What is Passive Income?

Passive Income is an income stream “where money is received usually on a regular basis, without continuing effort. This does not mean no effort at all; most passive income streams require great effort to start with.” - Wikipedia

Basically, passive income is money that you earn on a regular basis, without having to work every hour for it. Examples of passive income include:

• money that you earn from rental properties
• money that you earn from royalties
• money that you earn while your employees work for you
• money that you earn from other types of investments

Once a you can establish a stream of passive income, it opens up a new arena of possibility in your life. While most people are restricted to making money only for the time that they spend working, your passive income will make you money when you are not working. You will have increased income and more free time. The classic example would be Bill Gates, whom has so many assets that he earns money every second of every day, no matter if he is working, eating or sleeping.

It’s important to realize that most people live their entire lives without a passive income stream. You probably work for your boss and get paid for your time - but once you have worked an hour, that hour is gone forever. You can never get that hour back, and there is no way for you to earn additional money for that same hour of work. You get your paycheck and your boss takes the real rewards.

Imagine if you could work an hour, and continue to get paid more money for that same hour of work. Imagine you were to spend an hour writing a book that could be resold many times in the future. You could make $20 the first time you sell a copy, and then $20 when you sell your second copy. Every time you sell another copy of your book, you are getting another $20. You could continue to make money far into the future, and all you did was work for one hour to write your book.

This is of course a very simplified example, but I think it shows the basic idea and power of passive income. Once you can establish a stream of passive income, you can create additional time in your life to enjoy the things that you love - or spend your additional time seeking out more passive income streams.

If you are interested in passive income, I would suggest the book Rich Dad, Poor Dad by Robert Kiyosaki. I had known about passive income before reading this book, but Rich Dad, Poor Dad really puts it in a way that sets my mind ablaze with ideas.

If you enjoyed this post or have something to add about the topic of Passive Income, please leave a comment and I will be sure to respond.