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StockCram is not a broker-dealer, investment adviser, or financial institution. All content is for educational and informational purposes only and should not be construed as personalized investment advice. Consult a qualified financial professional before making investment decisions. Past performance does not guarantee future results.Simple Definition
Money you earn without actively working, like dividends.
Why It Matters
Passive income is the goal of financial independence - money that arrives whether you work or not. Dividends are the most common form for investors. With enough invested in dividend stocks, you can cover living expenses without touching principal. A $1 million portfolio yielding 4% generates $40,000/year in passive income.
Key Points
- Sources: Dividends, bond interest, rental income, royalties
- Building passive income takes time - start early and reinvest to compound
- Some retirees structure portfolios to live entirely on dividend income without selling shares
Related Terms
Common Questions
Money you earn without actively working, like dividends. Passive income is the goal of financial independence - money that arrives whether you work or not. Dividends are the most common form for investors.
Passive income is the goal of financial independence - money that arrives whether you work or not. Dividends are the most common form for investors. With enough invested in dividend stocks, you can cover living expenses without touching principal. A $1 million portfolio yielding 4% generates $40,000/year in passive income.
Sources: Dividends, bond interest, rental income, royalties
Building passive income takes time - start early and reinvest to compound
Some retirees structure portfolios to live entirely on dividend income without selling shares