Earn continuous income without working. What is Passive Income really?

Many investors dream of having income that flows in automatically—no need to wake up early to work, no more exhaustion. But the term Passive Income doesn’t really mean just sitting back and receiving money falling from the sky. This article will explain what Passive Income is, how it differs from other types of income, and how many ways there are to create it that suit the general public.

What Is Passive Income Really?

Passive Income is not about futures or making money through swing trading. It’s a cash flow that regularly comes in from assets you own, without requiring you to spend every day maintaining them.

Simple examples include:

• Owning a house and renting it out → Monthly rental income is Passive Income.
• Holding dividend-paying stocks → Dividends paid quarterly are Passive Income.
• Writing a book and selling it on a platform → Sales continue to flow in month after month, even after the book is finished.

The key point of Passive Income is creating a system that makes money work for you, allowing the assets to generate ongoing income.

The 3 Types of Income Investors Need to Know

Besides Passive Income, there are two other types of income that are completely different:

Active Income → Income from working

• You need to be at your desk, with clients or a boss.
• Stop working = stop earning.
• Examples: Salary, night shift wages, consulting fees.

Portfolio Income → Income from buying and selling

• Profit made once when you “sell” the asset.
• Requires monitoring and deciding when to sell or hold.
• Examples: Profit from buying stocks and selling high, gains from trading investments.
• Note: Dividends from held stocks can also be considered Passive Income.

Passive Income → Income that flows in without working

• Assets work for you, whether you’re sleeping or abroad.
• Can be combined with Active Income.
• Examples: Interest from savings, rental income from property, royalties from works.

8 Ways for Ordinary People to Build Passive Income

1. Rent out land, houses, or condos

If you already own real estate, why not turn it into income? The rent you receive monthly is the best form of Passive Income.

✓ Advantages:

• No need to do much besides finding tenants.
• Generate income from both rent and property appreciation over time.
• Income starts immediately after signing.

✗ Risks:

• Requires a large initial investment to buy land or a house.
• If no tenants, income stops.
• Maintenance and repairs take time.

2. Invest in high-dividend stocks

Dividend stocks (are stocks where companies regularly pay profits to shareholders.

Some leading stocks pay dividends of 6-8% annually, which is a reasonable return.

✓ Advantages:

• Generate Passive Income while also benefiting from stock price appreciation.
• Easy to buy and sell in the market.
• No deep knowledge needed to start.

✗ Risks:

• Stock prices can fall during market downturns or crises.
• 10% withholding tax on dividends.
• Some years, dividends may not be paid.

) 3. Fixed deposit savings - an old but safe method

Fixed deposits involve depositing money with a bank for a set period and earning interest at an agreed rate.

This is a classic form of Passive Income—simple, low risk.

✓ Advantages:

• Very safe and straightforward.
• Receive interest on time as promised.
• Income can be forecasted in advance.

✗ Risks:

• Need a large principal to get good returns, as interest rates are relatively low.
• Interest rates may change according to policy.
• 15% withholding tax on interest for individuals.

4. Bonds or debentures - higher returns than fixed deposits

Bonds are contracts where ###the government or companies( agree to pay you interest )coupons( regularly.

They offer higher returns than fixed deposits but come with increased credit risk.

✓ Advantages:

• Steady and higher returns than deposits.
• No need for active management; just hold until maturity.

✗ Risks:

• Requires a certain amount of capital.
• Credit risk—if the issuer defaults, you may lose your investment.
• 15% interest tax applies.

) 5. Create digital products - no initial capital needed

If you have special skills ###like drawing, photography, writing(, you can create digital products and sell them on platforms.

Examples: Photos, e-books, digital templates, YouTube videos.

✓ Advantages:

• No initial capital, just time and skills.
• One creation can be sold repeatedly.
• Wide variety of options.

✗ Risks:

• Takes time to produce.
• Platform fees cut into your earnings.
• Need good skills to make products attractive.

) 6. Buy REIT units - rent real estate through the market

REITs ###(Real Estate Investment Trusts)( are funds that invest in various properties and distribute dividends to investors.

The advantage is you don’t need to buy property yourself—just buy units.

✓ Advantages:

• Lower initial investment than buying property.
• Diverse options like office buildings, hotels, storage units, etc.
• Easy to buy and sell like stocks.

✗ Risks:

• Unit prices can go up or down.
• 10% tax on dividends.

) 7. Insurance savings - combining savings and insurance

Insurance companies accumulate your premiums and pay back with interest (around 2-3% annually).

✓ Advantages:

• Combines insurance coverage with a return.
• No 15% tax like savings accounts.
• Can reduce taxable income.

✗ Risks:

• Requires paying premiums over a long period.
• Returns are paid only at maturity, not gradually.
• Relatively low yields.

8. Crypto staking - for gamers and investors

If you already hold cryptocurrencies, you can stake your coins on platforms to earn interest.

Returns range from 3-5% up to dozens of percent, depending on where you stake.

✓ Advantages:

• Very high returns compared to other methods.
• Easy to buy and sell on platforms.
• Both Passive Income and Portfolio Income at the same time.

✗ Risks:

• High risk—platforms may fail, and you could lose your principal.
• Tax implications for this Passive Income are still unclear.
• Requires good understanding of crypto; not suitable for beginners.

Summary: Passive Income is a Real Helper, Not a Distant Dream

Building Passive Income isn’t about selling dreams. It’s about designing your financial life to be smarter.

You don’t have to choose just one method—you can combine them, for example:

• Salary (Active Income)
• • Stock dividends ###Passive Income(
• • Rental income from a second house )Passive Income(
• • Savings interest )Passive Income(

This way, you avoid risks and generate income from multiple channels.

The key is to select methods that match your financial situation and knowledge. Don’t overload yourself with unnecessary risks, as everyone has their own path to wealth.