"Passive income is an income received on a regular basis, with little effort required to maintain it. It is closely related to the concept of 'unearned income'". (Wikipedia)
Or if you are one that doesn't fancy Wiki, here is another definition:
"Definition of 'Passive Income'
"Earnings an individual derives from a rental property, limited partnership or other enterprise in which he or she is not actively involved. As with non-passive income, passive income is usually taxable; however it is often treated differently by the Internal Revenue Service (IRS). " (Investopedia)
Essentially, go to Google and search for "passive income" and find these and more definitions. If you want to do as little work as possible, but still earn money on a venture, you are earning passive income. Now you are asking, "How do I sign up?!"
It's isn't that easy, and often people define the wrong types of income as passive income. They also mislead you into thinking that you can really do nothing and make money. There are many blogs that I have come across that list things like selling on eBay or etsy as passive income. Yeah, ummm, no.
Unless you can figure out how to pay someone to manage your eBay inventory, list it on eBay, ship the items when they are sold and still make money for you, then you can call that passive income. If you are savvy enough, by all means go for it. (Now that I just said that, I am seriously giving it some thought).
Usually, passive income comes with a hefty upfront investment. Purchasing rental properties such as apartments, office space or vacation space and then paying someone else to manage it for you is a very common passive income, if not the most common. Joining the rental property in popularity is someone who starts or invests in a business and isn't involved in the day to day management of the business. The common element here is "pay someone else to manage it for you".
To me, that sounds like a dream come true.
Writing a blog and relying on the ad clicks to be passive income, not so much. You can SORT of classify it as passive, but in all honesty, you are putting forth the work to write the blog, market it and keep it current.
Here are a few ideas to get what I call "sort of" passive income, in which you can still do less work if you are willing to share the profits with the people you hire to do some of the leg work.
- That eBay thing I listed above, or something similar. Acquire or find someone with junk that they want to get rid of. Then, hire someone to take pictures of the items, list them and manage the sales. You will still do work with keeping the inventory up or finding new sources, and of course paying the people you hire. But hey - you can still make some moola.
- Create an app. Or just come up with the idea and then pay other people to create it and manage it. They will keep up with the updates, bugs and whatever else.
- Write an ebook. OK so I keep seeing this all over the place. You could do this, but it would be really hard to just whip something up and get money for it. You will need to work on it to get it to sell. OR you can hire people to peddle it for you. If you are a literary genius or just really know how to rein in a crowd, you can earn passive income once it starts selling itself. Hey, it could work.
- Drop ship. But you won't even be doing that. Create a website (or pay someone to), get into an agreement with a wholesale company (easier than it sounds, I'll post about this on a later date) and then pay someone to manage the sales that come in on your site. In general, you could easily just do all this yourself and save a couple bucks, but if you are truly not want do much just pay someone.
- Pay someone to do pretty much anything for you. If you have the upfront funds, by all means go for it.
I hope this helped a little and didn't completely squash your dreams of moving to a beach front property and watching your bank account sky rocket. (which could happen, if you play your cards and money right, and if you don't know how to do that, hire someone).
[footnote: I attempted to site my sources by providing a link on the site name in parenthesis. If at anytime this does not work, please let me know so I can correct it. I don't believe in plagiarizing, and wouldn't want my work miss represented either]
