Passive income is most people’s dream. 💸 Yet few of them know the rules and techniques for securing a reliable passive income. Would you like to earn money without having to work all the time? Probably a silly question… Otherwise you most likely would not be reading this. This article can point you in the right direction, or at least help you understand what passive income is and how it works. Knowing how passive income works, and the iron rules that come with it, is the first step towards creating your own passive income. So let’s get started.
🎓 Definition: The term passive income refers to a type of regular income that requires you to invest at the start, after which no further investment or activity is needed (meaning significant activity or work), and returns and profit simply keep adding up. The idea is that the work (or money) you put in is only needed at the beginning, not in the course of earning and receiving the money.
We can explain the main idea and origin of passive income by comparing an innovator or entrepreneur on one side with an employee on the other. An employee goes to work and is paid by the hour. This means that while they go to work, they can earn a decent income. But once they stop working, they have nothing and depend on their savings or help from the state. On the other side, an entrepreneur or innovator often spends the first phase building a business with great effort or developing an idea (a money machine). In the second phase, this machine runs on its own and the entrepreneur can spend most of their time travelling, for example. Money flows into their account almost effortlessly. This is just a simple introductory example.
Passive income is not about making money today. It is about building long-term wealth in a thoughtful and systematic way.
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Passive income and its pitfalls
That sounds very nice for a start, but every coin has two sides, and it is important not to forget that. Passive income can create a good financial cushion, but nothing comes for free. If you are just starting out, take a look at the article on what business to start in 2022. With passive income, the hardest part is planting the seed of success in fertile soil and watering, guarding and caring for it well in the early stage. Passive income will only very rarely fall into your lap from the sky!
To achieve a good passive income, you usually need to put in considerable effort, but the principle is that this effort should pay off later and, in the course of earning, be kept to a minimum, ideally reduced to zero, so that your profit is maximised. The key lies in this.
Just as with a plant, the early stage requires a lot of effort, hard work and care, but once the plant has grown, you only need to maintain it and it bears the fruit of your earlier work by itself. Ideally, it regularly produces fruit (money) with little effort (not to be confused with no effort). The owner of a passive income source must always look after it.
💡 Tip: If you want to learn more about passive income options and your English is at least average, be sure to read Pat Flynn’s blog thoroughly, which describes specific tips as well as the process of creating passive income. The texts are based on the English-speaking world, but they also offer plenty of useful advice for Central Europeans.
Why do so few people create passive income if it is so great?
The million-dollar question. We can identify several reasons.
- A deep-rooted employee culture from the days of communism. People are programmed to go to work and then spend all their money on consumer goods in the same month. In the worst case, they also take out a loan.
- They do not know how passive income works.
- They do not persevere. Passive income starts as hard work without big results, and many people cannot put their needs on hold, persevere and work hard during a certain period of their life.
How to create and secure passive income?
There is no perfect guide to effective passive income, but here are a few tips that may suit you and be useful. To secure a good passive income, you almost always need some starting capital, whether for buying property or shares, creating a work of art that you will then distribute, or owning something that you will then rent out.
But it can also be done without capital. This path to passive income is just a little more winding, but the passive income can be all the more stable and interesting for it. You need a good idea and to go after it. To create passive income, you need to save money for a certain period and invest it wisely in your activity. Building passive income works on the principles of the Protestant work ethic, on which Western capitalism and culture are founded.
There are two ways to invest in creating passive income: investing money and investing your time and effort, and these two very often overlap. Here are a few tips for a good passive income.
💡 Tip: We look at investment options in more detail in the article: How and what to invest in?
1) Renting out property
The most common type of passive income is property and renting it out. Given that there has long been a housing problem in Prague, for example, and rents are often sky-high, this type of income is extremely convenient and effective for owners. Monthly rent, even for a small studio flat, starts at 10,000 CZK (about 460 USD) in the capital, with prices going up from there.
And that is before we even get to two- or three-room flats. If we consider that the owner often does not need to invest anything further in the property, this type of passive income seems to be one of the most profitable. The biggest problem, however, arises at the moment of buying the property. Owing to the extremely high rents, property prices themselves are also extremely high, and not everyone can afford them. Here you can read how to rent out a family house?
Renting out property is not work-free either, and you need to have a system. You need to know when to fix something and how to manage relationships with tenants. Keeping accurate accounting records is also important. Experience with repairs is worth its weight in gold, as some renovations or repairs often bring more problems than added value. A property owner may end up repairing some parts very often and badly. This costs them money and adds to their worries.
💡 Tip: An expert on buy-to-let investment advises people not to over-renovate flats and houses for rent, as they will not get the money back. It pays most to rent out an older property in poorer condition with old furnishings. This also avoids the risk of brand-new floors, windows and other fittings being ruined.
2) Renting out other assets
You do not have to rent out only property. You can rent out anything you buy that has some value and that people may need only for a certain activity for a certain period, and you do not need to invest millions. You can rent out your car, for example, and film and photography equipment does very well, as it is very expensive but also in high demand, and people often use it only once. It is something people need only for a certain activity, as such equipment is rarely bought for occasional use.
This may include expensive lenses, grip equipment (crane, Steadicam), a drone, lights or even the camera itself. For this type of passive income, however, you need the right circle of people around you who will use these services as regularly as possible and, in the best case, recommend you to others. There is also a high risk of theft, so you always need to be insured in some way in the event of renting out an item. A written contract or a financial deposit is ideal.
3) Shares and how to make money on shares
Shares can certainly be considered an advantageous form of passive income. Shares give you the opportunity to share in the success of another company through its stock. They are securities that confirm you are a shareholder, meaning you have certain rights in relation to the company, which can include a share of the company’s profit (the so-called dividend).
Dividends in particular are often compared to a source of passive income, as some companies pay relatively high and regular dividends (some of them). The advantage is that, in this case too, you do not need to invest millions. Much smaller amounts, usually in the tens of thousands of CZK, are enough. If you hold them for the long term, they can provide a good passive income. The risk, however, lies in the possibility that their value may fall, which could lead to losses.
How can you eliminate the risk of losing your money when investing in shares? The answer is simple. Diversify your investments. If you have a larger amount of money invested, diversify across investment platforms as well. It is not good to keep all your investment money in one pile. Secondly, also diversify across individual stocks and markets.
If you split a pile of money into two heaps, investing one part in Visa and the other in Mastercard, you expose yourself to considerable risk. This is because you are investing in a single sector. If that sector falls, all the money you have invested falls with it. If you want to play it even safer, you can choose an ETF, where you buy small portions of a large number of shares, which significantly reduces the risk of any swings or losses. Don’t be afraid of shares of companies from your home market either (in the Czech Republic, for example ČEZ). Investing in shares can bring you attractive returns, but you also need to take a proper interest in the subject if you want to earn more than an ETF and the index.
Investing in shares is really easy today. You can use the excellent and intuitive Revolut app, where even the free plan lets you make three (now only one) share trades a month with no fee. Trading therefore costs you nothing, and dividends are credited to the app completely automatically. Anyone who wants to dive a little deeper into trading can use one of the brokers eToro, Plus500 or the popular XTB investment platform, where you pay no fees for holding ETFs or shares. In the next part, let’s look at how to make money without investing.
🎓 Fun fact: In the long term, shares are an excellent investment. Over a long horizon, they bring their owners returns of 7 to 8% a year! Tech companies did very well in 2020, sometimes gaining as much as 100%. A shining example was Tesla, with an annual gain of more than 740%. Shares are also a good weapon against high inflation.
4) A good idea is the best passive income
Having a good idea and bringing it to life is the best guaranteed passive income. Here you have to reckon with an extremely difficult entry barrier that only a small percentage of the chosen few will overcome. Look around you and explore what the people around you are missing and what they would be willing to spend their money on. Today’s world is very dynamic and open to new ideas. Trends change every day, and catching trends is a great opportunity. The following picture beautifully illustrates the dynamics of today’s world.
It is not enough to have a good idea only in your head; you need to turn it into a thorough and well-organised process. You also have to work hard to make the idea happen. In the first phase, you certainly won’t be enjoying any passive income.
5) Advertising
You can use your property for the promotional purposes of popular companies. Most often this means a house, a car or a plot of land. You can approach an advertising agency and ask whether any of the companies would be interested in using your space to place their advertising. If advertising doesn’t work out, try to use any of your property commercially and rent it out.
Another place to earn money effectively is the internet.
How to earn passive income online?
The internet seems to be a handy helper for passive income, and on top of that it means working from the comfort of home, but all that glitters is not gold. You can earn money online through Instagram, YouTube or a blog, or you can offer your own work for sale, an e-book being ideal, for example. However, everything mentioned above requires some work.
Especially at the beginning, you have to follow the rules on the one hand, but on the other you have to be original and offer added value that users won’t find anywhere else online.
When running an online business with the prospect of passive income, it is important that you enjoy it! Do business and build passive income in a field you enjoy, where you have knowledge or a competitive advantage over others covering the same topic.
1/ Instagram
Earning money on Instagram can be very convenient and profitable, although it is not passive income in the true sense of the word, it comes very close to it. The hardest task, however, is that very first step. In this case, you need to become a so-called influencer. That means having lots of followers, people who follow you and make your account popular. How do you get followers? Once you are widely known in the Instagram community, you can earn a very decent income by working with various companies and presenting their brands and products, so the company pays you for advertising.
However, you need to reckon with fierce competition. To make it easier to earn an income from Instagram, you need interesting, original and engaging content for as wide an audience as possible (or, on the contrary, excellent targeting), correct use of hashtags, constant reminders of yourself in Instagram stories and, above all, a high level of activity on your account to keep people interested. So Instagram doesn’t just require initial effort, it needs your care the whole time, although it is worth realising how little effort this often takes.
Many influential Instagram accounts consist of nothing more than photos of the “ordinary” life of the influencer in question (food, sport, leisure activities, selfies and so on), and that really doesn’t take much work. A successful Instagram account can also be sold at a good price, much like a website. When selling an IG account, the key figures are the number of followers, their activity and the number of agreed paid collaborations per month.
Instagram is more of a high-quality and effective marketing tool than a source of passive income. As with other similar fields, the beginning is extremely difficult, and after that it gets relatively easy.
💡 Tip: Also read the article describing new trends on Instagram.
2/ YouTube
In the case of YouTube, passive income is somewhat more complicated and even less passive than with Instagram, but the earnings can be nice. YouTube is based on videos, and anyone can create their own channel with their own content here for free. If the channel has enough subscribers, it can then be monetised and you can earn amounts paid out to you by YouTube itself. This amount depends on the number of ads shown on the account, in other words on the number of views of your videos.
Just like on Instagram, you can also earn by promoting a particular company through so-called sponsored videos, from which very nice money can come, but again you first need to break through so that it is worth anyone’s while to pay you for promotion. The competition on YouTube is enormous and becoming famous there is not easy at all. Moreover, unlike Instagram, filming videos, coming up with their content and then editing them takes much more time and work, and you also need to watch out for copyright.
However, given that the YouTube community consists mainly of children and teenagers, you can bet on simple, entertaining content and follow the trends there, so you may not need any extraordinary talent or originality, just to be in the right place at the right time.
3/ Blog
You can earn money on a blog by displaying ads, but the ads need to get a lot of views, which means the blog needs a lot of traffic. So someone has to look after it and keep it updated. You can do this yourself, but others can also do it for you. However, few people will do this work for free, although you might get lucky if it is, for example, their hobby. Still, you can’t rely on that.
4/ Selling photos
The internet is full of photos from stock photo sites. If you enjoy photography and have a talent for it, selling photos to stock photo sites can be an interesting source of income for you. Probably the best-known stock photo site is Shutterstock. It works on the classic principle of passive income. The more photos you upload to the stock site, the greater the chance that someone will buy one of them. After two years, when you have thousands of photos on the stock site, you can already have a decent passive income and perhaps devote more time to other activities.
5/ Your own creative work
Your own creative work means anything you create and can then distribute (not only) via the internet. If you get lucky, this is a very effective route to passive income. To start with, however, you often need not only a large investment but also great talent. This is how a book, an e-book, a piece of music or a film, for example, can be sold. Creating a high-quality work of art is not for everyone, and even after a large investment, a lot of work and advertising (which you also need to invest in), nobody can guarantee you success. If success does come, however, this type of passive income is very effective.
6/ Digital product
A product? Yes. A digital product is certainly closer to passive income than a classic physical product, because it can be replicated very easily. You simply copy it. What is a digital product? It can be a course, an e-book, an app or perhaps simple software that can fill even a tiny gap in the market.
At the start, you have to create the product and then also put time into marketing. Both are very demanding, but afterwards your sales can be automated and you simply collect money for the products sold. Some digital products, such as an ebook, need no further management. Software or an app, for example, has to be improved and updated over time. On the other hand, the potential of software or an app is many times higher than that of an ebook or a video course.
7/ Multi-level marketing
Multi-level marketing is mostly known for its negative connotations. Its idea, however, is fairly simple. Multi-level marketing often focuses on a product that is twice as expensive as it would cost you in a shop or online store. A foot soldier always starts by selling the products and can work their way up fairly quickly. Because the product is overpriced, everyone above in the pyramid gets a small share from the sale of each product.
By moving higher up the pyramid or company hierarchy, a person earns a certain passive income from the sales of the people below them. Although I am not a big fan of the multi-level marketing world, it cannot be denied that this sector can generate passive income after a certain initial effort.
8/ Bonds
If we turn a blind eye, we can also count bonds as passive income. Our money invested in bonds will “earn” us around 1 to 3% a year. There are corporate bonds on offer, as well as government bonds, which are issued mainly during financial recessions.
However, bonds, like savings accounts, do not currently even beat inflation, so in fact they earn you nothing and you are really just slowing down the erosion of your savings by inflation. Bonds have a place in the portfolio of all larger investors as a kind of insurance against stock market fluctuations. For small investors, however, they are only a weak brake on inflation.
9/ Zonky Rentiér
P2P lending platforms can turn you into an investor, and you can then earn from interest (in the Czech Republic, for example Zonky). You invest your money in people who take out a loan on the platform, and thanks to the interest you get back more than you put in after a certain period. Of course, the more money you invest, the better the resulting profit. Registration requirements vary by platform; the Czech Zonky, for example, requires a Czech bank account and two valid identity documents.
The Czech investment service Rentiér grows your investment by spreading it across a large number of low-risk consumer loans. P2P loans are a modern invention that makes it possible for people to lend money to other people through a sophisticated digital platform. The most important thing is the creditworthiness of clients, which the service must monitor easily yet reliably. Around the world, several fintech startups focus on P2P loans; look for a reputable, regulated platform available in your country (in the Czech Republic, Zonky is the clear number one).
If you have not found a better place to invest your money, you can at least partly protect your finances in the best savings accounts on the market.
10/ Savings accounts
A speciality of almost all banks is lowering and raising interest rates on savings accounts. What is the purpose? Mainly marketing! In the customer acquisition phase, banks lure people with a great interest rate, which often comes with conditions. Then, sometimes after less than six months, they cut the rate dramatically. By then, people often do not leave the bank and keep their accounts.
With returns of 0.3 to 1%, savings accounts are only very slightly better than current accounts. However, you often do not lose access to your money in savings accounts and can use it much as you would in a current account. I included savings accounts in this category purely to show that these days they have little to do with passive income. The idea that your money will multiply in the safety of a bank is misguided. Inflation is usually about twice as high as the interest on savings accounts. Savings accounts are therefore only suitable for holding money for a while when you are looking for a suitable investment.
11/ Bitcoin and cryptocurrencies | Passive income?
Again, Bitcoin and cryptocurrencies are investments that meet the definition of passive income much less than shares, because Bitcoin never pays you any dividend that could be considered passive income.
So why do I even bother writing about Bitcoin? In 2020, this cryptocurrency saw unprecedented growth, reminiscent of the jump in 2017. The price of Bitcoin soared by 10% every month. It made many people who invested in time rich. However, it is not passive income.
The lesson from Bitcoin for other cryptocurrencies is: invest in time and do not put too large a share of your portfolio into these alternative investments. On the other hand, if you believe in these projects, you can certainly support them, and not only by buying.
The best passive income
We have just talked about selected types of passive income, so which of them is the best? Unfortunately, there is no such thing as the objectively most effective and best passive income. Which passive income is best to invest time and money in depends on many factors, which are, however, purely individual. These are your financial resources, assets, available time and talent, so you need to weigh up all these options, ask yourself what you yourself have to offer, use it to your advantage and start earning passively.
Passive income experience
If I am to speak from my own experience, I would choose this path: writing an e-book. Since writing is my hobby, I can spend hours a day on it, and I also have knowledge in fields that could appeal to a wider audience and on which not much literature has been written, certainly not in the Czech Republic, this option of passive income is personally the most ideal for me. In addition, writing an e-book requires no financial investment, it only takes a lot of time, but in the event of failure you at least do not lose money.
There is also the advantage of being able to translate it into English, which lets you target a much larger audience than just the domestic one, and in the case of the right advertising, promotion and public interest, you could be looking at the prospect of a very pleasant passive profit. Successful people who have created streams of passive income are now, by contrast, thinking about where to invest their money or even give it away.
You can read the English version of the article here: 19 Tips: how to earn passive income?
USD amounts are approximate, converted at the Czech National Bank rate of 21.75 CZK per USD on 9 October 2026.
