Linear vs Passive Income: Which is Better?

Are you being paid once per month for the work or services that you have provided? If yes, chances are you are earning a linear income. Linear income is also called active income, where you earn one unit of income for one unit of your effort. To earn a linear income you also need to be present at your supposed workplace. Hence, doctors, lawyers, hawkers, or practically every employed or self-employed person are earning linear income. If they don’t attend to their clients, they don’t get paid.

What about passive income? It is an income that you continue earning even when you are not working. Sounds unbelievable? Believe it, as thousands or probably millions of people have made it. Passive income, also known as residual income, is a stream of income that you can earn many times, with your one unit of effort. Here are several sources of passive income:

  1. Royalty income. Do you know that singers/songwriters are paid royalties every time their songs are played on the radio / TV, regardless of how long ago they made it? This is a form of royalty income and the best part is, it continues for the rest of their lives. Of course, this also includes those MLM home-based businesses. 
  2. Dividends. This can come from stock investments, where listed companies share their income with shareholders in the form of cash or stock dividends. Dividends also come from mutual funds.
  3. Real estates. Your real estate can be rented out to earn a good amount of passive income!
  4. Interest income. Interests from savings / fixed deposits.
  5. Websites. With the increasing availability of the internet, websites have become an effective place to sell your products and services to the mass and earn big bucks! You don’t have to watch the website 24-7 as your clients will be able to purchase your products/services online without much hassle with the advent of the online transactions.

How do people actually get rich? The answer: By having multiple passive incomes!

So, would you rather earn linear income or passive income?


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“I always knew I was going to be rich. I don't think I ever doubted it for a minute.” – Warren Buffet