Sometimes you do things that probably can’t give you money, but you still do out of curiosity. Then soon, you just realized that those little things have become your alternative or prime sources of income. Isn’t that really fun and worthy of your time? If you really experience these, then congrats you just explore and start passive income streams.
To begin with, things that fall under passive income may or may not give you money in an instant unlike those “active income” generating endeavors like day job or business. But the idea behind the passive one is you start earning even you’re busy doing other things or not putting much effort. So with the extra money you’re receiving, building wealth is possible if you have both active and passive income.
The popular example of passive income generating work is writing an informative book or eBook. The author might do a lot of effort initially in creating story and dealing with publisher, but once the book hit bookstores and become best-seller, the writer just created unstoppable passive income stream. He or she will earn through royalties for years, even without working.
With the emergence social media and modern technologies, more and more possible passive income generating ventures are being invented like blogging, creating apps, joining affiliation program, and even selling online. But of course investments such stock market, real estate or mutual fund are still effective and popular.
For About.com there are two kinds passive income, the leverage and residual. The first type involves other people who can bring money for you like the franchisees do for franchisors, subcontractors to general contractors, and the downlines of a network marketer (upline).
Meantime, the residual income venture may still need little work but not necessarily too demanding like insurance agents who get income every time clients renew their policy. The other examples that About mentioned are the photographers who sell photos (stock photography), and instructors who created and sell videos or instruction manual.
“Note that this is different from merely recurring income. Recurring income may still require your involvement to earn the income, e.g., a coach or consultant on a monthly retainer, or a caterer who delivers lunch every Monday to the local school board. While this “active recurring income” offers welcome stability, it also tends to tie you down, and you still have limits on your earning capacity based on your own personal production capacity,” About’s comparison between residual and recurring income.
Though Passive income requires little time and effort in the long run, people should bear in mind that it cannot overnight. In addition to this, a venture and work will not be profitable as well if it not valuable. This is also one if the tips shared on Forbes’ report about Passive Income. In their interview with Pat Flynn, an architect and blogger who earned $2.7 million dollars at 31 through passive income techniques.