Active and Passive Income
It is effortless to understand the difference, but this difference is one of the most important things to create wealth.
We work to earn on an hourly, weekly, or monthly basis, called Active Income.
For instance, you have a job, and you are earning $3700 per month, then it is your active income. When you quit your job, you will not have an active income. So for active income, we can say ‘we work for money’. If we become dependent heavily on active income and we don’t create a passive income, we may face financial crises if our active income stops.
On the other side, there are lots of ways to generate passive income. The coolest part about passive income is ‘we don’t work for the money; our money works for us.’
When we create, a system that generates income without working hard is called passive income.
Here are some coolest examples of passive income.
- Investment in the stock market (direct equity or mutual fund)
- Investment in commodities (gold, silver, crude oil)
- Investment in real estate (land, houses, shops, etc.)
- Writing a book and get royalty for a lifetime.
- Invent something, take a patent and sell to other industry and get a royalty for a lifetime.
- Affiliate marketing, Youtube, Google Adsense, and many other sources.