TheTaxHeaven Dictionary - Know the meaning of tax

Passive Income

Understanding Passive Income

Passive income is earnings generated with minimal effort. It often comes from investments like real estate, stocks, or cryptocurrencies. Although it requires initial setup or investment, it can earn money without continuous involvement.  

More About Passive Income

Passive income can enhance earnings with little effort. It involves investing in various products or ventures to create alternative income streams, providing financial security and a safety net during uncertain times. 

Common sources of passive income include high-dividend stocks, bonds, rental properties, and high-interest savings accounts. 

You can also generate passive income through peer-to-peer lending, silent partnerships in businesses, or fractional real estate investments. Crypto staking is another option. 

Passive income is generally classified into three types: 

Property income: Profits from capital ownership, rental income, and interest from financial assets. 

Business-related activities: Investments in businesses without active involvement. 

Royalties: Payments received for the right to use someone else's intellectual property.