Passive Income. It seems like an abstract concept, or even a contradiction in terms, but the term is thrown around with such passion and zeal these days that it’s become pretty hard to ignore; like some kind of divine ritual. Often, however, it is accompanied by dodgy sounding catchphrases like “financial freedom” and “self-attained financial power” that really don’t inspire huge amounts of trust.
This might be the case, but passive income sources are all around us – most of the wealthier and more affluent people in the world enjoy sources of income on the side of what they’re known for (whether it be through investments, affiliations, etc.) and, more than this, it’s a great way to maximise the hours in your day!
I was first interested in passive income when the book “The Richest Man in Babylon” was thrust upon me by my grandmother’s neighbour one hot summer in Portugal. I devoured the book, which is more of a wealth management guide, told through parables set in the ancient wealthy city of Babylon. From what I learned :
Passive income represents mastery over your own time and wealth (financial as well as “skill”), allowing you to completely detach your work from your earnings.
Before we start, it needs to be mentioned that passive income can take many many different forms, and spans multitudes of domains, from finance and investing, to arts and crafts – there is always something that suits your personal rhythm and skillset. It is therefore essential that you choose something that suits you (and it’s a bonus if it’s something you do already!). Starting small is preferable, and you won’t be making 10,000€ per month from your blog (until far further down the road of course!), so remember to also disperse your earnings into several different methods.
So what is passive income?
The term is used colloquially worldwide today and usually means :
Income that is earned regularly and takes little to no effort from the person earning it.
The legal definition of the term isn’t the same from country to country, depending on a whole range of parameters such as if and how taxes are applied to it. In America for example, passive income is an income type in itself (and is looked at more favorably when it comes to taxes), so has a set definition.
For me personally, there are two types of passive income:
Semi passive income requires your continued input (replying to emails, opening the door to Airbnb guests, etc.) – no matter how well set up or maintained this is, it will still continually require some time and effort on your part to keep it going.
Truly passive income usually takes more time (or money) to set up but requires no continued input (for example creating a logo that you get paid for every time it is used, or investing into dividend yielding stocks).
I’m a long way off being a master at earning passive income – but my interest has grown and I have begun to compile my thoughts and ideas on the concept as my knowledge increases. This “article” will evolve over time, as I share with you only the most interesting and pertinent of ideas that I come across (with, of course, referral links to each of them!).
Tips are always a good source of passive income too 😊