What is the best way to earn a passive income? Start a blog and become an affiliate marketer? Publish books to the Kindle store? Become a YouTube star? In the video that follows, and the text that follows the video, I explain why none of these things really equates a passive income these days.
That said, after the fact I realized that the income that my husband and I depend on is technically referred to as a “portfolio” income, rather than “passive” income. However, since the phrase “passive income” usually brings up images of people living in huge houses who only work one or two hours a day for a five-figure monthly income, the information I’m about to share holds true. Because the sources that used to be passive income, aren’t so much anymore.
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“Passive income” defined
A passive income is an income you receive that is much greater in proportion to the hours you work to receive it. For example, if you work two hours a day – and two hours a day only – on writing novels and marketing, and make more money than you would at an average job ($50K/year), this could be considered “passive” income.
I defined it differently in the video because I was a bad girl and took the literal meaning of “passive” rather than what has become the generally accepted meaning of “passive income.” For that, I apologize.
BUT…the question is, how easy is it to work only fourteen hours a day and make the equivalent of a forty-hour-per-week salary? Let’s look at multi-level marketing first. The company “opportunity videos” imply that you only have to work a few hours per week in order to be making a six-figure annual income within two to five years. But the fact is, the serious money-makers in the industry work a lot more than four to eight hours per week! That’s not to mention the hard work it takes just to get off the ground with MLM, mainly because most people who sign up eventually drop out. While a scant few people make a passive income in MLM, most do not.
How about YouTube? It can be a great source of passive income if you put up the exact right video at the exact right time that just happens to go viral. But this does not happen very often. Because of the competition there is now, people with YouTube channels need to do a lot of work in order to get views and subscribers – and therefore money…especially if you’re looking for a minimum four-figure monthly income.
What about blogging? Used to be, twelve years ago, that you could set up a blog, post two or three times per week, and have enough traffic coming within a year to make money on ads, affiliate products, or your own products. But today, you have to do a lot of marketing to get people to find your blog. You may also have to put a good bit of money into SEO services to help your blog posts show up in the search engine results.
Let’s talk about Kindle. Same thing. Everybody and their brother is trying to make money by publishing e-books to the Kindle store. The people who make a consistent income with their books are usually the people who are consistently marketing…and publishing several new books a year. Once in a while an Indie author gets lucky and writes a great story that makes five figures per month for several months, just because it got off to a great start. But this, like a video going viral on YouTube, is rare.
I don’t mean to imply that you shouldn’t try to start an online business, if that’s what you really want to do. What I’m saying is that for most people making a full-time income with any of the models I just mentioned, the income is not passive.
REAL passive income
The best passive income is when your money is making money to the extent that you can live – and live well – off of that income that your money brings.
Yes, this requires a nest egg of several hundred thousand to a couple of million dollars. Yes, this generally takes a debt-free individual ten to twenty years to achieve. But in twenty years, would you rather still be stuck at a job you don’t like, with no hope of retiring for another ten or twenty years after that, or would you rather be financially independent? If you are willing to work at a conventional job or at your own business, live beneath your means, and invest wisely, you will have reached a point where your money will make enough money so that you no longer have to work.
You can be PASSIVE and still make an INCOME.
So, even though “the experts” call that a “portfolio income”, I still argue that the term “passive income” also applies. And that it’s a lot more passive than online business or MLM income.
To get all the step-by-step details of achieving early financial independence, click here for my book, Hatching The Nest Egg.
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