Passive income is the buzzword. Afterall, who wouldn’t like to have some extra income that they can squirrel away for contingencies or maybe big plans in the future?
However, many folks do not understand the concept of passive income and often confuse it with short time gigs that give instant money and in a way, instant gratification.
“ Passive income is all about setting up income streams that might require initial investment — effort or money wise, but it eventually helps you earn a steady income without any active participation. It is great for long term plans and mostly requires a process set up which will pay for itself down the road”.
| Passive Income | Gig Projects |
| 1. Passive income is the earning that is made from minimal or no effort from the individual. There might be an initial investment of effort and money but it is never a continuous input. | 1. Gig is a temporary job or project that lasts for a specific period of time and often requires heavy effort every time one starts a new gig. |
| 2. Passive income does not always have to be skill-related and can be derived from various sources. | 2. Here, the service provider has to be skilled in at least one skill that is performed in exchange for money. |
| 3. Some of the examples of passive income sources are rental properties, dividends from investments, royalties from intellectual property, or income generated through online businesses. | 3. Examples of one-time gigs could include freelance work, event-based jobs, or specific project assignments. Unlike passive income, one-time gigs typically require active participation, effort, and time investment. |
| 4. Passive income continues to fill the coffers slowly and steadily, yet without a dry spell (in most cases). So, there is assurance of income generation in this case. | 4. In gig based work, once the task is over, there is no knowing for sure whether the project will be revived or there will be new tasks for the future. The recurring income is not a part of the gig-project. |
| 5. Great for overall steady income and eventually, a significant amount of corpus that can be used for bigger projects and personal milestones. | 5. Gig based work is more likely to be the extra cash that one can use in case of emergency or a short-term milestone. There is no security in this case. |
| 6. Takes time to grow. | 6. Time is not a factor here. |
Passive income can also be a great contributor to your existing retirement corpus.
How?
In simple terms, most investors looking to build their retirement corpus will not be able to hit their mark until they hang their boots up. Another compelling reason can be inflation and your existing numbers may not match the expenses then.
Passive income will be your saviour in such times.
This blog is a part of our Passive Income series. In the upcoming blogs, we will be talking about how you can build your passive income irrespective of your age or your financial status.
If you are already building a passive income stream for yourself, our GoalFi team can help you understand how you magnify that wealth with right investment choices and plans.
Get in touch with our advisors, today!