Passive Income – Three Main Types

November 14th, 2007 | stacey | Financial Freedom, Financial Independence, Multiple Streams of Income, Passive Income, Passive Income Online, Passive Income Opportunity

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Passive income are the earnings an individual gains from owning a limited partnership, real estate rental property or other business enterprise that does not require ongoing, active involvement. The work is done once and the business enterprise continues to yield in income every month.

There are three main types of passive income, which are passive income, active income and portfolio income. By combining all three sources of passive income, you can create multiple streams of income for true financial freedom. Creating passive income passively does not include wages, dividends, interest or capital gains. These type of dividends and interest are earned through portfolio income, which is a series of investments. Active income involves earning money through working.

True passive income exists in situations where you own real property and collect rent every month. The initial work is done when you find the real property, purchase it and set up the rental situation. Once you have performed these tasks, the rental income comes in regularly with no additional effort on your behalf. Additionally, as you pay off the property or own it longer, it increases in value and builds equity to boost your overall net worth for greater financial independence.

By establishing sources of passive income for yourself, you can eventually leave the everyday routine of nine to five and use the multiple streams of income you create to pay your expenses. The key to financial freedom is to earn passive income and you can start while you are still working at your regular job - after all, it is your business and you are in control.