How do you define financial freedom? Unlimited wealth or money? This dream is too wild. 

To achieve financial freedom, you need to learn how to accumulate passive income. Passive income allows you to get income without work. They can make money for you when you eat, drink, have fun, and even sleep. 

At first, you will think it is impossible to accumulate passive income, and you don't know where to start. But, don’t worry! Below are 4 types of passive income that can help you achieve financial freedom.

Photo Source: Passive Income M.D.

1. Interest Income 

The source of interest income could be time deposits, national bonds, and dividends.

Fixed deposit

Suppose you deposit $100,000 into a fixed deposit today, and the annual interest rate of the fixed deposit is 3%, then your $100,000 fixed deposit will bring you $3000 in interest income one year later.

If the annual interest rate of fixed deposits decreases, interest income will decrease relatively. In this case, you can only maintain an annual interest income of $3000 if you increase the principal invested. 

Photo Source: Investment Pedia

National bonds

When you buy a national bond, you are lending money to the country. The country will issue interest to you every month or year, and return your principal on the repayment date.

Dividends

When you buy a stock, you are buying a business. When this business makes money, the directors of the company have the right to decide to distribute the profit earned to all shareholders. If the directors unanimously agree that the profits are distributed to the shareholders, the shareholders of the company will receive dividends.

2. Rental income

If you rent out the house you bought, you can get rental income. Assuming that you rent out all the rooms, this means that rent income alone can offset your monthly bank mortgage.

Assuming that this method has been maintained for decades, and the previous rent income has been paid off the mortgage, then the rental income after that will completely become your passive income. 

Photo Source: ArchDaily

3. Business income

The book "Rich Dad Poor Dad" mentioned the difference between self-employed people and business people. Self-employed people make money by selling their time and services while business people make money by relying on the business system.

To know whether you are a businessman or a self-employed person, the most straightforward way is to answer: "Can this business continues to operate and continue to generate income without you?" If not, then you are a self-employed person. If you don't need to operate it yourself, and this business continues to bring you income, then this is considered as passive income through business.  

Photo Source: Entrepreneur Asia Pacific

4. Copyright Income

When you have intellectual property rights, others must pay you for using your intellectual property rights. These include patents, books, software, music, virtual characters, brands, etc.

  
Photo Source: Restream

How much money is needed to achieve financial freedom? The answer is mostly "the more the better." 

In fact, when your passive income is greater than your living expenses, you no longer need to rely on active income to maintain expenses. That is true financial freedom.

To achieve financial freedom, the most important thing is is whether you take action. And, it requires your efforts and time.

Cover Photo: Medium | Property Guru