Passive Income — Build Wealth That Pays You
Imagine your portfolio paying the bills while you choose how to spend your time. That’s passive income — cash flow that continues with minimal day‑to‑day effort once the setup is done.
What Counts as Passive Income?
It’s income that keeps arriving with little ongoing work. You’ll still review and rebalance, but you’re not trading time for money every day.
Active vs. Passive Income
| Aspect | Active Income | Passive Income |
|---|---|---|
| Time involvement | High (job, consultancy, freelancing) | Low ongoing (after setup) |
| Predictability | Monthly salary/fees | Varies by source; aim for diversified streams |
| Scaling | Limited by hours | Can scale with capital & systems |
| Examples | Salary, hourly billing | Dividends, interest, rent, REIT/InvIT payouts, SWPs, royalties |
How Long Does It Take?
With disciplined saving and compounding, many investors see meaningful passive income within 15–20 years. A simple rule: if your portfolio’s yield (or SWR) × corpus ≥ your monthly expenses, you’ve reached “income cover”.
Passive Income Streams (with Examples)
1) REITs & InvITs
2) Dividend Stocks & Dividend/Factor Funds
3) Interest from Debt & Bonds
- Bharat Bond ETFs (various maturities)
- RBI Retail Direct G‑Secs / SDLs
- High‑quality corporate bonds / target maturity debt funds
4) Rentals
- Residential: e.g., ₹1.2 cr asset → ~₹30k rent (≈ 3% gross yield)
- Commercial: often higher gross yields, but vacancy risk & upkeep
- Consider tax, maintenance, and liquidity
5) SWP from Mutual Funds
- Use a diversified equity/debt portfolio and set up a Systematic Withdrawal Plan
- Example: Corpus ₹2 cr, SWP 4% p.a. → ~₹6.7 lakh/yr (~₹55k/m)
- Structure matters: volatility buffer + annual review
6) Digital & Royalties (semi‑passive)
- YouTube/blog ad revenue, affiliate marketing (after initial build)
- Courses, ebooks, templates (updates & support needed)
- Franchise / small assets (semi‑passive oversight)
Common Mistakes to Avoid
- Chasing high yields without quality checks (credit risk, unsustainable payouts).
- Under‑diversifying streams (rely on more than one source).
- Ignoring taxes and costs (net cash flow matters).
- Confusing side‑hustle income with passive income (it needs maintenance).
Calculator: When Can Passive Income Exceed Salary?
Bottom Line
Passive income is built, not found. Automate investing, favour quality cash‑flowing assets, and give compounding the years it needs. One day, your money will work harder than you do.
Education only; not investment advice. Yields, taxes, rules, and returns change — always check the latest scheme documents and regulations.