Passive income is a concept that should be understood by anyone seeking to increase their knowledge in the area of financial literacy. According to the IRS, the word passive income is defined as income generated from a business or trade in which an individual does not materially participate. Passive income is the opposite of active (earned) income, when a person earns active (earned) income he or she has to physically do the work to generate the revenue; an example of a person generating active income would be someone who works for wages on a job or a self-employed business owner who works in a business.
How to generate passive income
In order to generate passive income you have to either own assets or buy assets. When you own or have assets, those assets should be put in place so you do not have to be actively involved. Your asset accumulation should be able to provide you with a stream of passive income that you can accumulate on an ongoing basis.
Here are five ways to start generating passive income either online or offline.
1. Real Estate – Purchase a single or multifamily property and receive income from the rent roll.
2. Online Website or Blog – Establish a blog or website and provide good content, you can earn a passive income by selling products or ad space on the website or blog.
3. Intellectual property online – Create an e-book and sell it on Amazon Kindle or create music and sell it on iTunes.
4. Products – Sell items on sites like EBay, Zazzle or Café Press
5. Leverage – Use online sites like Amazon and establish your own web store to generate a passive income stream, find a direct selling organization to sell their products, or find affiliates and sell their products.
Out of this list of the five activties, I am personally using four of the strategies. I currently have an e-book that helps individuals fight debt collectors called “Jump Start your Credit”, I own online real estate, which are multiple websites and I actively promote affiliates.
Let me know how you are earning passive income. Share your strategies with me and comment below.
Also check out the video below to get a clear understanding of Passive Income!
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