Unlike income that is earned from employment, passive income is earned from cash flow received on a regular basis. Examples of these include rental income from property ownership, cash flow from financial assets such as dividend from stocks or coupons from bonds, or from trade or business activities in which the earner does not materially participate on a day-to-day basis.

It includes lifetime monthly payouts from the national annuity Central Provident Fund Life plan. It can also include royalty payments from intellectual property such as copyrighted music. Little effort or upkeep is required from the recipient to manage passive income.