What is passive income?

Passive income is income that is earned with minimal or no active involvement or effort from the recipient. It is money earned regularly with little to no ongoing work to maintain it. Passive income can come from various sources, including investments, businesses, real estate, or intellectual property. Here are some common forms of passive income:

1. Rental Income: Money earned from real estate properties, such as rental apartments or commercial spaces, where tenants pay you regular rent.

2. Dividend Income: Earnings from owning stocks in companies that distribute a portion of their profits to shareholders in the form of dividends.

3. Interest Income: Money earned from interest on savings accounts, certificates of deposit (CDs), or bonds.

4. Royalties: Income received from licensing your intellectual property, such as patents, copyrights, or trademarks, to others for use.

5. Capital Gains: Profits made from selling investments, such as stocks, real estate, or other assets, when the value has appreciated.

6. Affiliate Marketing: Earnings from promoting and selling products or services from other companies through affiliate programs.

7. Online Businesses: Passive income can be generated through online businesses like e-commerce stores, blogs, or YouTube channels, where revenue comes from advertising, affiliate marketing, or digital product sales.

8. Peer-to-Peer Lending: Earnings from lending money to individuals or small businesses through peer-to-peer lending platforms.

9. Automated Business Systems: Businesses that can run with minimal hands-on involvement, such as vending machines, automated dropshipping, or online courses once they are set up.

The key idea behind passive income is that it allows individuals to build wealth and financial security with less active time and effort compared to traditional forms of employment, where you exchange your time for money. However, creating a sustainable source of passive income often requires upfront investments, time, and sometimes expertise. Additionally, it's important to understand that not all passive income is entirely "hands-off" and may require periodic monitoring and management to ensure continued profitability.