Active income vs Passive income: which one better in 2021? – DTW

Active income vs Passive income

Everybody wants to make some money and earn money so we can discuss here about active income vs passive income.

However, the path to financial freedom often requires you to navigate between various monetization strategies.

Most successful entrepreneurs believe that the best way to earn a steady stream of income is having multiple sources of revenue.

Maybe, the topic making money may top the bucket list of the most of the people. It just get coupled with making money while sitting at .

This isn’t a bad thing since you must first make an active source of income before you can get capital to generate passive revenue.

According to Wikipedia, Passive income is income that requires little to no effort to earn and maintain. It is called progressive passive income when the earner expends little effort to grow the income.

Examples of passive income include  and any business activities in which the earner does not materially participate.

Active income is traded for time and you get wages for it, so if you work for 1 hour you will get wages for those 1 hour and some days you get sick or due to some reason you took off your wages will be deducted.

Passive income requires upfront work and effort and you will get the benefit for rest of life like you wrote a book and published it then you will get the revenue rest of life.

“The key to becoming wealthy is the ability to convert ordinary income into passive income or portfolio income as quickly as possible.“

-Robert Kiyosaki (Rich Dad, Poor Dad)

Many also consider passive income to be income from activities that you do for a short time (the set up) but that require very little else to maintain the income flow. For example, Blogging, affiliate advertising, logo design etc.

As well active income that comes from our active efforts to earn money.The main reason active income is called “active” is due to the fact that you have to do something

Passive income can also come from investments. Dividend stocks and bonds are popular income investments.

For the reasons laid out about, it is clear to see why investors prefer to hold assets which provide tax-preferred income like stocks which pay qualified dividends. These tax savings can quickly feed through to your bottom line and result in long-term wealth creation and a more secure retirement.

That’s why Warren Buffet said that:

“If you don’t find a way to make money while you sleep, you will work until you die.” –Warren Buffet

You may already be building both active and passive income and if so – good for you! It is definitely not going to be an easy task. If it was easy, anyone would do it. Hence if you want to achieve something you never had, you’ll have to do something you never did.


“Money can’t buy happiness, but it will certainly get you a better class of memories.” -Ronald Reagan

Thank you for your time.

Leave a Comment