Active Income

Active income is derived from being in a physical place performing a physical task. Most commonly this is in the form of a job or work. You have to actively engage in the work if you want to get paid. Don’t show up, don’t get money. This is the most direct and clear way to earn money, but not always the most desirable.

Semi-Active Income

Semi-active income is from sources that don’t require you to always be actively engaged. For example, income derived from intellectual property. After the initial investment of time creating the intellectual property, you can earn income from it. While the income from the intellectual property will eventually decrease, it won’t immediately cease. The typical blog is also an example. Missing one weeks’ worth of posts won’t cut off the income, but long-term neglect will.

Passive Income

Passive income requires no investment of time or effort. The interest earned from savings or investment accounts is a good example of this. If you can live on a tropical island with no contact with the outside world and the checks keep rolling in, that’s passive income.