Passive Income Definition

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:

1. Inheritance
2. 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

Related Links:

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How To Generate Passive Income?

Passive Incomes of Financially Free and Not Free Compare?

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How to Attain Financial Freedom?

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Active Income Examples Slide

Active Income Example Slide

Active Income Definition

‘Active Income’ is earnings out of labor or effort. People engage in thousands vocations and professions to earn active income. Solicitors, doctors, teachers, brokers, potters, goldsmiths are people dedicated to a few examples of vocations.

The essential characteristics, as well as disadvantages of active income, are:

1. Requires the direct involvement of the individual concerned.
2. Invariably consumes more than a than one-third of the highly valuable maximum available time resource – 24 hours of a day.
3. In case of death or disability of the individual active income stops.
4. Most importantly it is not available to a person in the old age when one cannot actively work anymore.

Related Posts

• What Is Passive Income?
• What is Financial Freedom?
• How The Passive Incomes of The Financially Free and The Rich Compare?
• Passive Incomes Empowers Pursuit of One's Dreams and Passions
• How To Generate Passive Income?
• Low Lifestyle Costs and High Passive Income Lead to Financial Freedom
• How to Attain Financial Freedom?
• How Will My Lifestyle Affect My Children?