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Most of us will have an active income while our concept of a passive income seems distant.
It is a dream to reach a stage in life where you earn money by doing nothing. However, to reach this stage, one needs to have an active income. Money received from doing a physical work in the form of salary or profit from a business is active income.

Money earned without working is called passive income.

Passive income is earned in the form of rent, dividend, interest, and royalty.

If passive income is higher than monthly expenses, he or she is financially free.

Passive Income literally works and generate income when one sleeps. However, to generate passive income, one should have an income. At the same time, you should identify an option to invest so that passive income will be generated in the later phases of your life. This helps when nearing retirement age as active as well as passive income makes the retirement life quite safer.

However, one should always make a thorough study before identifying options that can generate passive income.

The following form passive income.

• Rentals from a company for an advertisement which has been pasted on your house’s exterior wall.
• Royalty from the sale of a book which you wrote and published
• Income from a YouTube channel which you had started and stayed committed to.
• Profit from a company which you funded

Doing a job creates active income.

If you invest this active income wisely, the returns from it will form a passive income, the rewards of which you will enjoy in your retirement years.

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