Passive Income vs Active Income

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Income sources can be categorized into two categories broadly. They are active income and passive income.

What Is Active Income

Active income is earnings received for performing a service. For example, monthly salary, commissions, wages. This requires your active involvement and this is the most common way that people used to make money. Some argue that it is the easiest way to make money.

What Is Passive Income

Passive income is earnings derived without the active involvement of the person.

Why Passive Income

Both income streams have pros and cons. The active income streams are typically low risk, but you have to spend more time earning active income. For example, if you have a full time nine to five job, you have to work eight hours a day for one month to earn your monthly salary. What if you want to earn more?. People around you most likely to say, work long hours or work during weekends and sacrifice your off time. But the problem is having done all that, can you achieve your financial freedom?
If you want to achieve financial freedom and escape from the rat race, you should invest your time into one or more passive income streams.

It is not easy to create a passive income, it requires a greater amount of time, effort, and sometimes money as well.
For every passive income, you should have an underlying asset developed for that, developing that asset is the difficult part.
But passive income streams will earn a great amount of money for you in the long run. Because once you have developed that underlying asset, you don’t have to spend your valuable time on it. it will make money for you even while you are sleeping. Is there anything better than making money while you sleep?

Passive Income Ideas

  1. Rental Income
    Rentals income is always a great generator of passive income. With long-term rentals, you can secure the tenant, then just wait and collect the money every single month. While there might be a small number of maintenance costs, the income will mostly be passive.
  2. Dividend Paying Stocks
    This needs some starting capital, but if you pick the right stocks with a healthy dividend payout ratio, it will help you earn money around the clock – and all with no work on your part. if you can build a good portfolio with the time, you can earn a substantial amount of money as dividends.
  3. Digital Products
    This passive income source is relatively new to the earlier ones on my list. Digital products can be e-books, online courses, or anything that you can sell online and don’t have physical form or substance. My latest digital product is online courses which I sell on udemy.com. All you have to do is record your content just once and sell online using your website or a platform like udemy.com. If your content is really good, you can earn good money.
    If you are passionate about photography, even though you are not a professional photographer, you can sell your photos in stock photo sites such as shutterstock.com. I recently started to sell my photos on shutterstock.com. However, they check the quality of your photographs and approve them before they publish it on their site. Ten photographs out of seventeen I uploaded for the first time were rejected due to various technical issues. But if you build a good portfolio with the time, you can turn this into a good passive income source.
  4. Display Ads
    For this passive income source, ideally, you need to have a website or youtube channel. Then you can display ads on your website or youtube channel. Google AdSense is the most well-known largest advertising network that works with bloggers and you tubers.
  5. Affiliate Marketing
    Affiliate marketing is a concept that you promote other’s products, often through an affiliate network, and earning a commission if people end up buying because of your marketing. The benefit of affiliate marketing is you don’t have to have your product, instead, you can promote some other’s product and earn income passively.

If you read this and think do these things work, has anyone done these things and succeeded?, The answer is “Yes”, a lot of people have achieved their financial freedom through passive income sources.

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