Are you being paid once per month for the work or services that you have provided? If yes, chances are you are earning a active income. Active income is also called linear income, where you earn one unit of income for one unit of your effort. To earn a active income you also need to be present at your supposed workplace. Hence, doctors, lawyers, architects, or practically every employed or self-employed person are earning active income. If they don’t attend to their clients, they don’t get paid.

What about passive income? It is an income that you continue earning even when you are not working. Sounds unbelievable? Believe it, as thousands or probably millions of people have made it. Passive income, also known as residual income, is a stream of income which you can earn many times, with your one unit of effort. Here are several sources of passive income:

  1. Royalty income. Do you know that singers / song writers are paid royalties every time their songs are played on the radio / TV, regardless of how long ago they made it? This is a form of royalty income and the best part is, it continues for the rest of their lives. Of course this also includes those MLM home-based businesses.
  2. This can come from stock investments, where listed companies share their income with share holders in the form of cash or stock dividends. Dividends also come from mutual funds.
  3. Real estates. Your real estates can be rented out to earn a good amount of passive income!
  4. Interest income. Interests from savings / fixed deposits.
  5. With increasing availability of internet, websites have become an effective place to sell your products and services to the mass and earn big bucks! You don’t have to watch the website 24-7 as your clients will be able to purchase your products / services online without much hassle with the advent of online transaction.

How do people actually get rich? The answer: By having multiple passive income!

So, would you rather earn linear income or passive income?