Passive Income
Also called: income streams, residual income
Passive income is money that keeps arriving without your ongoing labour — dividends, bond coupons, rent, royalties, interest. The honest version of the idea is that it takes capital or upfront work: $500 a month of dividends at a 3.5% yield needs roughly $170,000 invested. The dishonest version, heavily marketed online, treats a business that requires daily management as 'passive'. Tax authorities have their own narrower definition, which matters because passive losses often can't offset active income.
Want more than a definition? Learn it in Money Basics →