Active VS Passive Income: Everything You Need To Know!

What's up people?

Today I have got a really interesting topic that can change your entire mindset about how you look at money.

In this article, I will tell you everything you need to know about active vs passive income.

From an exact definition, what income streams should be considered completely passive with examples, so without wasting any more time.

Let's get right into it!

Active vs Passive Income

Active vs Passive Income

There are majorly 2 types of income.

1. Active Income
2. Passive income

So first let's get little warmed up and go a little deep in each of these 2 like:

What Exactly is Active Income?

To make it really really simple you can look at this way as if you are physically actively working for something and at the end of that task you will get some money.

And whenever you work on that thing, every day you start from a brand new scratch surface, it would be considered as something active income.

You see people around you like Accountants, Doctors, and Lawyers, all these people have to actively do their work daily and then they will get paid.

So, this would be considered a pure active income.


What exactly is Passive income?

Passive income is something on which you also have to work actively but at the end of the tunnel after completion of that work after some time.

That thing that you were working on actively from some time start to pay you back.

Meaning it is a type of income which also demand your full attention as active income does but after some time this work starts to pay you money.

Now there are various subtypes of passive income that I will tell you in deep down there but here just consider passive income as something that produces you recurring monthly income again-n-again.

Examples of Active vs Passive Income

There are a lot of examples that you will see all around you like:

Examples of Active Income:

Active vs passive source

- You can lawn grasses in your area.

- You can labor work in a factory.

- You can flip Burgers at restaurants.

- You can work as a delivery guy for companies.

- You can be an accountant.

- You can roam around dogs in your area.

- You can become a cook.

- You can be a lawyer.

- You can be a dancer, etc.

There can be a lot of examples that you can find to be considered as an active income source.

But the main thing that you always have to remember that in the column of active income you are basically always trading your time to get paid.

Examples of Passive Income:

- You can start to train people at the gym and build your clientele.

- You can invest in a business and become a silent partner.

- You can join a network marketing company.

- You can sell a lot of insurance and get paid monthly.

- You can do software as a service.

- You can open your own food stall and hire a few people for work.

- You can invest in stock markets.

- You can publish a book.

- You can open a lottery sometimes with your first cut.

- You can rent your own property.

- You can start your own online business.

- You can open a blog just like what you are reading rn;)

You see, there can be a lot of things that can be done if you look and think more creatively from like what can you do so that you can get passive cash flow each month without actively working for them.

Always remember that there are different-different types of passive income opportunities that you can build.

Some of them are completely passive and others are somewhat non-passive that may require your physical existence there to work properly.

Active and Passive Income[Advantages/Disadvantages]

There are different-different advantages to active and passive types of income so let's go through some of them:

Advantages and Disadvantages of "ACTIVE INCOME"

(+) Advantage :)

Active Income is something that you can in-cash easily and it is easy to do some things here-n-there if you really do not know anything about what you can do but you literally need right now cash in hand.

(+) Advantage :)

You can actively work for someone and get to know each and every aspect of their business that how exactly it is basically done?

And then, after gaining some experiences and building some connections you can enter in the same industry too if you are really sure about yourself!

(-) Disadvantage :(

Active income is something like you do not get high raises working actively for someone. It is fairly difficult to get pay raises if you are working for someone and ask for a promotion.

(-) Disadvantage :(

You are basically working under someone that can fire you in a shadow of a doubt if something happens to their company or whatever. You can think initially that you are in safe hands.

But it is very difficult to consider yourself safe if the person you are working for does not consider you their top priority unless you are their closed relatives or family or something like that.

(+) Advantage :)

Besides getting graduation and everything, if you look at other active sources of income. You will find out that this thing does not require you to learn some massive skill that is rare or anything on those levels.

Anyone can learn a few things and can start to work actively for someone for some instant cash.

(-) Disadvantage :(

If something happens to you like an injury or an illness, you're done!

I do not want any of you who are reading this but by the hands of God, if something happens to you, you cannot earn any more of active income which is a really serious concern to consider in the first place.

Active vs passive income

Advantages and Disadvantages of "PASSIVE INCOME"

(+) Advantage :)

If you can build or somehow generate one stream of passive income by looking at different opportunities. Basically, it gives you the ultimate power to automate this current stream of income at hand and build some more.

And then some more and more... etc.

In a nutshell, this type of income gives you leverage because if you can successfully build on a stream of income, then you can leverage your time from this one and do something else or can have time to do what you truly want to do!

This type of income can give you a massive curve from the rest of the people that are working actively. It is all about working smart vs working hard.

(+) Advantage :)

Passive income can release a lot of stress and headaches from your head very effectively like you do not have to actively work from start each time.

But at the end of each month, you will get credited some in your bank account passively!

(-) Disadvantage :(

Requires a lot of hard work in the beginning upfront without getting paid anything. Basically, you have to actively work on something that has no guarantee that will this pop-off or not?

Initially, you have to work hard and give a little more effort which can be a big issue for most people because you don't know where it is leading you to?

(-) Disadvantage :(

Building a passive source of income may require you to basically have a good amount of money initially to build some.

Like if you are thinking to buy a property or apartment, it gonna cost you some if you do not yourself have the capital you invest in, you can get discouraged easily.

(+) Advantage :)

You can have the power of the Super Man!

I mean to say the Ultimate Power of Compounding Effect!

I mean literally, this single things is basically the biggest thing that can make you really really wealthy in the long run.

You can accumulate a lot of wealthy if you just invest little money like in stock markets. The money will grow in humongous quantities in the long run!

(-) Disadvantage :(

Generating passive income from the outside may seem very easy and all the concepts but it has got its own process.

Like when you try generating passive income from different opportunities, it basically requires you to learn skills by hit and trial if you do not know what you are doing.

Skills need to be learned anyway, there's no way you can build a passive income without building some skills.

Some Key Terms That May Confuse You

So this section is completely dedicated to some of the famous terms that you may have heard earlier but still making you somewhat confused, like what?

So what does that mean
And what does this mean then.?
You see where I'm going?

So let's also take a look at them also:

1. Passive Gain:

This term is used when you own a house and the prices of the house gain in rates.


When you have invested in stock markets and the price of the stock goes up without you working actively, that would be considered as passive gain.

2. Leveraged Income

Leveraged income is just another name to call passive income. Both passive income and the leveraged income are throwing the meaning towards the same page.

Leverage word is devived like you are not actively working which means you are leveraging your time to work on something else, that why it's called leveraged income.

3. Income Producing Assets

When you read this, it somewhat sounds like such a big thing "income-producing assets", but in actuality the meaning of this is,

First, what is an asset, it is something that is making you money. So, income-producing assets mean all those different sources that are producing your income.

For example, rental income is your one income-producing asset, owning a website that is making you money is your one another income-producing asset, etc.

active vs passive income

4. Dividends Income

In stock markets when you make some money when a stock pays you, it would be considered as:
The stock is paying you monthly dividends from its shares or mutual funds. When the company profit, it pays it's shareholders some dividends.

5. Royalties Income

Royalties are something that you get paid after publishing a book. Like there are not many things on which you earn royalty income.

Very few are there income opportunities that pay you monthly royalties like income from copyright, patents, and trademarks, etc.

6. Passive Investment Income

Understand the meaning of what these words are trying to say.

Passive is something on which you are not actively working then,

The  investment you already know that you invested some type of money into something and finally,
Income is something you receive.

So in the end, passive income investments from real estate, you lend some money to someone at a certain interest, etc.

7. Non-Passive Income

Understand this like, you have actively done some work on something and then after some time you do not actively have to work full time on that thing again but,

You somehow are managing everything from the top like rental income. You still have to do some care of the apartments and everything.

8. Portfolio Income

Portfolio income is something that you get when you make your own portfolio of different income streams.

In this, no active business income is considered, it is strictly for income from interests, dividends, capital gains, etc.

9. Earned Income

Earned income is something you actively work on like your typically 9-5 job where you are earning a salary by working for someone else.

And on the flip side for the owner point of view, he is earning passive income off of everyone who is working under him.

Who Will Get More Rich or Wealthy?

Obviously who doesn't want that whenever the month-end, he can just listen when seeing his bank account the sound of ching-ching in his head.

Ok, That was a bad question!

But on a serious note, if you can look at anyone who is successful right now. These successful people do not have any single source of income on their team. Rather,

These people are getting paid from different sources and now you will ask how to generate passive income? or what are different ways to earn passive income?

So if you have truly understood about active vs passive income concept then would you like to build some passive sources of income for yourself?

If YES, then register for our online course on how you can make money online. This is a completely free course that will teach you exactly how you can build an online business.

Check here-

Share if you find this article informative, that would be greatly appreciated.
Until then

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