Passive Income Meaning

Passive Income Meaning (official definition)

Passive income is the recurring income that you earn without doing anything except holding a fixed-income investment such as a bond or trust. Most traditional savings vehicles don’t offer this type of return, but with passive income there are no savings required at all. Passive income can be completely anonymous and come from any source — a dividend, a rental lease, selling used goods on eBay, autoresponders, business selling your own inventories or even creating an online course. Passive income is usually defined as something that doesn’t require much time to invest, but can still provide returns above what’s required to invest in order to generate it. It helps those who have less time or money to invest into their businesses and can be very lucrative over the long term.

Types of passive income

After clarifying the passive income meaning, let’s discuss about types of passive income. There are a few different types of passive income, but some of the most common forms are:

• Dividends from stocks or bonds

• Rental income from property rentals

• Passive income from e-commerce sales

• Overtime payments for work done at your job

• Profits earned by selling products to other people on eBay.

How does passive income work?

passive income meaning

Passive income is a source of income that doesn’t require an active work- to- get. You can earn passive income in many ways, but it usually starts with your own earnings or investments. For example, if you held stocks that pay dividends, you would be considered receiving passive income because you are collecting a return on your investment without having to do anything other than holding onto those stocks.

Passive income meaning: money that you make without having to actively work for it.  It comes from investments or businesses in which you have a stake, but don’t have to manage on a day-to-day basis.  Passive income can be a great way to supplement your regular income and help you achieve financial independence.

There are a few different ways to create passive income. One common approach is to invest in assets such as real estate, stocks, or bonds. When you purchase an asset, you become a part owner of that asset and receive a share of the profits generated by it. Another option is to start a business in which you have little day-to-day involvement but still earn money from it. This could include things like renting out a room in your house on Airbnb or licensing your intellectual property to others.

Passive Income Examples

Passive income can come from many sources, but an easy example is investing in dividend stocks. Dividends are the payments that companies make to their shareholders based on the dividends they generate. These payments are usually made on a quarterly basis and the company has the right to reduce or stop these payments at any time. Let’s say you bought 100 shares of ABC stock with $10,000 and it paid out a dividend of $100 each quarter. The first payment would be made in three months, the second in six months, and so on until there was no more money coming into your account. You’d receive 10 payments of $1,000 over the course of a year (you might have to wait longer if you reinvested your dividends). If ABC stock increased by 25 percent during this period, then you’d receive another payment for $1,250.

Passive income strategies

There are a number of ways to generate passive income. Here are some strategies you can use: – Sell your items on eBay, create an online course, or offer your services to businesses in exchange for an hourly pay – Invest on dividend stocks and have a portion of the earnings sent to you periodically – Make money from the side hustle by selling your own inventory or services

Drawbacks of passive income

passive income meaning

The biggest drawback to passive income is that there isn’t always guarantee of success. You have to be patient and it can take some time before you have the capital needed to start generating a profit. Many methods of generating passive income are highly dependent on your definition of “investment” as well, so it may not always be possible for you to generate passive income without personally investing in the project.


Passive income meaning is also explained as earning money with little or no active effort on your part. What’s the benefit of this? This is because you don’t need to work harder or put in more hours to earn more money. The downside to passive income is that you have to have a lot of money to make it worth your while or invest a lot of time.