Active Income vs Passive Income

(Which one is better for you?)

What is active income?

Active income involves any kind of earning which requires working actively in exchange for money. Some examples of active income are salary, hourly wages, and commission.

In our 9 hours job, we have to invest our time and energy in order to earn a salary which is paid after 30 days period. You are time-bound but it is a stable and secure method that most educated people adopt. Fresh graduates prefer doing a permanent job instead of starting their own venture.

With the emergence of freelance platforms, the majority of employees start a side-hustle along with carrying out their regular jobs. This lets them enjoy 2 streams of income. But, freelancing is also an active source of income. You have to work for more than 9 hours when you are freelancing along with your job.

It is a low-risk and secure job but comes with some pitfalls. You are time-bound and cannot exceed a certain amount of income.

What is freelancing?

Unlike a regular job which demands fix 9 hours from your time for 30 days a month, freelancing is relatively flexible. You can choose to work a certain number of hours as per your preference. You are not bound with a specific employer. Rather, you can choose with whom to work. This allows you quite a freedom and flexibility.

What is passive income?

Passive income doesn’t involve actively working to earn money. You can earn even while you are sleeping. It is not a fad or quick rich scheme. With the advancement in internet technology, new ways of earning have evolved. Many sources of passive income have also come into existence as a result.

Passive income is riskier and comes with more rewards as well. But, one downside is that it keeps on fluctuating. You are not time-bound and can use your time doing the things you like.

The popular passive income sources are as follows;

Adsense

When you publish quality content on your website or blog, you can apply for Google AdSense. It will let Google display ads on your website. Based on the number of views or clicks on the ads, you will earn a set percentage. This is a great source of income if your website receives a good amount of traffic.

There are other ad networks as well like Mediavine which pay more than Adsense but the latter one is a more popular one.

Affiliate marketing

It is a form of marketing in which you promote a company’s product in return for a fixed amount of commission. When someone clicks on your affiliate link and buys the product, you are given a set amount of commission. Thousands of companies take on affiliates to promote their products.

Rental property

It is a traditional model of passive income. You can buy a property and rent it. Every month tenants will pay you the rent amount which will keep on adding to your account balance. If you already have a house, it's a great way to generate passive income for years to come.

Info products

This is the most exciting model of passive income. You can create your ebook, course, or software app which you can sell on high-profit margins. The cost to create these info products, except software apps, is less as compared to the profits margin. Thousands of people have become multi-millionaire owing to this info business.

Which model is best for you?

It depends on your preference and liking. If you are satisfied with your 9 hours job and happy to carry it out, you should definitely stay with it. However, if you desire more freedom and more income, you should go for passive income. One important point to note is that for establishing a passive income source, you have to put in active work, sometimes, for even years to come.

Conclusion

Active income is good for people who desire a stable career. But, if you want to enjoy more freedom, consider opting for passive income which is a long-term game.