An excerpt from http://www.sitepoint.com/passive-income-streams/, by joshua Kraus
Pop quiz. What is the definition of passive income?
A. Making fat stacks without ever having to lift a finger.
B. Income earned from an enterprise in which you are not actively involved, but which you created through an initial investment.
C. Income that leaves angry notes on the pile of unwashed dishes.
If you guessed B, you’re correct. Or you’re just good at guessing.
Passive income isn’t a magical spell you can cast on your bank account. It’s about creating an enterprise or a set of circumstances that will eventually yield profit while requiring minimal maintenance.
If you’re willing to invest the time, the money, or both, here are four methods of generating passive income.
Peer To Peer Lending
Have you ever lent money to a friend, only for them to try and pay you back in expired Chili’s coupons? Do you believe that you and your hard-earned money are destined for more than expired Chili’s coupons?
Consider becoming a peer to peer (P2P) lender. This relatively new industry allows individuals to lend money to other, unrelated individuals through online platforms such as Prosper and Lending Club.
P2P lending removes traditional financial intermediaries from the mix, offers better interest rates to borrowers and allows lenders, or “investors,” to make money off their loans.
Becoming a P2P investor is relatively simple. Most platforms will allow investors to invest as little as $25, and you’ll most likely see your first returns after a month to a month and a half.
It should be noted that the laws of P2P lending differ from country to country and state to state, so be sure to check if you’re eligible. If you live in the United States, for example, this map will tell you if your state allows P2P lending.