Meaning and Definition
Passive Income
is income that accrues to a person without carrying on of active vocation or
profession or the expenditure of any physical or mental labor or time. Passive
income is the antonym to ‘active income’,
which requires carrying the person’s active engagement and exertion.
Passive income
can accrue to a person from two sources:
- Inheritance
- Investments
For a majority
of us, only sustained, prudent and significant investments can result in the
creation of adequate passive income to liberate us from the drudgery of the
necessity to work for a living, which is called ‘financial freedom’.
Examples:
Examples of passive
incomes are:
- Rent
- Dividend
- Interest
- Royalty
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