There are indeed many income sources people claim are passive that in reality are not. Also, as you point out, there are no passive income sources that start passive (unless you count inheritances or lottery winnings). You first have to earn money actively, then set aside much of it, then invest it in creating passive income streams. Investing in ETFs or mutual funds is mostly passive. Rental real estate can be passive if you hire a property management company. You can also invest in a partnership as a silent partner, and let the active partner run things.