Passive income is basically money that comes to you day in and day out without having to spend any physical effort to earn it. Passive income keeps flowing to you whether you do anything for it or not. Now, is that easy money, or what?
Even better, passive income is usually tied in some way to inflation so, by association, it usually keeps growing in size. In my opinion passive income is one of the easiest ways to make extra money, you'll ever find. Once you understand the concept of passive income and how to get your share of this easy money, you are well on your way to financial freedom.
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Examples of Passive Income
There are many examples of passive income and ways to achieve your ultimate goal of financial freedom. Here are just some of the ways to earn extra money through passive income investments:
- Investments
- Royalties
- Commissions
- Franchise Fees
- Capital Growth Such As Shares And Property Trusts
- Internet Business
The Difference Between Passive Income and Residual Income
Two investment terms that are often confused with one another are residual income and passive income. The difference is fairly easy to explain. Passive income is generated without any effort, or very little effort, from the investor. Where as residual income is generated from the initial investment by the investor.
Real estate investing can produce both residual income and passive income. If you are looking for ways to make extra money through residual income investments in real estate you can buy a property and resell it, providing owner financing. This means that instead of the buyer securing financing through a bank or mortgage lender, you agree to carry the note and they submit monthly principal and interest payments to you. These payments are considered residual income.
On the other hand, if you want ways to earn extra money through passive income from real estate investments, you can invest in trust deeds. Trust deeds are private mortgage loans. This type of investment is passive because you don't have to actively participate in the management of the account to make money.
Passive income can be generated from business opportunities. However, for tax purposes the passive income cannot be a result of the active participation in a business, nor can it be derived from interest, capital gains, or dividends.
Some of the other ways to earn extra money from passive income investments could involve investment in real estate properties to use as rental properties or investing in stocks or bonds. The incomes you generate from these investments are also passive income.
Generating Your Own Passive Income Source
Just imagine the possibility of waking each day and without having to do anything; you have more income than you had the day before. Every day you wake up and your income has grown. Easy money, what a great result!
If you are one of those people who, have never had the opportunity of enjoying passive income but are looking for easy ways to make extra money, there are always ways to get involved in passive income techniques. Do some research to find your opportunity and then enjoy the opportunity of earning some easy money without having to work for it.
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