In the recent years the term ‘Passive Income’ is rather relatively used. Some call it easy money while others rather staunchly argue it to be an equally hard earned money as a nine to five job.

The pop culture often defines it as ‘easy money you earn while sunbathing on a beach sipping mojitos’. Colloquially, the term Passive Income has been used to define money that is earned regularly with little or no effort on the part of the receiver. The trends of Work-from-home and Be-your-own-boss lifestyle have received a boost by the enthusiasts of passive income.

What is Passive Income?

The American Internal Revenue Service (IRS)  has categorized revenue into three major categories, active income, passive income and portfolio income.  The types of earnings usually associated with passive income are gains on stock, interest, rent on property, lottery , online work and capital gains. While these definitions might explain passive income in the simplest form they fail explain the whole concept of passive income and the reason it’s gaining such popularity in the recent years.

Answering our previous question as to why passive income is becoming such a hit in simplest words would be- minimum amount of ongoing manual effort. Passive income might not be a case of magic beans but it is a sure shot way of hitting the jackpot by optimization of your business model for higher yields.

Most people fantasize about creating some kind of revolutionary information product (e-books, DVDs. etc.) and then kicking back while the cash from the sales of their ‘ravishing’ product rolls in. while information products can eventually yield excellent income it is hardly a passive activity.

Then comes the famed investment in rental properties,this too does not come without any work on your part. The properties need constant maintenance apart from the initial high cost of investment and financial risks of owning properties.

The most trending form of passive income today is online business models. They require no direct contact on your part and a limited amount of time according to your convenience. They take advantage of the systems of automation that allow cash flow and transactions along with helping your company grow without any real-time presence. This by no fashion means that it’s easy money! Neither is it an overnight bonanza. Online businesses requires equal amount of hard-work on the entrepreneur’s behalf as any regular project, it just allows the freedom of flexibility and optimization of resources.

In the stark reality of daylight passive income is no child’s play. One in a million might be sheer lucky and have it easy but for the most of us, a healthy balance between work and home needs to be maintained. While nothing may come free but initial hard-work and smart thinking can help you establish a steady stream of passive income in near future.