What is Passive Income?

Passive income is a regular amount of income that is provided to a business or an individual, with very little effort required in order to maintain it. It is categories by the American Internal Revenue Service as separable into three areas. The first section being active earned income, passive income and portfolio income - further describing it as income from business activities or trade, in which the party concerned do not materially participate in any activity involved with obtaining the money. Financial and government institutions, however, observe it as an income obtained as a result of capital growth, or in fact an occurrence associated with negative gearing.

It is subject to tax, and can be obtained by several means.

The first means is the buying of property for reasons of investment, with little or no money down. Banks are generally attracted to first time buyers, so if this is the case for you, it is a perfect opportunity. There are many different programs intended to get buyers settled into their first house - something banks seem to want so much that they will go out of their way to keep the customer pleased, and provide as many resources as possible to allow for such a decision to take place.

The positive aspects of investing in property with no money down is that it is relatively inexpensive, with nothing other required than a signature. It does need, however, good credit - and there is of course a need to find a tenant quickly.

Another suggestion would be network marketing. Network marketing allows for individuals to collaborate with an organization or firm, in order to market products or services. The idea is that the company eliminates huge costs for advertising, by instead compensating consumers to promote the company image. This model is also known as multi-level marketing, and has been adopted by firms like Amazon.com, Google, Apple and Travelocity. The impact of their multi-million dollar advertising budgets were abysmal to what ca be achieved for a lesser price, by using word of mouth as a better method of promotion.

A widely used method is creating interesting content on the internet. Companies like Google, Revver.com and Amazon.com have decided in the past they they should share their revenue with creators of content - meaning that if a person can design and create an interesting film clip or, say, blog - the individual may be able to make some form of passive income out of it.

Automated eBay businesses are also a great way of obtaining passive income, with a system in place that makes selling goods really quite easy. The only foreseeable down side would be the time that would be spent acquiring and shipping a product that may have been difficult to find - as less common items sell better on website like ebay.

If you can find a reliable wholesale source of a product, it is relatively easy to open up the product to the rest of the world, and at the same time adding a little bit extra onto the price.

Once you've figured out how great passive income is, you'll never want to give it up again. And once you know how to do it in one area, it becomes easier to create residual income streams in other areas too. So what are you waiting for?

More on passive- and residual income

• Building a passive income business.
• How to make some passive income online.
• Some passive income opportunities.
• Building multiple passinve income streams is the smart thing to do.
• Wikipedia on passive income.
• Wealth doesn't have to be hard, you just have to do things somewhat differently.