What is the best way to make passive income?



If you are mildly business savvy - Become a "silent investor" in a small cash cow business. $5K to $20K can go a long way to help a small business and in return could earn yourself a small partnership. They can use the money to do some "pending work" like shop for new equipment, invest in training, hire an extra sales person etc. If you have a little more money (say $30K - 50K), you can help someone start a franchise business. Helping a business owner repair a rental property (with some cash) is another example of a simple and safe business investment. 

A quick word of advice: 

1) Respect the fact you are a silent investor and not a working partner in the business. Don't penny pinch the people who are working hard to keep the business going. 
2) Study various kinds of business for at-least a year before investing anywhere. Study their revenue models, past performance. Take advice from friends who work in banks and investment companies (even better if they give out loans to small businesses). 
3) Avoid franchises which are up for resale every 6-18 months. 

I would recommend capital markets (stocks/options...) to people who have an interest to study/learn the market and lot of patience. I invested in capital  markets for 10+ years and I can say  that it is not for people who are busy with other  things. You will need to pay attention on a constant basis.

(This answer is from Quora: click here)

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