Passive income is money that comes in without actively working for it. For FIRE seekers, investment income is the ultimate passive income — the point at which it exceeds your expenses is the moment you become financially free.
The most reliable form: dividends from stocks, interest from bonds, and portfolio growth. A $1,000,000 portfolio at 7% returns generates $70,000/year in passive income. This is the foundation of every FIRE plan.
Net rental income from property (after mortgage, maintenance, management). Genuinely passive if managed by a property manager. Illiquid and management-intensive compared to index funds — but provides income uncorrelated with stock markets.
Revenue from a business you own but don't work in. Genuinely passive income is rare in business — most "passive" business income still requires periodic attention.
Most "passive income" content online is misleading. Selling courses, running a blog, affiliate marketing — these require ongoing work. They may be lower-effort than employment but they're not truly passive. Investment income from index funds is genuinely passive.