Does Passive Income Really Exist?

It’s the dream of many, and the path to true financial freedom… but does this often elusive “Passive Income” really exist?

Let’s first look at the definition of Passive Income according to Wikipedia.

Passive income is an income received on a regular basis, with little effort required to maintain it. It is closely related to the concept of “unearned income“.

Let’s look at this definition a bit closer, there are TWO key elements.

  1. Earned on a regular basis
  2. Little effort required to maintain it

Based on this definition, there are many types of activities that can earn you a passive income.

Does Passive Income Really Exist… Try these?


Bank interest is earned regularly and requires no effort on your part, except to have money in your account.


Dividends are earned when you own shares in companies that pay out a share of their profits. For the everyday investor, they do not need to have any active role in the company, just own the shares.


Authors, Musicians, Inventors and many other creative types can earn a passive income from royalties that are earned when their works are sold or licensed.

Trailing Commissions

Mortgage Brokers, Insurance Brokers and Affiliate Marketers are all familiar with trailing commissions as a passive income source. This income is earned when someone is referred to another companies’ product and they sign up to a recurring service (like a loan, insurance, hosting etc..).

The referrer is then paid a commission, not one time but ongoing, for the life (or specified period of time) of the referred person being a customer of that service.

Rental Income

While it doesn’t always work out easy without any problems, real estate can be a great passive income earner through multiple properties paying rental income.

Internet Businesses

Not all online business models can generate a passive income, not unless you are the investor and you’re earning a regular dividend. However, there are certain business models that when done right can consistently produce an income with minimal ongoing effort.

One such example is, the “information business” selling of books and online courses. Similar to a royalty like Authors and Musicians, except you get to control the sales process and usually earn a higher royalty.

“YES!, Passive Income really does exist”

The above is by no means an extensive list of passive income sources, but it shows that it isn’t some mythical and unachievable type of income. It in fact shows that the majority of us do earn a regular passive income (however small it may be) from our bank interest.

Our only job as entrepreneurs now is to actively seek to build our passive income streams from various sources. One of my personal favourite sources is through creating and selling online products like books, homestudy courses, and online courses.

I’m running a webinar on Thursday 29th January all about this. You can register here.



About The Author

Carl Taylor

Carl is the Author of Red Means Go! and founder of Business Builders Academy. He invests in and runs a number of businesses, and regularly teaches business skills through online training and live speaking events.