Completely untrue. Money doesn’t just pop out of nowhere; sure, some income streams may be very low maintenance, such as your investments, but most will still require constant attention and a decent upfront commitment. Let’s take a look at the examples we have brought up above.
Bank Accounts, Shares and Bonds: Savings and investments may be the only group on this list that is truly passive. Not much work is needed to generate this income, but if you want to maximise your passive income from savings and investments, you might need to do a bit of research before choosing a bank account or what financial instruments to buy. As mentioned when discussing bank accounts, it’s good to track your spending habits and plan your future big purchases. Financial planning will be key to maximising your savings and investment income.
Rental Properties (real estate): It sounds easy on paper but renting out property may be a chore. First up, you need to own a piece of property. Well, duh! You can’t rent out a house you don’t have. This may be more relevant for expensive assets such as immovable properties and movable properties like machinery, where you will have to deal with upfront costs, legal issues and contracts, taxes and mortgages, etc. So obviously, you need to put in a lot of work to get the asset.
If you already have the asset, congratulations! The hard part is done, but the road isn’t completely “passive” from here on out. Renting your property means leaving it with a stranger for most of the time, so a rental agreement needs to be in place, or maybe a third party guarantor to ensure that you get paid (and your property back!). You will also need to source for a customer each time the previous rental agreement concludes.
Additionally, you may still need to maintain the condition of your property, i.e. cleaning it, repairing it, repainting it, etc.
Photo by Aaron Burden on Unsplash
Copyright Work, Content Creation, and Digital Products: You probably know what we’ll say about this one already. You ain’t getting any passive income if you haven’t made anything yet.
You will have to dedicate time and effort to make your product before any income comes in. So yes, when the income comes in, you don’t have to do anything, but before it comes in, you’re probably doing a lot of work on the product, unpaid.
Furthermore, and we can’t stress this enough, there’s no guarantee of passive income flowing in afterwards. If there’s no audience, demand, or supporters of your work, then there’s no passive income. For example, many new authors go years without finding a publisher that will sign on their manuscripts, and often that may never happen at all.
Posting online or self-publishing is possible but may lead to a lack of reach and income, even disregarding additional promotion costs you take on yourself. So, sometimes there is no guarantee that your hard work will pay off, which is the scary reality.
Affiliate Marketing: It’s literally impossible to do this without already having an audience or a following. No company would ever pay you to advertise to your stuffed animals and pets. Much work is required beforehand to get a following, e.g. posting regular videos on YouTube that garner attention and attract subscribers (easier said than done).
Dropshipping/e-commerce: As you can imagine, no retail business is easy, and it's unlikely to be able to run entirely on its own without you having to spend time, money and effort on it. There is potential for a business with very low overheads. Still, it will only succeed if you can maintain high customer service standards, which requires strong dropshipping / e-commerce supplier relationships, which can be challenging and time-consuming.
MLM / "Network Marketing" / Direct Sales: Even assuming it's a legitimate business you're involved in, making any significant income would typically require a correspondingly significant amount of time and effort. Ideally, this effort would focus on promoting and selling the product rather than recruiting others into "your downline"!)
Let’s not get ahead of ourselves. If you’re just starting on something new, expect to earn a pittance from it. You need to have patience and build the passive revenue stream from the ground up. It’s like in your regular line of work; you start from the bottom with low pay and then work yourself up the corporate ladder. For investments, you will be relying mainly on the concept of compounding interest. That’s straightforward and mostly guaranteed. For side hustles, you will depend on getting supporters and making a name for yourself. Now, this is less guaranteed.
Making a name for yourself will be difficult in the age of the World Wide Web. After all, you’re facing millions of competitors, all looking for a good source of passive income as well. You need to make yourself stand out and be savvy about publicising and marketing your product. This is relevant to interacting directly with customers or approaching a middleman like publishers and online websites.
After you start building a reputation, the engagements start coming in. With more traffic and support, your passive income stream will begin to grow. From then on, it’s all about riding that momentum and keeping people interested.
Be warned, however, that most people don’t ever get off the ground. It’s best to keep your expectations realistic. We know, we know, many online influencers always make it sound so easy.
That’s not to say earning passive income is impossible, though, because it really is! You just need to put in a lot of work. Most likely a lot of work. Of course, you must come to terms with the possibility that all your effort may lead to nothing.
Some passive income streams require an upfront asset. Instead of finding examples of how to earn passive income and then trying to secure a specific asset to emulate those examples, why not just use what you already have? If you have idle money that you won’t be using any time soon, go ahead and invest it or put that in a fixed deposit account.
If you’re moving your home and your previous one will be vacant, put that up for rent. If you already wrote stories or composing music in the past, why not put those up online? Look at the idle assets you own and figure out how to use them forward! That’s the intelligent way of creating a new passive income stream, saving yourself some time and effort.
As we’ve mentioned, starting a side hustle for passive income may not guarantee any income at all, so don’t do something for the sake of unguaranteed income! Do something you enjoy so that you at least get some fun and entertainment in the process. It may even help you relax and unwind from your regular job!
It’s like using your current assets, but instead, use your current hobbies. What do you currently enjoy doing? You can make any hobby into a side project that may be a big hit and create a passive income stream for you. Sure, work will need to be done, but is it really work if you enjoy it?
For example, if you enjoy playing PC games, you could start streaming, writing guides and opinion pieces, and maybe drawing some fan art and posting it online. Make a food journal on social media, review restaurants or have your own cooking blog or vlog. There are many ways to combine our various hobbies into something new and refreshing.
Passive income sounds fantastic. Almost too good to be true! Well, in a way, it is! But because it's such a wonderful thing to build for yourself, it's also very tempting to fall for the schemes that are being sold to us on social media. Remember, these are paid-for ads. Social media and search company algorithms determine who is most likely to buy what, which is sold to advertisers at an enormous profit.
Not everything is a scam, but don’t fall for passive income ideas that promise overnight super returns for little to no effort. If a passive income business idea "Seems Too Good To Be True..." you can complete the rest. Do your research. Be especially wary if they charge hefty fees (after the so-called "free" webinar!) or require a lot of capital upfront (especially if you get yourself loaded up with debt to fund it!).
TIPS FOR GENERATING PASSIVE INCOME. COMPLETED. ✅
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