Quote from: jaysabi on March 12, 2017, 10:22:35 PM

Quote from: deisik on March 12, 2017, 07:28:57 AM

Quote from: aubert on March 12, 2017, 04:29:47 AM

A short definition of passive income according to Investopedia:

Quote

Earnings an individual derives from a rental property, limited partnership or other enterprises in which he or she is not materially involved

As I've seen recently on this topic that there's still someone who misinterpreting the real definition of passive income and uttering the thing that's out of context ( in this case, passive income ).
Doing tasks to get paid ain't considered as a passive income

Indeed, doing tasks for remuneration can hardly be considered a passive income

But, on the other hand, the definition that you cited from Investopedia is no less misleading (and you likely have taken it out of context as well). Really, if someone derives his income from an enterprise, how can he possibly be not materially involved in it? It is just this involvement there (material or not seems to be irrelevant here) that allows him to receive income in the first place. If you have nothing to do with some company, you can't get any earnings off them, obviously. In the same way, renting out property can only marginally be considered as passive income

This does seem to be inconsistent with what you're trying to convince me, since the crux of your argument is that a capital appreciation from an investment is an income since you're selling it for more than what you bought it for. Most stock owners have absolutely nothing to do with the business they are part owners of, they are merely passive owners of the stake. Most institutional investors who own a sizable portion of public companies are not even materially involved with the businesses they buy stakes in, they are also passive owners. It's not an official definition, but I would consider "materially involved with" to mean having a daily responsibility with regards to the business, or having the ability to exert control over the business, and in fact doing so. The majority of stock owners don't have either of those, but do in fact have earnings from their ownership stake. It's just that I thought our difference was that you considered that a passive income, where I did not

I'm curious if you really don't see how self-contradictory the emphasized sentence is

If they are part owners of some business, how can they possibly have nothing to do with it? If they have nothing to do with something, it should mean exactly that, i.e. just nothing, no connection of whatever kind. Having stocks of a company obviously is nowhere near that. Passive or active doesn't change a thing in this regard. They are vitally interested in the company success, now try telling them that they shouldn't in fact care about this company at all. Regarding dividends, that's precisely what I'm telling you. They are passive income, but they are again nowhere near being regular nor they are guaranteed in any way (unlike bank deposits). Which was exactly the point you articulated first (i.e. regular and guaranteed as a decisive factor in telling between passive and active income, according to your logic)