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    9 Replies Latest reply on Jan 20, 2014 9:31 AM by pauljoachim

    Passive Income

    LUCKIEST Guide

      I keep hearing the term "Passive Income"

       

      What's the story??

       

      Can anybody shed more light on the subject.

       

      Thanks, LUCKIEST

        • Re: Passive Income
          Moderator Berta Guide

          To me, I think "passive income" means making a little money without having to do much or any work. Like you set something up one time & it basically runs itself from there. That's what it sounds like to me anyways. Passive means your not actively involved or aggressive with the matter at hand so that's why I think that's what it means.

           

          ~Berta

            • Re: Passive Income
              Jim Peters Tracker

              I agree. It is something like earning income from franchisees month-after-month. This is generally a minimum guaranteed income or a percentage of sales whichever is greater. The franchisor is not required to render any service to the franchisee on a continuing basis. Effectively what the franchisee is paying for is the brand.

            • Re: Passive Income
              selfdefender Adventurer

              Passive income is basically a form of unearned income, which is income derived from investment dividends, etc., or a continuing income stream that was created at an earlier time. For example, insurance salesmen receive residual commission payments on a set time frame, which an underwriter continues to pay for as long as the client renews the original insurance policy. Another example would be licensing or copyright fees collected from end users of proprietary property. I have a friend who allows a cell phone company to use his land for a tower. The money paid for something like this is also passive income. Even though this may be defined as rent, the landowner does not exert any effort at all in order to earn.

              • Re: Passive Income
                bansod Adventurer

                Depends on which jurisdiction (US, Foreign, etc) you are referring to and what context (tax, etc.) For tax purposes in the US, the IRS defines passive income in Publication 925 (2012), Passive Activity and At-Risk Rules . The most common are rental income and pensions plus capital gains related to disposition of passive activity assets, although there are other types. Investment income (interest dividends, capital gains etc) are classified by the IRS as Portfolio income, not Passive Income, and royalties are similarly considered Portfolio and not Passive Income. Passive activities have special rules for tax purposes including limitations on deductibility of losses. If you have more than just a curiosity interest in this term you really should consult a tax expert, don't take this a tax advice.

                 

                You can also read this for just a general understanding: Passive income - Wikipedia, the free encyclopedia

                • Re: Passive Income
                  AngelBiz Tracker

                  I have heard it in the context of buying a rental property and renting it out. It doesn't require to actively manage it except for maintenance. You can even outsource the management and maintenance to other providers for some small amount. This is what I consider to be a passive income.

                  • Re: Passive Income
                    pauljoachim Scout

                    I think Berta nailed it.   For example, many years ago I set up a web site that had advertising it.   It made me money for 4 years and I did nothing.  Literally nothing but cash the checks.   That's my kind of passive income!