Here at Income From Dividends you will hear a lot about passive income. In fact, passive income is one of the major benefits of a dividend investment strategy. It helps you save money and, if you choose to reinvest it, the result is pure magic in the long run. Here, however, we intend to discuss what passive income is, so that we will know what we want to achieve through investing in dividend stocks.

Active or passive income?

For most people, you’ve got to have a job to get an income. We earn a salary for the time and energy we spend working. Should we choose not to go to work any more, the salary payments would stop feeding our wallet quite soon. It doesn’t matter if you run your own business and thus pay out your own salary, as long as the business requires your time and energy to turn a sufficiently ample profit. In other words salary income is an active income, since it stops if we don’t participate actively.

A passive income is an income that you receive on a regular basis without making a lot of effort to maintain it. You have succeded to cut the correlation between how much time and energy you invest and how much income you get.

There are many ways to create a passive income:

• Interest from savings account and bonds
• Dividends from stocks or funds
• Earnings from a business you own that does not require direct involvement from you
• Earnings from advertisements and affiliate networks on your website
• Royalties from releasing a song or publishing a book
• Patents
• Rent from property

Remember, you don’t have to choose between active and passive income. One dollar in interest from the savings account is a passive income, and each extra dollar in passive income is a welcome addition to the income you get from your job. If you keep on exploring Income From Dividends you will see how just a few first dollars of passive income may be turned into a literal money making machine in the long run thanks to the function of compound interest.