Income generated from activities other than through employment (job or contracting), can be considered as passive income. Majority of passive income is generated through savings and investments.
Examples of passive income sources:
- Dividends from stocks and/or bonds
- Interest on savings in bank account
- Renting out a spare bedroom
- Real estate income
Interest Income from Banks
Earning interest on the money sitting your bank account is not automatic. It requires active decision by you picking the savings account as your bank, more times than not, will simply do nothing because they can avoid paying you interest if they do not tell you. Simply put, you need to check your bank on what offerings they have for paying you interest. It is also a good idea to compare what other competitor banks might offer. Comparing offers is a great way to optimise your income.
Dividends
Income from dividends is touted by many as a great way to increase your overall income. Dividend from stocks are not guaranteed and can change overnight but they are also an income stream that requires very little from you. You just need to research which stock you find attractive and stay invested until you no longer want it.
Strategy for Passive Income
Looking for a way to generate passive income? Read article on how to generate passive income through with a small daily savings plan.