Passive income refers to money earned regularly with little or no effort required to maintain it. Unlike active income, which is typically earned through direct work or labor, passive income is generated from sources that require upfront investment, time, or effort but can continue to generate income with minimal ongoing involvement.
Rental properties:
Owning and renting out real estate properties can provide passive income through rental payments.
Dividend-paying stocks:
Investments in dividend-paying stocks allow individuals to earn regular income from the dividends distributed by the companies.
Royalties:
Authors, musicians, artists, or inventors can earn passive income through royalties from their books, music, artwork, or patented inventions.
Peer-to-peer lending:
Investing in platforms that facilitate lending money to individuals or businesses can generate passive income through interest payments.
E-commerce:
Creating an online store and selling products or dropshipping allows you to earn passive income from sales made without actively managing inventory or shipping.
Digital products:
Selling digital products such as e-books, online courses, or software can generate passive income once they are created and marketed.
Investments in mutual funds or index funds:
These investment vehicles pool money from multiple investors to invest in a diversified portfolio, and they generate income through dividends or capital gains.
Conclusion
While passive income may require less ongoing effort compared to active income, establishing and maintaining passive income streams often require initial investments, research, and some level of management to ensure their effectiveness and profitability.
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