Passive income is money earned from sources other than a traditional job, requiring little time or effort. That includes earnings from rental properties, stock dividends, courses sold online, and other projects where you're not actively involved in the continued generation of revenue.
Although you may have had to put time, money, or effort into starting up such ventures, eventually you collect income passively without much work.
GETTING STARTED
Savvy investors understand the need to diversify their investments to reduce risk. But it can be just as important to diversify your income source to mitigate career risk. If you're rooted in a job, it's understandable that you might want to keep doing more of it.
However, placing all of your eggs in one basket can be risky. You could lose an important client, or a recession might bring challenges that you aren't financially or professionally equipped to handle.
Everyone, including entrepreneurs and employees, should consider developing multiple streams of income for themselves. Having income from various sources can help you hedge the risks of layoffs, economic downturns, and unexpected expenses.
FACTORS TO CONSIDER
If you work for a company, keep in mind that many organizations have rules that limit or completely restrict employees from working other jobs. Be certain to check with your employer's guidelines regarding side work and be certain to get anything you do approved before adding a new revenue source to your plate.
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