Thursday, 28 February 2013

Passive Income versus Active Income

Passive income is income that you bring in even when you're not actively working.  I love passive income.  Who doesn't?

I first came across this term from the "Rich Dad, Poor Dad" book by Robert Kiyosaki.  My first reaction was,"This sounds too good to be true.  How can one earn income without working?"  It seems almost scandalous to be earning money when you're not reporting for work in some office get-up.

Many years have passed since then.  I have experienced first hand how one can earn passive income legally and regularly.  Currently, our household income is supplemented partially by passive income.  Active income from my husband's salary still forms the bulk but slowly and steadily, we are seeing a rise in the proportion of passive income.

The forms of passive income we have/had are as follows:
1) Dividends from stocks we own;
2) Rental from our HDB flat when we were expatriated;
3) Interest from bonds, fixed deposits and financial products;
4) Referral fees (ad hoc) for referring friends/family to certain banking products; and would you believe it even...
5) Prize money.

I am now a firm believer in passive income, but "active" work also gives me a sense of fulfillment which passive income doesn't.  In fact, it's been a well-known fact that people who stay "employed" voluntarily even way into their retirement years are happier than those who are not.  I hope to be one of those happy people!