An earned income is that which you receive at the end of the agreed/stated cycle. For example, you are to invest N10000 at 50% interest for 6 months. That means at the end of 6 months, your take-home is N15000. Interesting way to start. That is an earned interest.
When you purchase 50 products at N5000 each, you spend N250000. And you sell all at N8000 each, that’s N400000. It means you’ve gained N3000 extra on all 50 products. That’s N150,000 profit. Awesome! This is an earned interest.
A passive income is that which you receive continuously until you decide that you are no longer in business or no longer interested in investing.
What this means is that you keep getting your interest at the end of each cycle; monthly, quarterly, or annually, depending on the agreed holding period while your capital remains there and keeps bringing in money. This implies that if you invest N100,000 at 20% interest monthly, you keep getting N20000 monthly as long as you want, and when you decide that you’re no longer interested, you can withdraw your initial deposit.
This is what it means to generate a passive income.
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