Business Activity || Active Income and Passive Income

Understanding active and passive income
Basically, your income can be divided into two categories.

Active income and passive income

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Active income : is earned income. Passive income is capital gain. Earned income means the money you earn by working your muscles. You go to your office every day, work 9-5 on weekdays and get paid by the end of the month. This is active income. Or you can earn an active income even if you are self-employed. You drive Uber cars or do DIY, these are also active sources of income.

Passive income : means you earn with little or no effort. Basically, you're making money off of something you've done in the past. For example, if you are receiving rental income, this is a passive source of income because you bought the property in the past. Earning income from your business is also passive income because once your business is firmly established, you don't have to go to work every day, you will have a team to take care of it.

While active income is good for financial stability, building passive income is considered even better because that's how you build your wealth. Another reason why you need to build passive income is that you will have to pay more tax on active income compared to passive income.

Building passive income through active income

To build passive income you need these things:

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• Money to invest in various markets or to start a business
• Skills to create passive income (such as creating digital products or subscription sites)

What if you don't have either of these two? Can You Still Build Passive Income?

You can still build a source of passive income even if you don't have the money to invest or start a business or the skill to create products to generate passive income. You can use active income to build passive income.

You can do this in two ways.

You need to start saving money. You need to save money in high-yield savings accounts so that in a few years you will have a significant amount of money that you can use to do investments in stock market or purchase a real estate.

You can start saving right away. All you have to do is use a micro investment platform. Micro investment platforms are investment and trading platforms where you can start investing with a small amount. For example, you can invest on Acorn and Stash with just $5. However, do your research before micro-investing as some investment platforms have account management fees. Choose platforms where you don't have to pay these fees.

Different ways to build passive income

Whether you want to retire early and enjoy life, or you don't want to work full time to make money, you need passive income. Passive income can be built in different ways

Investing: You invest in the stock market and get dividends. You invest in real estate and collect rent. You buy equity in the company and get a return on your investment.

Business: You start a business and your business starts generating income, when the business starts generating income, you don't have to work 12 hours to run the business. It will be completely passive income. Just look at Jeff Bezos. He started Amazon working in a garage and now he can travel to space while Amazon makes him money every second.

Other Sources of Passive Income:

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If you don't have the money to invest or start a business, or if you don't have the necessary skills and knowledge to start a business, there are still other ways to build passive income.

• You can start a youtube channel. In a little time, your youtube channel will be the best ways to build a passive income.
• You can start a blog and earn passive income through ads, affiliate marketing, sponsorship, etc.
• You can create a membership site and earn passively.
• You can sell digital products on various marketplaces and generate passive income.

Reasons why you need passive income

Active income means you have to work every day (or 5 days a week) to earn money, passive income means you earn money with little or no effort.

It's easier to build an active income because that's how you were raised. Your parents tell you to go to school, study, get a degree, get a good job and start making money. There is nothing wrong with that, but the main problem is that it will only be enough to feed you when it comes to living comfortably and enjoying the life you cannot. First, you will never have enough money to enjoy your life, second, even if you earn enough, you will never have enough time to enjoy your life.

Passive income methods do not require you to work full-time (8 hours a day, 5 days a week), you may be able to generate enough income just by working 3-4 hours a day, or even less. Some passive income methods don't even require you to spend time. For example, if you own real estate, you don't have to manage your real estate, but you still collect rental income every month.

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