You don’t have to surf the Internet very long before you run into get-rich schemes offering big bucks through passive income. The problem is that the programs make it appear that earning passive income is a set-it and forget it proposition. For little money and even less time you can make a fortune. As a result, many people have lost money and their hopes of being an entrepreneur.
So what is the real deal about passive income?
In truth, no income is passive. It’s a misnomer. What legitimate business gurus mean when they talk about passive income is closer to residual income, where you create something once and sell it over and over. But items don’t sell themselves. Even in passive income you have to work to get people to buy. What’s different in so-called passive income is the exchange of time for money.
In the traditional work world, you do your job 40 hours a week, 50 weeks a year and get a set wage or salary. Service-based business tend to trade time for money as well, charging an hourly or project fee for doing a job. In passive income, the idea is to reduce time and effort while increasing income. However, reducing time doesn’t eliminate all efforts as the term “passive’ suggest.
What Earns “Passive” Income?
Probably the most passive of passive income options is investing. The idea is that you invest your money in something and the value goes up without doing anything. However, most investors I know don’t invest and then leave without a thought. If they’ve invested in real estate, they keep their properties in top condition and rented. If they’ve invested in the market, they study and research the market to buy and sell at optimum times.
Royalties is another form of passive income. An artist writes music or a book and earns income on each sale. This too isn’t completely passive. Artists spend a great deal of time marketing their work.
In the online income world, passive income comes in several forms, the most popular of which is affiliate marketing and information marketing. Both types of income involve regular efforts to market affiliate programs or informational products.
If It’s Not Passive, Is it Worth Trying to Do?
Passive income doesn’t earn income on its own, but it is still worth considering. Although passive income doesn’t mean no effort at all, it usually requires less work to earn income once the investment or product is created. Speakers, coaches and service-based business owners in particular do well by developing courses and writing books that earn money and help them market their services.
Whenever you can earn more with less effort, it’s a good thing. But you need to be careful not to get caught up in the hype that you can earn money over and over without effort. The only people I know who truly have money without effort have inherited their riches. Everyone else, even “passive” income earners, works, but they focus their time on efforts that pay over and over with maintenance (i.e. marketing) not a straight trade of time and money.