The term passive income is used these days to mean money that is being earned regularly with little or no effort by the person who receives it. Recently it is used more for work-at-home schemes and the be-your-own-boss lifestyle. Generally passive income refers to interest received, rental income, retirement pay, gains on stocks, royalties from music, plays, movie scripts or book sales, capital gains, lottery winnings, and dividends. (1)
There are two major keys to success in creating and realizing passive income. First, it does not matter what kind of passive income it is, you have to work very hard upfront to create the system that brings you the passive income. You may have to invest in property, or invest in company shares, or buy a retirement annuity early in life, or invest in government bonds, or create music or write books or create software. All these assets will earn you money long after you have finished buying/creating the asset.
Secondly, you automate the system. Once you are done investing time and money, you subsequently do little or no work while the system churns out money for you. In rentals you have real estate agents who manage your property and collect rentals for a fee. In retirement annuity you start receiving money from the retirement scheme, say after the age of 55. If you work online you take advantage of systems of automation that allow transactions, cash flow, and growth to happen without requiring your real-time presence, except a few emails or articles per week.
In essence, passive income ensures that you do not trade time for money on a daily or hourly basis. You invest all your time upfront as you work very hard to put it all together. Even online, you work very hard to create your products, whether they are courses or books or software. And success normally takes time and money for marketing before you reap the benefits. If anyone tells you about overnight success, they might be enticing you to buy their own products that are not necessarily good enough. But real passive income is possible and you too can create it. (2)