Passive income is the earning in which a person is not actively involved. It In passive income, person does not require a little effort to earn. Passive income is usually taxable. Once, you have to do something to generate income and then you have to rely on that income. It requires a little time in the beginning and then it gives you benefit for a long time/throughout life. Physical appearance is not necessary for making passive income. In passive income a person receives payment even after the work is over. With passive income you can make money, while you are sleeping or doing anything else.
It is the money which an individual received after providing the services of any kind.
Types of income
There are three types of income
a- Active income:
Income for which services have been performed.
wages, salaries, commissions, and business income in which one participate actively.
b- Passive income
Passive income is the income in which one can earn regular income with a very small effort.
c- Portfolio income:
It is the income from investment including dividends, royalties and capital gains.
1. Selling informative products
2. Affiliate marketing
3. Savings accounts
4. Rental income
5. Peer to peer lending
6. Invest in high yield CD
7. Dividing stocks
Sources of passive income
The internal revenue services (IRS) says passive income can come from two sources: rental property or a business in which one does not actively participate.
Importance of passive income
*It gives you the freedom of time
*It reduces stress, anxiety and fear of future
*You can do things that you want without any fear
*It gives you the ability to work from anywhere
Disadvantages of passive income
1-At the beginning/setting up passive income take effort and time
2-One cannot grow overnight
3-It requires diversification to ensure that you have
money flowing in at all times
4-passive income can be too passive for some people.
How can you generate passive income?
*By writing an eBook
*Make YouTube videos
*Try affiliate marketing and make sale
*Sell your own products on the internet
*Put your photography to work on the web
*Purchase dividends stocks