Active and Passive Income Explained

Income is the money we receive or the money we get. There are two types of income- Active and Passive Income.

Active income is income for which services have been performed. This includes wages, tips, salaries, commissions and income from businesses in which there is material participation. Any money you get from the job comes under this category.

What is 'Passive Income'?

Earnings an individual derives from a ren​tal property, limited partnership or other enterprise in which he or she is not materially involved. In other words it is the income in which less participation of the the person is required. You could just set it once and forget it. It will keep earning money for you even when you sleep, rest or travel. E-books, Affiliate market, Blog, Investing etc. come under this category.

Passive income is a very good option as you do not need to work everyday. You just have to set it and forget. It will earn money for you. I am not saying that you do not need to work at all. You have to work very hard in the starting for you to set a system to earn money. But once you have set the system its very easy to earn money and live your life the way you want to.

Once you have set a system for passive income life is very comfortable, you need to go to the work only if you want to. You could just quit your 9 to 5 job (which you probably hate) without even worrying about the money.

Passive income is seriously worth having. I recommend you to have more than one way of passive income so even if one fails you need not to worry at all. But folks let me tell you this it requires a lot of hard work to set this up.

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