Passive income investments are all about earning enough regular monthly income that can sustain your daily household expenses or put something away for next generation, while maintaining your standard of living. There are various investment strategies that you can employ to achieve financial freedom when you retire or before you retire. Passive income investments are not only for retired people, of course. Many kinds of investors may be looking to generate a little extra cash flow from their portfolio. We’ll discuss a few passive income ideas below. But first we’re having a look at what passive income is exactly.
Passive income differs from earned income and portfolio income in a variety of ways. Passive income is generally defined as a stream of income earned with little effort, and it is referred to as progressive passive income when there is little effort needed from the individual receiving the passive income in order to grow the stream of income. Examples of passive income include rental income and any business activities in which the earner does not materially participate during the year.
Passive income differs from active income which is defined as any earned income including all the taxable income and wages the earner get from working. Linear active income refers to one constantly needed to stay active to maintain the stream of income, and once an individual chooses to stop working the income will also stop, examples of active income include wages, self-employment income, material participation in an s corp, or a partnership. Portfolio income is derived from investments and includes capital gains, interest, dividends, royalties and Auto-Trading Certified Investment Strategies.