3 Passive Income Pitfalls to Avoid This Summer

Passive income is one of the gateways to financial independence. Unlike capital gains from the sale of stock, where an investor must take an action to close a position in order to book the gains, passive income happens automatically. Examples include dividend stocks, interest from a bond or savings account, and income from a rental property.

It's hard not to like the idea of making money by letting your hard-earned savings work in your favor. But there are many passive income pitfalls that investors make. Some of these can even lead to losses that exceed the gains made from passive income.

Here are three passive income pitfalls worth understanding and avoiding in your quest to find quality income stocks.

Source Fool.com