Passive income sources to help you build wealth

There are two types of income that one may have viz. active income and passive income. Active income is something that you earn by way of salary or profits from business. For active income you actually need to work to generate a cashflow. On the contrary, passive income is something that you can receive from various sources (explained below). Unlike active income, for passive income you don’t need to actually work for generating cashflows. In fact, here the money works for you. So, following are some of the passive income sources which can help you put your money at work.

Rental Income
This is one of the most traditional ways of earning passive income. So, if you have a secondary property that is not in use, be it residential or commercial, then you can give it on rent which would not just help you to keep the property maintained but would also help you to get an income. Amount of rental income you can receive, though, will depend upon the property specifications and area in which it is located.

Dividend Income
Dividend is a kind of a profit shared by a company to its shareholders. So, to earn a dividend income, you need to buy shares of the company. It is to be noted that dividend is something which is not mandatory on the part of the company to pay. Many companies that are in growth phase don’t pay dividends as they may need those cash to expand company’s business further. So, it is wise to invest in a dividend paying company, which is fundamentally sound.

Interest Income
Interest income is something that you receive when you invest in a bank FD (Fixed Deposits) or bonds or debentures of a company. It is a fixed percentage that you receive. Unlike dividends, it is mandatory on the part of the banks/company to regularly pay the interest irrespective of the banks/company making profits or losses.