If you have read any of my other posts, you will know I love passive income. It is what I work towards every day and I truly believe it is the way of the future. However, there are some things about passive income that you may not know until you work for it yourself. Here I am going to spill all of the secrets of passive income, and show you that everything is not as amazing as it seems.
What is Passive Income?
To understand passive income better, lets think of a regular 9-5 job as a source of “active income”. You clock in each day and get paid for each hour or day you work. You trade your time for money.
Passive income is where you can earn money without actively working for it.
You can theoretically set up the passive income stream and leave it to run automatically. You can then get paid for years to come after only working for a few hours on the initial set up.
This does not mean it is easy.
In fact, some passive income streams can take more work than a 9-5 when starting out.
But their potential can be well worth it!
You may need to work for nothing for a while, but you can then reap the benefits for the rest of your life.
My Passive Income Experience
Now I want to share with you my experience with Passive income and why I originally started building it.
I didn’t have the typical journey to passive income.
You know the one:
“I hated my 9-5 and felt completely burnt out. I wanted to find a way I could earn money but have more time for myself.”
I’m sure this is the position many of you are in and I think it is great you are researching passive income now to possibly broaden your financial horizons.
It’s just so happens that this is not where I started.
I have never had a “proper” job.
I have got jobs before, but life seemed to get in the way of me actually starting them!
My goal was always to work for myself as I felt that a 9-5 would limit me and my life. So from the age of 15, I knew that I wanted to reach financial freedom and live life on my own terms.
Over the years I have tried many side hustles and passive income ideas.
Since finishing University, I have been fully focused on creating Passive income streams and working for myself.
I did not start this journey with a lot of money, and I decided that I did not want to use any money to start my first passive income stream. I wanted to prove that it doesn’t “take money to make money”. And although it was not the easiest way to go about things, I did manage it!
I started with a free Print on Demand platform, which I used the profits of to invest into a bigger business. I kept doing this through various passive income and side hustle ventures and I learnt a lot.
After years of experience with generating passive income, I need to tell you what I found. There are some things about passive income that you don’t see any millionaires or finance “gurus” talking about. And there is one particular secret which questions the very definition of passive income!
Keep reading to see me spill the secrets of passive income and find out why all is not what it seems!
Is it the key to Financial Freedom?
It is well documented that most millionaires and billionaires earn a lot of their money from Passive income. So depending on your definition of financial freedom, this should be an easy “Yes”.
There are only so many hours in a day that you can work. Meaning your earning potential through “active income” is capped by the amount of time you have. So if your salary is not currently covering your spending. Or if you think your future salary will not be enough to live the life you want or perhaps retire early, then the only way you can beat this is with Passive income.
“A wealthy person is simply someone who has learned how to make money when they’re not working. -Robert Kiyosaki
The only way to truly have unlimited earning potential is by making money passively. Whether it is through businesses or investments, I believe that Passive income is the key to financial freedom. And is quite possibly the only way that this generation will be able to retire early.
Can you make Passive Income Immediately?
Now we will start getting into the less discussed parts of earning passive income.
Can anyone start making Passive Income straight away?
In my opinion, No.
In order to make passive income immediately you cannot start from nothing. The easiest and quickest passive income you can make comes from one of two things.
You need Money or Property.
If you already have a sizable chunk of money set aside you can make passive income through savings accounts or investments. Although some can be risky, this is one of the easiest and truly passive forms of income that there is.
Then if you already own property, there are many ways you can use it to earn passive income. You can rent out your whole building, a room, your driveway or even your garden! You could become a landlord or start an Airbnb. Having property really is the gift that keeps on giving.
There are so many ways to make a full time income from your property that many people manage to quit their 9-5s!
Unfortunately, many of us looking to create passive income do not own property yet, and certainly don’t have a sizable amount of money saved up that is free for investing.
This leaves you with starting a Passive Income Business with little to no money. As I said earlier, this is how I started and I love running these kinds of businesses. But they are not without problems or challenges and in some ways they are much more difficult than a regular 9-5.
This leads me on to our main question for the day…
What is the Big Secret of Passive Income?
There is NO SUCH THING as a Passive Income Business!
That’s right, after 9 years of experience, I truly believe there is no such thing as a passive income business. There are some businesses that are more passive than others. But if you are looking for a business that practically runs itself, I am afraid that will probably not be possible.
The thing is, to keep a business profitable and growing it needs consistency. Let’s look at some examples.
Many people consider blogging to be a great source of passive income as you can earn advertising or affiliate revenue years after you wrote that post. This is passive income. But if you do not constantly update your blog, create new posts and continually drive traffic to it, it will probably slowly become less and less profitable.
So whilst you can earn money years after you created the post, it is unlikely people will see it if you have not marketed your blog in years. (This is true for 99% of bloggers as the really huge multi-million making blogs could be established enough to actually generate passive income without any more input).
The same could be said for an online print on demand business. Whilst you could make passive income for years after, without any more input, it is very unlikely if you do not continue to drive traffic to your website.
Finally, let’s say you have an Etsy Printables shop where you sell digital files that you made once and now get automatically fulfilled by Etsy. This business can run automatically and theoretically can make you passive income forever more. However, in practice, if you don’t keep your shop updated, don’t regularly update your tags, and don’t keep making new products, you will slowly be pushed aside by the competition and end up in the Etsy graveyard of forgotten shops.
They all need Consistency.
I have created multiple successful businesses like the ones mentioned above, but when I left them for a few months to set up a new one, they all slowed down. Sure, I would get an odd sale here and there, but nothing like I was getting when I was actively working on them.
The reality is, if you are hoping to “set it and forget it”, I am afraid there is a very good chance you will see your business slowly fade away.
Conclusion
Do not get me wrong, I do not want to put you off passive income at all. As I said earlier, I truly believe it is the way of the future and I personally intend on pursuing passive income streams for all of my career.
I just want you to know that it is not as simple as it always sounds. Finding a truly passive source of income may take much more work than you think. And if you are in the middle of setting up a passive income business right now, please think twice before you try to leave it to generate income automatically without your input.
- 19 Passive Income Ideas for Beginners in 2023
- The Ultimate Beginner’s Guide to Print on Demand
- 8 Myths about Starting your own Business
- The Ultimate Beginner’s Guide to Making Money on Etsy
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