You have probably heard the term 'Passive Income' but are not sure what it includes.
Passive income is a financial term that can have 2 different meanings. One meaning is related to tax situations, in which case deductions for passive losses have limitations without an offset of appropriate passive income. For this post, I am only interested in the other meaning, which is income that you earn or receive passively, not actively working to receive it.
Passive income includes investment income, rental income, creating something that continues to generate income after the work is done (i.e. a book or digital course), advertising space, etc. You don't have to be rich to generate passive income, but you may need to be creative to find a passive income stream that would work for you.
Passive income for this definition can also include social security, disability income, pension or other retirement distributions, and any other income you can reasonably expect to receive on a continuing basis without actively working for it at the time the money will be received.
It's not that passive income requires no work. You have to plan and build the asset that creates the passive income. If it is rental property of some kind, there will be maintenance and other effort required on a regular basis. But the income will come even on the days/months that effort is not required, and if done well, there will be more income than work involved.
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