Passive Income
Passive income is earnings derived from a rental property, Limited Partnership, or other enterprise in which a person is not actively involved. It contrasts with active income, which is earned through direct involvement in a business or employment. Passive income typically requires an upfront investment of time or Money but can generate ongoing Revenue with minimal effort.
Examples of passive income include:
- Rental Income: Earnings from leasing out property.
- Dividend Stocks: Income received from owning shares in a company that pays dividends.
- Peer-to-Peer Lending: Interest earned from lending money through online platforms.
- Royalties: Payments received from creative works such as books, music, or patents.
- Affiliate Marketing: Commissions earned by promoting other people’s products or services online.
Cases of passive income can include:
- A landlord who collects rent from tenants without being involved in day-to-day management.
- An author who receives royalties from book sales after the initial publication effort.
- A Stock investor who receives dividends from their investments without actively trading.