Passive income, also referred to at times as residual income is something that we all should hope to achieve. Being able to bring in money continuously for something that you’ve already done. For simplicity’s sake, let’s say I build a sliding board at a park for kids to play on. It might take me a few hours to build and I probably have to pay for materials, but once it’s built, it’s there for good (in a perfect world). Let’s also say that I decide to charge a quarter admission. Now this is passive income. Eventually those quarters are going to add up. I will make up money for materials and my time and eventually it’s all profit. Day after day, quarter after quarter, I’m making money.
This can easily be applied to a more realistic situation. For example, a website getting paid to advertise other products and businesses. You might do a lot up front to get that website up and running, get traffic flowing and getting those well paying advertisements, but once it’s done, there’s minimal effort on your part to keep it up and running. Even if you have to post daily on your blog, you dont have to build a new website every time to get paid.
Another form of passive income that you’re probably already getting is interest. If you have a savings account, you should be getting compounded interest at a rate specified by your bank. I recommend heading over to BankRate to check out the best paying high yield savings accounts if you don’t already have one.