What is Active and Passive Income

You might wonder what active and passive income is and how one can earn passive income along with their jobs. Your worries come to an end as in this blog, and I will share the meaning of active & passive income, sources, and its pros and cons. So let’s dive into this and understand the basics of active and passive income.

Meaning of active income

Active income is money earned in exchange for performing a service. A person who receives salary/wages/tips monthly or daily by working in an organization or a company is known as an active income. E.g., the company assigns a task to the person for which, he is paid salary or wages; this comes under active income.

Pros of active income

Many people prefer jobs to earn active income as they are assured of their salary. Some of the benefits are:

• A person is assured of monthly income.
• There are chances of earning increment based on their skills

Cons of active income

• An individual needs to work 8-10hrs per day
• They are employees and works for someone
• To earn more increment, an individual needs to impress higher officials and work hard.
• The responsibilities get higher in job

Importance of active income

Active income is important for those looking for constant and consistent income. You can make money in a short period. You get an assured monthly salary, and there is no risk involved. One can earn passive income along with active income.

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Meaning of passive income

Passive income is money earned by an individual on investment or who makes money without additional effort. There are various ways by which one can earn passive income. Some are interest earned from investments, Affiliate Income, Display Advertising, Rental income, online course sales, and Info Products.

Pros of passive income

• You can earn income without working or devoting time to it
• If the source of income is from capital gains or qualified dividends, it may be taxed at a lower rate
• You can work at your comfort and enjoy your weekends to the fullest
• For earning passive income, you do not require to be in a fixed location. One can work from anywhere in the world

Cons of passive income

• Relying solely on passive income can be a risky way to earn a living
• You need more startup costs or more money for investing

Importance of Passive income

Passive income is important as you are not required to be physically present at the work location. You can make money at all the hours of the day and around the year. No matter where you are, you can earn money.

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Conclusion

I hope you like reading my article and understood the meaning of active and passive income. Both of them have their benefits and disadvantages. One can earn passive income along with their job and increase their sources of income. ULIPINDIA will help you earn both active and passive income. As mentioned above, the guide will help you understand the meaning of active and passive income.

I’m looking forward to your valuable comments and feedback! Thank you

Vaishnavi Baheti