What Is Passive Income and Why Is It Important?
The often overlooked importance of passive income
What is Passive Income?
Passive income is generally defined as a stream of income earned with little or no ongoing effort needed from the individual receiving the passive income in order to grow the stream of income. Passive income is income that is not proportional to the time you physically put into acquiring it. Active income (typically one’s regular job or additional part time jobs) is a direct exchange of your time and skills for money.
Examples of passive income include real estate rental income, stock dividends, fixed income/bonds, book royalties, peer-to-peer lending, and stock photography royalties.
The intriguing thing about passive income is that it can generated literally while you are sleeping, freeing up additional time for hobbies or allowing you to increase your earnings by performing some other form of work while still generating previously established streams of passive income.
An example of this would be a person working a 9–5 office job where they are paid a fixed salary. This same person also receives regular passive income from an eBook that he wrote on gardening over two years ago. The office job requires direct effort to produce the agreed…
