audio tracks for YouTube videos, commercials, podcasts, to market themselves. You can license music tracks on SoundCloud and Audiosocket and earn money from royalties.

14. App Development

Besides developing and designing the app, you have to make regular updates and improvements. It requires a one-time effort, and you can sell indefinitely. There is a lot of hard work and creativity that goes into successfully developing an app.

Die heutige Generation hat mehr als 50 Apps auf ihrem Telefon installiert und öffnet sie 20-30 Mal pro Tag. Wenn du ein Programmierer bist und innovativ denkst, kannst du die Entwicklung einer App in Betracht ziehen, um eine Einnahmequelle zu schaffen. Du verdienst Geld durch Werbeeinblendungen und In-App-Käufe.

15. Members’ area

A membership area is an excellent way to monetise exclusive content.

The idea is for you to research topics and summarise them in a clear and concise way. Visitors can then find initial information on the main page and access more detailed articles or videos in the members-only area, which is subject to a fee.

16. WordPress Themes

This income is again something for programmers. Around 43% of all websites use WordPress, so the market for it is huge. With a well-thought-out design, many potential customers can be reached.

To make money with WordPress themes, however, you need programming and design skills.

17. VG Wort

‘VG’ stands for “Verwertungsgesellschaft Wort”. This company only exists in Germany and can provide you with a small additional income as a blogger for published topics. This remuneration is currently around €45 per article and depends on the number of clicks.

The articles must fulfil certain criteria. We will only pay for texts that are at least 1,800 characters long and have received at least 1,500 views in one year. The article must also be freely accessible and you must be able to identify yourself as the author of the text.

It should be noted that views from abroad or bots are not counted.

18. Car rental

Just as you can rent out a property on Airbnb, you can also rent out your car to generate a passive income. There are various platforms where you can offer your car for rent: Turo, TravelCar, Zoomcar or Drivezy. Many people prefer to rent a car instead of taking a taxi for long-distance journeys, as it is less expensive.

Not only do you earn extra money, but you also contribute to environmental protection. However, the potential to increase this income is limited because the car is a depreciable asset, the value of which decreases gradually due to wear and tear.

19. Amazon FBA (Fulfillment by Amazon)

Amazon FBA offers resources for a profitable eCommerce business through its brand name and extensive warehouse network. Amazon stores your goods in its warehouses and packs and ships them directly to customers on your behalf.

Use Amazon’s bestseller rankings to research which products are popular and profitable. Clothing, electronic devices, kitchen appliances and shoes are among the trendy and fast-growing products on Amazon.

20. Dropshipping

This is the creation of an online course with a niche selection of products. It’s effortless because you don’t have to maintain a physical inventory or package and ship products to customers. All orders are forwarded to the manufacturer, who ships the items directly to the customer.

It is a low-risk business model and a less time-consuming source. The difference between the selling price and the price paid to the supplier is your passive income.

What you should do:

• Choose the right type of product for your target market to ensure conversions.
• Find the right supplier who can process the products and deliver them to each customer.
• Develop a strong marketing strategy and promote the products on social media.
• Create a professional website to publish content.

21. Staking cryptocurrencies

Investing in cryptocurrencies with distribution potential or ‘crypto staking’ can be a great way to earn between 5% and 10% when done passively.

We recommend the following procedure:

• First of all, you should read up on the topic of proof-of-stake cryptocurrencies and how to set up a crypto wallet.
• After that, you should research the different coins that you can use to generate a passive income through staking.
• Once you have purchased your cryptos, you have to stake them.

Staking cryptocurrencies, like any investment, involves its own risks. So make sure you do extensive research in advance and invest responsibly.

22. Create music

If you are musical, you can create music either for private use or for commercial purposes, such as in commercials. Music that you can listen to on hold is best for selling, so use friendly and happy pieces. There is a huge market for this, which you can take advantage of with a little creativity.

23. Travel guide

If you have a wealth of experience in a particular place, including insert tips, then you can create a travel guide with targeted Google and Facebook advertising for people who are currently on holiday in that exact location. This will generate a passive income for you in the long term.

24. Student research projects

Even if it’s been a few years since you graduated, it’s worth digging out your old assignments and theses and uploading them to the appropriate platforms.

There you can earn cash for every download. However, this model is not very scalable, but it is still worthwhile for smaller amounts.

25. Donation button

If you provide your visitors with high-quality content month after month, then it is perfectly legitimate to place a donation button in a prominent position on your site.

With the help of services like Steady or Paypal, you can easily collect money – this is also a form of passive income.

26. City Roller

This is a unique opportunity to increase your passive income. You can use the Go X app to invest in city scooters. These are becoming increasingly popular, and you can take advantage of this.

To do this, you can buy a fleet of scooters from a single provider and receive a portion of the revenue when people rent the scooters.

27. Renewable energies

Support climate protection, drive modern innovation and build a passive income at the same time? It’s possible! Some ETFs focus specifically on solar or wind energy projects. An alternative is crowdfunding projects that regularly generate income from energy production, enabling you to build a passive income.

Another interesting alternative is to purchase your own solar energy system or balcony power station. The electricity produced by solar energy systems can be used for your own needs and significantly reduce monthly electricity bills. The money saved can be used for investments, for example.

28. Advertising spaces

If you already have a well-visited website or blog that you keep up to date and where you regularly upload content, you can use it for digital advertising.

Incidentally, this doesn’t just apply to digital spaces: especially in big cities with lots of spectators, it can also be worthwhile to put up outdoor advertising on your vehicle and thereby build up a passive income.

29. Content subscriptions

This idea is particularly suitable for creative people who enjoy producing content. This could be digital content such as digital drawings, calendars or even music.

Such content is sometimes urgently needed by other people. This is where platforms like Patreon come in, where you can take out a scalable subscription and become active in a specific niche.

30. Storage rooms

If you have unused storage space, renting it out can be worthwhile. This includes, for example, garages that you don’t currently need. You can rent out such spaces to private individuals or companies and easily build up a passive income in this way.

31. Specialised equipment

You may have a hobby or a passion for a relatively specialised area that you can use to generate passive income. For example, if you are a handyman and have some specialised equipment that you only need for certain projects, you can rent out your machines to other people for their smaller projects.

This works with a number of different hobbies. If you like going out to take pictures and have special camera equipment, you can also rent out such things to other people.

32. Job fair for special niches

If you know how to create websites, you could, for example, create a specialised job portal for a specific niche. These sites then compete less with the typical, already well-known job portals. Here you can profit from membership fees, job ads or advertising and build up an income.

33. Online-Tools and Widgets

Widgets and online tools are used by many people and can make life easier. One example is to-do lists, which help people to manage their daily lives and take important tasks into account.

If you are able to programme and design such widgets, you can use this talent to generate a passive income by selling premium access or by earning money through advertising.

34. Offer tutoring

One way to generate a passive income is through tutoring videos. For example, if you were particularly good at maths, you could create videos covering the different topics that students can use to prepare for a specific qualification.

One example of such a course would be ‘Mathematics for the school-leaving certificate’. This allows students to work their way through the basics and prepare themselves optimally.

35. Book reviews

If you love reading books, there is an interesting option for you. Platforms like Kirkus or US Review of Book offer readers money to write reviews of books. You only need a few minutes to create a review and can build up a passive income from it.

36. Flip-Websites

Another option is to buy websites that are already making money and have a lot of visitors. You could buy a website like this and update it by adding your own content. You can then make money from advertising revenue or resell it. A well-known marketplace for this is Flippa.

37. Online-Gaming

If you regularly play online games, you can take advantage of this. For example, you can start a livestream on platforms like Twitch, where others can follow you regularly.

So you use your time in the same way as before, only you broadcast your screen to other people. Over time, you can build up a larger audience that will further increase your passive income.

38. Sell music

We have already mentioned that photographers can make their photos accessible to others. Other hobbies can also be monetised. If you can produce music, you can use this passion for yourself. You can sell rights to use your music on websites like Bandcamp, for example.

39. Facebook group with paid membership

You may have created a Facebook group. These can, for example, help people with niche interests to find each other and discuss and exchange ideas about their hobby.

You can only allow such groups for paying members. However, for this you need a membership management area outside of Facebook.

40. Operate an online shop

If you can create your own websites, an online shop might be worthwhile for you. In this way, you can sell purely digital products such as books, for example. This way, you need time to build the website and the content, and then you can build a passive income.

41. Share the internet

With the so-called Honeygain app, you can share your additional internet bandwidth with companies. These often depend on increased bandwidth and pay you for it. Especially in big cities, this can be an easy way to increase your passive income.

Bonus: earn interest

Currently, online brokers offer more attractive interest rates than most high street banks. We have put together a small overview for you, showing that interest rates of up to 8% per year are possible!

providers	Interest	speciality
Freedom24 Call Money.	up to 4.85 % interest p.a.	daily payout
Freedom24 Time Deposit.	up to 8% interest p.a.	Early cancellation without penalty
Trade Republic Interest	3,25 % p. a.	monthly payment
ING DIBA Interest	3,30 % p. a.	After 6 months, only 1.25% p.a.
Scalable Capital Interest	2,60 % p. a.	‘PRIME+’ as a prerequisite

Conclusion: Start earning money passively early on!

Generating passive income can be fascinating, but it can take time before the investments in money and time pay off. You can increase your income and strengthen your financial future.

Building up your portfolio can be a lucrative option if you have the right skills and knowledge, as described above, and apply the right strategies. It can lead you down the path to financial freedom if you are willing to make a sustained effort to grow your investments.