Passive income refers to earnings derived from rental properties, limited partnerships, or other ventures in which a person is not actively involved. This type of income can provide financial freedom and stability by allowing individuals to earn money without actively working for it. Here’s an organized overview of passive income, its sources, benefits, and considerations.
Sources of Passive Income
1. **Real Estate Investments**
– **Rental Properties**: Owning residential or commercial properties and renting them out.
– **Real Estate Investment Trusts (REITs)**: Investing in companies that own or finance income-producing real estate.
2. **Dividend Stocks**
– Investing in stocks that pay regular dividends can provide a steady income stream.
3. **Peer-to-Peer Lending**
– Lending money to individuals or small businesses through online platforms in return for interest payments.
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