Passive income is a type of income that requires minimal effort to obtain and maintain. It is the opposite of active income, which is income received from working at a job or as a contractor. Passive income can be generated from sources such as rental property, equipment leasing, limited partnership interest, and financial investments such as stocks, mutual funds, and royalties.
Passive income can be a great way to generate extra cash flow, especially during times of inflation or unemployment. It can help you earn more during the good times and tide you over if you suddenly become unemployed, if you voluntarily take time away from work or if inflation keeps chipping away at your purchasing power.
Examples of passive income include:
- Rental property
- Equipment leasing
- Limited partnership interest
- Dividend stocks
- Peer-to-peer lending
- Owning a business that can mostly run itself
Its important to note that while passive income may take less effort to maintain, it often requires an upfront investment of time, money, or both.
