What Is Passive Income?
In a word, passive income (sometimes known as "residual income") is cash that you earn after making an upfront financial or "sweat equity" investment, then you sit back and watch the money roll in. Good examples of passive income include:
*An author who receives royalties after writing a book.
*An entrepreneur who buys a car cleaning shop for an upfront cost, and collects money on the washing, waxing, cleaning, and detailing services charged to clients.
*An investor who lives on the dividends and profits earned by making smart stock market moves.
*A real estate investor who fixes up a home and rents it out for a profit every month. The profit the owner receives after his or her initial investment is passive income.
*Even a cash back credit card qualifies as passive income. You're earning money -- however small -- on cash reward purchases you make with your credit card, and that's enough to be considered passive income.
--->Passive Income Vs. Active Income
Passive income is the opposite of active income, which is money earned when you perform a service or when you work full- or part-time and earn a salary, a per-hour paycheck, or earn commissions (like a salesperson) or tips (like a bartender.)
The key differentiator between passive and active income is this - with the former, you can make money literally while you sleep. With the latter, if you're not working, then you're not earning any active income.
20 Passive Income Ideas
While there are dozens of ways to earn passive income, from building a mobile phone app to owning a vending machine, let's stick to the passive income models at the top of the list of the best money-making opportunities.