Monday, June 23, 2008


One of the more important financial concepts you should know about is 'passive income'.

Passive income refers to income generated through very little to no additional work on your part.

Examples of passive income:

For example, interest on your bank deposits can be considered a passive income. You just put your money in the bank, and it grows, without any need for active involvement on your part.

Other examples include:

* rent from any property you own
* royalties from something that you invented
* earnings from something you created such as writing a book or creating a website
* dividends from your investments (stocks, bonds, and other investments
* earnings from a business that you don't play an active role in running

Why you should start thinking about passive income:

We of course only have so much time in a day, so if we had to actively work at every additional dollar that we earn, we'd be exhausted!

That's why it's important to start learning about how we can create passive income. Read up on investment in property and shares; study the markets to find out how they work, and which income sources provide the most stable, secure forms of passive income, etc. It's never too early to start doing this!

An understanding of how and where to create sources of passive income will help you to be more financially secure.

Make a start today by opening a savings account which earns you interest, if you haven't already done so. Remember the lesson on Compound Interest in previous blog post (Start Saving Early: Compound Interest) where we learnt that the earlier you start, the more you stand to earn?

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