What is passive income – A definition

What is passive income – A definition

Are you curious about passive income? Have you asked what is passive income?

A definition of the word passive is: not participating readily or actively; inactive.

The definition of income is: money received, especially on a regular basis, for work or through investments.

 

The Definition for Passive Income

Passive income means income you receive inactively.

Definition of passive income

This can be deceiving, it makes it seem like you do not have to do anything for the money or income. But really you have to invest time or money to set up this passive income.

For example, if you are an author making money from a book, you put a lot of time and work into writing that book. The author was not getting an hourly wage while he was taking the time to write the book but wrote it with the intention of making money after the book was published and sold. The author continues to make money from book sales over the years that is passive income. This is just an example, I do not know if writers continue to make money over the years or if they sell the book for a certain amount and that is it. But the same example could be used for a singer. The singer writes a song but is not getting an hourly wage and expects to make money after the song is finished and selling either CD or downloads. The song is bought for years to come and continues to earn money from each download.

What is passive income vs active income

So passive income is from work you do once and keep making money from the work.

Active income you are trading hours for dollars, you do the work once and get paid once. Your hourly job is active income, you are actively working to continue to make money. When you stop working, you stop making money. This would not matter if you work for an hourly wage, salary or you are paid for each job because if you quit working you quit making money.

what is passive income vs active income

Is passive income really passive

Can you really make money without working? As I mentioned early, the term passive income can be deceiving because you do have to do some work to eventually make any money. Even if you have stocks that are earning you income, you do work when you are researching and studying which stocks to invest in. When you have rental properties you are earning income from, you still have to visit properties and decide which ones you would like to invest in and there is still upkeep for properties. Authors have to take the time to write the book. So most passive income isn’t really without any work but you can have multiple ways of bringing in different types of passive income.

Some examples of passive income

Stock investments

Rental properties

Publishing a book

Selling digital products

Affiliate marketing

Bloggers

These are considered passive income but some of these things will still require work to continue to earn income. For instance, if you are selling digital products, you will still need to update and promote your products or continuing to add new things that will also need to be promoted.

The best way to make passive income would be to start with one idea and work to make that profitable and earning a regular income and then try another way to add to that and have income from multiple sources.

These are just a few of the many ways you can earn passive income. There are so many things you can do to earn passive income in addition to what is listed here.

Check out my post for a list and explanations for passive income ideas.

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