Wednesday, August 3, 2016

What Is Passive Income?

A majority of people has no option but work to make a living. Only a minuscule proportion of the population can afford to live without the necessity for earning a living. They have attained financial freedom. I

What does financial freedom mean, technically?  Financial freedom means a person need not necessarily work for a living. It means one should earn incomes that are not directly dependent on the persons labor. These incomes are called passive incomes. Examples of passive incomes are:
  • Rent
  • Dividend
  • Interest

Passive Income Examples

On the other hand, income earned out of efforts like salary, fees earned by professionals like doctors, solicitors, brokers, profits earned out of business are all active incomes. Active incomes stop the moment the earner stops working – they are totally and directly dependent on the skills, knowledge, competence and efforts of the person.

It is highly desirable to have substantial passive income in life. A lucky few may attain it through inheritance but the rest must consciously work towards creating sizeable passive incomes.


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