The simplest form of passive income is a Savings Account, for doing absolutely nothing your money earns a return.

So why, when there are so many other things about which to write am I concerned about a savings account. Simple. It’s the economy.

With all the mega financial news out there, it is interesting to see that at times like these cash is king. The institutions that have a nice chuck of change in the bank are the ones able to purchase the failing or troubled institutions for pennies on the dollar. Now none of us are really going to buy a brokerage firm, but we can apply some of the lessons to this situation to our own needs.

Having a cash cushion would come in really handy should there be a sudden job loss or unexpected repair, we all know that, but it would also come in really handy for non-emergecies as well – like remodeling the kitchen.

With so many financial institutions in need of cash to cover some of their losses, I am surprised at some of the interest rates for some savings and short term certificates of deposit. As these are insured by the FDIC the amount of risk is minimal, and, with some of the low opening balance requirements, now is a great time to use one of these instruments to start making a habit of creating a cash cushion for later on. And of course, since they pay compound interest, you earn passive income.

Okay, this isn’t the passive income that one would earn from say owning rental property, but it is passive income nonetheless and a great way to dip one’s toe into the concept.