What is Passive Income?
By Rachel Victoria, MSFS, former CFP
November 11, 2008
One of the most popular phrases searched for online is "Passive Income". In fact, when I Googled it, over 1.9 million responses appeared.
Yet, when I visited most of the websites, they were just Business Opportunities. How disappointing. I don't want to Work for my Passive Income!
But, really, What exactly is Passive Income?
I define Passive income as Income that is generated Without any exchange of
"work"
from you!
What truly qualifies as sources of Passive Income? Income and dividends from investment accounts, royalties, pensions, and residual income sources. (Again, that is only if you don't have to "work" for it.)
So, that eliminates the following sources that are often advertised online as "passive income":
Affiliate Marketing: requires Work- setting up a website, marketing and customer service. Online Businesses: requires Work- setting up a website, marketing and customer service.
Home Based Businesses: Requires Work- Often require referrals or sponsoring, or exchanging several hours of "work" weekly in exchange for compensation.
Offline Businesses: requires Work- office management, staff management, and obtaining goods or services to sell.
Some people also define real estate rental income as passive income. Unfortunately, those rentals usually have to be managed, tenants secured, rent collected, houses painted, property landscaped and maintained, property taxes paid, and appliances replaced. That doesn't qualify as true Passive Income for me. (I do realize you can hire someone to do those things, but when you can generate passive income even without having to be responsible for hiring these tasks to be done, rental real estate and passive income still don't seem to belong in the same sentence.)
To me, 100% Passive Income should at the most require you to set up an account, cash your checks as they are mailed to you (I prefer direct deposit), and complete your income taxes. And that's what we focus on at Passive Income Opportunities.net!
To learn more (if
not already here), please go to my website:
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