Passive income is income which a person receives through little or no work at all.

Stocks, bonds, mutual funds, real estate, inheritance, network marketing, and automated businesses are forms of passive income.

Owners of passive income usually make an initial investment and wait for the income. Sometimes a person may have to wait years, even decades, to reap the benefits of passive income because the longer you keep many of these investments, the more the interest will grow. Exceptions are bonds(which pay income continuously until maturity. i.e., you don't have to wait for it) and stocks (which may or may not pay out dividends depending on the company and it's circumstances).

One of the main problems with passive income is the massive taxation. Governments usually tax big on it because of two reasons: 1.Since the passive income builds, you usually get it in a lump sum, hence, Uncle Sam takes a bigger percentage out of it. 2. Since its not labor derived, the government can look more harshly at it. Somebody asked me if there are tax exempt investments. There are such investments as a 401k or retirement plans which are, but they are not passive income.

If you are looking to make some passive income, I suggest starting small, with some shares in stocks or mutual funds then maybe moving up to real estate. Smart investing is the key to passive income. Think about what you invest in and soon you'll be on your way to being a millionaire.

Log in or register to write something here or to contact authors.