In the period of economic fluctuations due to the coronavirus outbreak, it is necessary to adjust the way to make money and earn income in order to keep up with the rapid changes. One-way income may no longer be enough. There are two concepts to generate income, which are Active Income and Passive Income.
Have you ever wondered what the difference of these two concepts is? The difference of Passive Income and Active Income is the concept of earning. Both methods have advantages and disadvantages. Let’s find out together what the difference between Passive Income and Active Income is.
What is Active Income?
Active Income refers to income received from performing works to generate income. Such income includes salary, commission, and income from freelance projects. On the other hand, it is the money that one earns in exchange for performing works.
Active Income has main constraints on resources in terms of time and physical health because the time is limited, and it requires skill, knowledge and capability development to increase income. For example, Mr. A, who used to work 8 hours a day, earns a monthly wage of 15,000 Baht, However, with the same working hours, Mr. A now may earn twice, that is, 30,000 Baht. This means that Mr. A can earn Active Income twice within the same working hours.
However, in the age when there is a variety of ways of uncertainty, one-way income is not always the only solution. People starts to increase active income with more than one channel, such as earning money from a full-time job and still looking for income from freelance jobs as a reserve income or additional income from online sales.
As we work hard to earn more incomes, it causes a faster deterioration of physical health. That’s why the income earned will be used for medical expenses.
Therefore, once we have a certain level of Active Income, investment is a good option to generate Passive Income simultaneously in order to earn sustainable and balanced incomes.
What is Passive Income?
Passive Income refers to any money earned in a manner that get your money or assets working for you to create more values. It may require time, but it is not as much as Active Income. It is evident in property investment for rent or investment in stocks, intellectual copyright, including other types of investments.
As a result, everyone should have Passive Income to ensure stability in life and be able to live as needed because Passive Income does not require too much effort. To earn Passive Income at the initial stage requires a fair amount of patience.
What is the difference between Passive Income and Active Income?
- We need to work to generate Active Income, while Passive Income is to get assets working for us to make money.
- Active Income has time constraint as long as we can work, while we can earn Passive Income even if we cannot work anymore.
- Active Income is the way we work and receive returns almost immediately, such as earning wages, while Passive Income takes a long time to generate income.
In summary, the principle of Passive Income is to get money working for you, while Active Income is that you work for money. Therefore, to earn one-way income may not be so stable. It is better to earn income with both methods.
Passive Income from Investment Property
Investment Property (IP) is a new trend of property investment in a form of passive income, which generates returns without any effort. It is ideal for those who have already earned a certain amount of active income and spent such amount to make an investment to generate dividends and then spent such dividends for monthly expenditures. Currently, there are many investment property developers. One of which is CISSA GROUP, which has developed the Wyndham Grand Nai Harn Beach Phuket Project in tourist areas in Phuket. In addition, Wyndham Hotels & Resorts, a world-renowned hotel management brand, also manages hotels by allowing investors to make an investing and receive dividends up to 8% per year plus full buyback. This allows investors to generate worthwhile and sustainable yields which is in contrast to the severe volatile markets.
