Passive Income means more time, more cash and more options.
You could say the Holy Grail of maximizing the ratio of income earned to time expended is passive income. In its simplest form passive income is when money comes in regardless of whether you are asleep, on vacation, or in a coma. Its close cousin is semi-passive income which is when money comes in all on its own but you have to do a little bit of work now and then to keep it coming.
Some examples of purely passive income are:
Interest on bank deposits or similar;
Dividends on equities (stocks);
Royalties on published books or music or software;
Income from a website that automatically sells an electronic product or service.
Some examples of semi-passive income are:
Rent from property;
An investment in a business where you are a silent (not involved) partner;
Almost fully automated businesses, especially web based;
Connecting two parties with separate needs and taking an ongoing cut of the profits for a multi-year period.
Earnings from internet advertisements.
From a lifestyle point of view, you should be aiming to derive as much passive and semi-passive income as possible, for the simple reason that it preserves your most valuable asset your time.
Tip #1 Passive Passion
You already have areas of your life you are passionate about. These are interests where time seems to stand still while you are doing them. You cant wait to find the time to do it. These interests are exactly what you should be thinking about turning into passive or semi-passive income streams.
Tip #2 Passive Investments
There will be times in your life where you have a chunk of cash that you can invest. Do not rush in to investing that money in something that will suck time out of your life. Some people in that situation decide to buy or start a part time business. Unless you are actually ready to give up a lot of your time you are better to find a passive investment. This is one that pays you money where you spend zero or very little time managing it.
Tip #3 Real Estate
One of the best semi-passive investments is real estate. If you have never looked into real estate as an investment, start reading and researching. Always look for a property that has these features:
In a city that is growing, and where employment is growing.
Produces a positive cashflow from day one.
Is attractive to tenants and is in a highly desirable area of town.
Will be easy to manage.
Remember you do the vast bulk of the work before you buy. I recommend really understanding the market and location. I strongly suggest viewing 100 properties, putting offers in on three and buying one!