Payday Installment Loans Near Me in Tacoma, Washington
Fast Online Approval Money & Cash Advance Lenders (offline stores)

---

"Understanding Passive Income and How to Build Yours"

---

The term 'passive income' is well known as one of the dream goals for achieving financial freedom, and is widely popularized during the past few decades.

However, many people didn't actually understand the meaning, concept, and much less the ways to achieve it, and thus the term only became an empty goal.

---

Thus, let's dig deeper into the actual meaning of the subject, a few examples, and how we can achieve having passive income in our financial lives.

---

What Is Passive Income?

Learning from its name alone -passive income- we can generally assume that the meaning is earning, or income accumulated without being materially involved in the process.

In its legal and technical terms by the IRS, passive income definition is only limited to earnings from rental property and income generated from a business he or she is not directly involved in.

---

However, lately, passive income definition has become relatively loose, and other incomes and earnings gained through indirect involvement can also be included in the term, such as:

---

- Income gained through portfolio investments:
For example, gains from stock market.

- Interests gained through giving out loans:
For example, earning interests from online peer to peer loans.

- Lottery winning:
Some experts put earnings from lottery winning inside the passive income category.

- Rental Property:
Except if you are a real estate professional, earnings from property rental can be legally categorized as passive income.

- Dividends:
Business earnings in which you are not materially involved in can be categorized as a passive income. In its legal terms, material participation is defined as being actively involved for more than 500 hours.

Benefits of Passive Income

---

Why is having a strong passive income so important in accumulating wealth? Here are a few notable reasons:

---

- Time is a valuable commodity, and you can only dedicate so much of your time to earn active income.

- Legal passive income as mentioned above can be tangible for tax deductions.

- Diversification, having more than one source of income is great to mitigate risks.

How to Get Passive Income?

---

There are many ways to get passive income in its loose definition, and here are some of the notable ones:

---

- Online Businesses:
Although technically we will still need to be actively involved in most online ventures, such as having a monetized blog, doing affiliate marketing, etc, arguably the involvement is relatively less material.

- Renting Property:
As mentioned, renting property is one of if not the best way to get a sustainable passive income.

- Portfolio Investment:
Investing in the stock market can be a great way to accumulate passive income, both with a long term and short term approach.

- Peer to Peer Lending:
Peer to peer lending platforms has become increasingly popular as a great way to do investments with a small amount of money. Although lending with interests can always be categorized as passive income, be aware that personal lending is heavily regulated.

- Limited Partnership:
You can be a passive investor in a business, such as being a venture capital or angel investor, and gain passive earnings through dividends and other earnings.