Passive income involves earning money from a source other than a contractor or an employer. According to the IRS, passive income can come from either a rental property or a business which you do not actively engage in his can be payment in book royalties of stock dividends. While passive income as that get-rich-quick appeal, it is not about getting something for nothing. It still involves some work upfront.
what is intriguing about passive income is that it can be generated while you are inactive or sleeping, which free up additional time for hobbies and allowing you to increase your income by performing some other form of work while still generating previously established streams of passive income. For example, let’s say you work a 9-5 (nine to five) job where you are paid a fixed salary. You also receive regular passive income from a course you uploaded and sold in the least year. Now your office job requires your direct effort before you get your salary. You are directly trading your time for the money.
Warren Buffet famously said, “If you don’t find a way to make money while you sleep, you will work until you die.”
With all this said, creating a passive income stream is far from easy. You will have to put in a considerable investment of time, effort and money in the beginning. You may get frustrated but keep in mind that it is one of the most worthwhile investments you can ever think of. Passive income may not provide an answer to your problems, but it is definitely a path towards building wealth and financial independence. If you are thinking of starting a passive income business, it must meet the following criteria:
- Recurring Payments — Passive income does not require effort to maintain or sustain
- Systematization — Passive income streams Should be derived from a systematic process. The ability to properly develop these processes is a key element of passive income.
- Automation — passive income relies on automation and the ability to outsource in order to remain truly passive
- Scale and leverage — your passive income stream must be able to multiply through automation and other methods that enable you to scale the process.
- Income Potential — Passive income cannot be controlled by the overall possible income it generates. Those are some of the fundamental qualities that separate passive income from a traditional salaried job.