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
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| 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.
