Making money while you sleep: Check out these 35 passive income plays – WRAL TechWire
Most people think of income as something they must trade their time for, like going to work for a day and then collecting a paycheck. However, passive income is money you earn even when you’re not working.
Creating passive income often takes an upfront investment of time. And some passive income opportunities will also require a financial investment. Still, the money comes in, helping you pay off student loans or credit card debt, save for retirement, or advance your journey to financial independence.
What is Passive Income?
Passive income is defined as income that doesn’t require much effort to earn. It is a form of income that can help you build wealth even when you’re not physically working.
There are many different ways to earn passive income. For example, if you invest in mutual funds and your investment portfolio increases in value, your earned money is classified as passive income. Likewise, if you create something digitally – like a video or a song you get money every time someone views it; that’s also passive income.
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How Does Passive Income Work?
Since you’re busy living your life, you want to build a passive income stream that eventually works while you sleep, play, socialize…whatever you want to be doing with your time. The good news is that you don’t need a pile of cash to set yourself up to earn passive income.
If you already have an asset you are not fully utilizing, that can serve as your investment. For example, if you have money sitting in your local bank account, transferring it to a high-yield savings account with a much higher interest rate is an easy way to earn extra money with very little work.
Passive Income vs. Active Income
No matter how you make money, income falls into one of two categories: active or passive. While you may have heard about these, many people still don’t understand the differences.
Simply put, passive income is indirectly obtained, such as interest from savings accounts or stock dividends. Additionally, revenue is procured from rental property, limited partnerships, or other businesses where you invest funds without any added effort.
On the other hand, active income is money you substantially work to earn. If you have a business you actively manage, it falls under this type of income. Your paycheck is one example, along with wages, tips, salaries, and commissions.
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