Sources of Passive Income

Nowadays, it isn’t easy to find sources of income. The gap between the rich and the poor is widening. Some say that if you work hard, you will always have the income to survive. But what will you do if it is tough to find a job? Even the rich find it hard to keep their pay. However, this is less of a problem for some who know where to find passive income sources.

So, let us define passive income first. Passive income is a type of income earned from investment. There are two types of income – active and passive. We earn active income from the result of our labor. Salaries, commissions, and service fees are sources of active income. What are the sources of passive income? Sources of income have different forms. Some popular sources are dividends, interest earned, rent, sales, land, equipment, and money.

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Dividend

The dividend is earned from the net profit of a company. It is a form of profit-sharing, which is more common in the stock market. When a company is owned by several people or more, the profit is divided according to each owner’s investment. These owners are called shareholders; such a profit is known as a dividend. The dividend can be cash or stock. It is a cash dividend when the profit is distributed in cash through bank checks. It is a stock dividend when it is distributed in the form of shares of stock. As one of the sources of passive income, the prize is also attractive, especially during growth. Not all companies give consistent tips. It is important to remember that stock selection determines your future income. If the company selected is proven to provide higher rewards, there will be a big possibility that it will continue. Most companies that consistently offer higher tips are called income stocks. Income stocks may not be large companies. Even some large companies fall short of making consistent dividends due to their high cost of operation. So, not all stocks are a sure bet as one of the passive income sources.

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Among the many sources of income in the stock market is an “income stock,” dependent on their good industry environment. For instance, if the IT industry is beautiful, any IT company can be a candidate as a source of passive income. This means it is better to choose from those companies than to pick a huge company in which the industry has been suffering from economic turmoil. Therefore, a company with a good drive is a good source of passive income in the stock market.

Interest Earned

Interest earned is also prominent as one of the sources of passive income. We make an interest rate when we deposit our money in a bank. What is the interest rate? Interest rate is the percentage charged when we borrow some money, and it is made when we lend. Although we are not necessarily a lender, we can also do this because the money we have deposited in a bank contributes to the loan lent to borrowers. Of course, there is a condition before we consider our deposits as sources of income.

We can consider our savings to be a source of passive income. This only happens when the interest rate is high and our deposit is significant. Time deposits or bank bonds are examples of stagnant incomes. A savings account, too, can be one. Banks differ from one another in interest rates. So, to get an attractive income through the banks, we should choose the right bank and deposit at the right time when the interest rate is high.

Rent and Lease

Sources of passive income are numerous and complex, but the easiest one is through rent or lease. Everybody knows without any explanation that the revenue we get from renting or leasing our property has proven to give us a reliable source of income. If you have an extra house and lot or apartment unit, you only need somebody willing to occupy the place. Your passive income sources are not your property but a reliable tenant who can pay the rent consistently and stay longer. The only consideration here is the profile of your tenant. If your property is a commercial lot, you may have it leased to those business people putting up a restaurant, a gas station, or a warehouse. The profile of your tenant here is more credible than the household ones. Commercial lot tenants will surely stay longer. This can become your concern because this type of investment is not liquid. It is a long-term investment. Nevertheless, many of us will consider this one of the best sources of income.

Investment in transportation services, however, is hardly considered to be one of the potential sources. The risk involved here is high. But if you are just an ordinary individual who owns one or two units of a taxi cab, it is good to rent them out, provided that you invest a little in your vehicle’s depreciation.

Sales

Buy-and-sell businesses can be income sources depending on the items or goods you trade. The bigger the things you sell, the more passive the payment becomes. If we deal with smaller things, that’s marketing and a good active income source. But if we buy and sell cars, houses and lots, stocks, and bonds, they are great sources of passive income.

Land

The land is the best source of income. It does not have to be from renting it out. Since time immemorial, it has been the most reliable source of income. In the past, fertile land could produce crops, trees, plants, and grains without human intervention. Even livestock and poultry were products of fertile land. All these things that land could make were sources of passive income. Such circumstances are still true until now but with little intervention.