When most people think of passive income, they mistakenly think of it as money you earn while sitting on a beach in some exotic country, without any work, or with little investment, or little time. When in fact, passive income includes work, sometimes a lot of it. Most of the time, in order to create passive income streams, you do a bulk of the work up front, and then, you may be able to do minimal work to maintain that income stream. The great thing about passive income is that you do not have to constantly trade your time for money if you set things up the right way.
Investopedia defines passive income as “earnings an individual derives from a rental property, limited partnership or other enterprise in which he or she is not actively involved.” Rental properties are a great example of passive income. However, they take work if you are managing them yourself. Another great example is income from e-books, selling information products, or stocks that yield dividends.
Which one is your favorite?