Passive income refers to earnings that require minimal effort or active involvement to maintain. Unlike traditional employment or business activities, passive income generates revenue on an ongoing basis with little day-to-day effort after the initial setup. It can be an effective way to build financial security and increase wealth over time.

There are various types of passive income streams. Some common examples include:

  • Rental income from properties
  • Royalties from creative works such as books or music
  • Dividends from investments in stocks or mutual funds
  • Affiliate marketing revenue

To successfully generate passive income, one must often invest time, effort, or capital upfront. Here’s a basic breakdown of how it works:

Initial Investment Ongoing Effort Potential Earnings
Capital for investment, time for creation, or assets Minimal, could include occasional maintenance or monitoring Continuous, as long as the system is in place

"The beauty of passive income is that it allows you to earn money even when you’re not actively working."