What Is Passive Income? Explaining The Term For Newbies

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Have you ever heard of the phrase passive income? What is passive income anyway? Maybe you have. Perhaps you even know what it is. Most think of it as a pipe dream, though — something most bloggers, entrepreneurs, and business-owners strive to achieve. However, it’s not reserved just for the few who hit it big in this world.

Passive income is a type of income that does not require active work

Passive income is a term that is thrown around a lot in the personal finance community. It’s not just a buzzword, though — it can be a very real way to make money online.

Passive income is money that you earn without having to work for it. With passive income sources, you’re making money while you sleep or after your workday ends. The idea of passive income is that you build something up once and then it runs on autopilot. Your time, labor, and expertise are used once to install passive income streams that generate money over long periods of time.

You could work for 40 hours a week or 50 weeks out of the year, and still end up with zero passive income. Passive income is all about building up the money you make without having to actually work for it.

For example, this blog takes me a lot of effort to write. However, one day I could be making passive income from advertisements on popular posts or affiliate links strategically placed.

Like this affiliate link here for TubeBuddy if you’re building a YouTube channel:

https://www.tubebuddy.com/Tracydeetips

There are many benefits to passive income

There are many benefits to passive income. The most obvious benefit is the lack of labor involved in its generation. You don’t have to work at your job to make money from it; you simply invest your money into a passive income stream and let it do all the work for you!

Another benefit is that you can spend more time with family or doing whatever else makes you happy. In fact, one of the biggest reasons people choose to invest in passive income streams is so they can spend more time with their loved ones while still making money!

Passive income is also great because it allows you to accumulate wealth over time without having to work at all! This is especially true if you’re using a long-term strategy (such as real estate investing) rather than short-term strategies (like trading stocks).

what is passive income
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Passive income is often created by making an investment

What is passive income and how do you create it? Passive income is often created by making an investment. When you make an investment, you’re hoping the value of that investment will increase over time. It could be an investment into a tangible thing or investment in your time at the start.

Let’s say you buy some stock in a company that you think will grow over time. If it does, then when you sell that stock, you can pay off your original investment and then some — creating passive income for yourself.

Or maybe you buy a rental property and rent it out to tenants every month. If the rent is more than what it costs to own and maintain the property, then that’s considered passive income.

But passive income can also be earned in other ways — by selling your own products or services online, for example. The more time and effort you put into building passive income streams, the more money you’ll make from them over time.

What is passive income and is it for me?

In the end, passive income is still a bit of a niche subject. It’s not something that most people are going to be familiar with in the beginning, and it can be easily misunderstood as well.

The best thing you can do is educate yourself on it, look for examples of it as you encounter them, and determine for yourself whether or not passive income is for you. You may find that it’s exactly what you’re looking for.

Personally, I’m trying to learn as much as possible about ways to make money in my sleep! Even if it requires a bit of investment with my time up front.

Author: tracydee

Millennial living life to its fullest. Growing, learning, and sharing.

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