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Make Money at Home - Passive Income

Updated on January 1, 2016

What is passive income?


Passive income is defined by the IRS as income received from only one of two sources - rent and business activities that seldom to never require the individual's participation. Less formally, though, it can also refer to interest from savings and other capital growth.
Rent and capital gains are fairly easy to comprehend - rent out a property or receive interest from investment and savings accounts. Passive income from business activities is slightly more diverse.

Royalties

One of the largest components of this latter component is royalties. This, in turn, is largely composed of royalties paid for an individual's words, be it specialist articles, short stories or novels that are published and sold by a second party. It may also include song lyrics.

This form of passive income could reasonably be considered the most 'easy' because there are no restrictions on what you have to write; choose a topic that you truly enjoy and are knowledgeable about. If it is printed or performed and sells, you earn money sitting at home. The added advantage of selling your words is that the public develops positive perceptions of a writer if they enjoy his work - this leads to successive works having a ready audience which can raise both direct sales and subsequent passive royalties exponentially.

Blogging

One particular form of passive income has boomed with the inception of the internet - online advertising on websites. Bloggers in particular have seen their fortunes soar.

Blogging is similar to earning royalties, except there are no printing costs involved and the author is in full control of what and when he or she publishes. Take, for example, a blog on baby prams. If the blog has a steady stream of visitors, manufacturers of baby prams will want to advertise on it to attract potential customers to their own products. The blogger simply keeps writing about prams as he always did, while the manufacturer’s ads keep earning him passive income.

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    • Terrex profile image
      Author

      Terrex 2 years ago

      Hey Swalia,

      I was just testing this article see if it would get featured without any specifics. :)

      Do you do any of this passive income stuff?

    • swalia profile image

      Shaloo Walia 2 years ago from India

      True! Though it takes time and patience to build up passive income.

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