Redfive looks into what a passive income really means.

May 27, 2012 - PRLog -- Redfive realises that in contrast active income is money that stops coming to you when you stop working. If you get paid a salary and you quit your job or get laid off, most likely you’ll stop getting paid. You may get a severance package to help you transition, but your boss won’t keep paying your salary unless you keep showing up for work.
Similarly Redfive understands that if you do contract work for clients who pay you, and if you’ll stop getting paid if you stop doing this work, that’s also active income. You may have more flexibility with contract work, but you still have to do the work to receive your payments.
What Redfive has accepted is that with a passive income; you keep getting paid whether or not you do any meaningful work. You may do a lot of work up front to get the ball rolling, but eventually you reach a point where the passive income stream gets activated. At this point you can essentially stop working on this income stream if you so desire and more money will keep flowing to you through this stream regardless what you do or don’t do.
Redfive acknowledges that a passive income doesn’t mean one-time lump sum payments such as an inheritance or the sale of an asset like your home or some stock you own. Passive income is a source of income with some sense of continuation over time.
However Redfive appreciates is that a passive income doesn’t mean permanent income. Some forms of passive income may last a few years. Other forms may keep going for decades or even for centuries across multiple generations. But all forms of income eventually dry up for one reason or another.
Redfive recognises that a passive income doesn’t mean 100% secure income. As Helen Keller wrote, “Security is mostly a superstition.” Some forms of income are more secure than others, but there’s always a risk element. For any income source, there’s a non-zero probability that something could destroy it. This is one reason it’s often wise to create multiple streams of income, so you can reduce the risk that all of them will fail simultaneously.
Redfive isn’t under the misconception that a passive income would mean perfectly 100% passive with no maintenance required. With any income source, you may need to do a little maintenance to keep it going. Sometimes this is really easy and only involves checking your mail and depositing checks. Sometimes it’s even more passive when the money is deposited directly into your bank account every month. But then you may still need to report this income and pay taxes on it.
Redfive acknowledges that a passive income is really a spectrum of possibilities. Some income streams are very passive. If you do essentially no maintenance on them for years, the income will keep coming. book royalties are one example of this. Other income streams are semi-passive. You may need to do some work to maintain them even if you’re not working for a salary. For example, if you own a house and rent it out, you may earn passive income as rent payments from your tenants. But you may also need to invest some time, energy, and money to maintain the property, to find new tenants when the place goes vacant, and to handle the mortgage, insurance payments, and property taxes. If your tenants get ornery or become delinquent, you may need to do even more work. You may delegate much of this work to someone else, but then you have a business partner or employee to manage instead.
What Dominion Acquisition’s have discovered is that a passive income doesn’t mean it’s passive for everyone. There may be other people with regular jobs who do some of the work that enables you to receive passive income. You may also leverage technology to do a lot of work for you. The level of passivity is perspective dependent. One person’s passive income is another person’s active income.