Passive vs. Active Income

[Adam Shindler]

My goal is to build a buy-and-hold portfolio to earn $5,000 a month in passive income, but I have learned today that passive and active income are gray areas.  Can someone please help me understand the difference between these two in terms of buy and hold investing and perhaps provide a reference?

Thank you

[Walter Key]

In the simplest terms possible, Active Income goes away if you stop working for it. Passive income continues to flow in even after you stop working. I.E. If I quit my 9-5 job, I lose my active paycheck. However, if I buy a rental property and after all my costs and expenses it cash flows $300/MO, I have just created $300/MO in Passive Income. If I do nothing else with that property, I will continue to earn $300/MO.

Make sense?