As from April 2013 my Journey in Investing is to create Retirement Income for Life till 80 years old for two over market cycles of Bull and Bear.

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Welcome to Ministry of Wealth!

This blog is authored by an old multi-bagger blue chips stock picker uncle from HDB heartland!

"The market is not your mother. It consists of tough men and women who look for ways to take money away from you instead of pouring milk into your mouth." - Dr. Alexander Elder

"For the things we have to learn before we can do them, we learn by doing them." - Aristotle

It is here where I share with you how I did it! FREE Education in stock market wisdom.

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Value Investing
Dividend/Income Investing
Technical Analysis and Charting
Stock Tips

Wednesday, 21 January 2009

Active Income and Passive Income

1) What is Passive Income?

Passive income is money received on a regular basis, with little effort required to maintain it.

Some examples of passive income are:

Repeated regular income, earned by a sales person, generated from the payment of a product or service that must be renewed on a regular basis, in order to continue receiving its benefits - also called residual income.

Rental from property;

Royalties from publishing a book or from licensing a patent or other form of intellectual property;

Earnings from internet advertisement on your websites;

Earnings from a business that does not require direct involvement from the owner or merchant;

Dividend and interest income from owning securities, such as stocks and bonds, are usually referred to as portfolio income, which can be considered a form of passive income;

Pensions.

2) What Does Active Income Mean?

Active Income will require significant effort and time to acquire with services performed.

This includes wages, tips, salaries, commissions and income from businesses in which there is material participation.


3) Why do we need to grow Passive Income?

Most people will one day get burnt out in the RAT RACE to acquire Active Income, and sooner the ability to acquire more Active Income will be significantly reduced or just end.

Look at your options, and diligently work on your possible sources of Passive Income and keep to increase it, and that will certainly help you to reduce your dependancy on Active Income, the sooner the better.
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