This week ending 2 June 2017 mark just over 3 months of me being involved with this awesome business.
So I want to talk to you about Passive inccome. What is it? Why is it important?
I prefer to define passive income fairly broadly as revenue you earn even when you aren’t actively working. Another name for passive income is residual income.
"By contrast active income is money that stops coming to you when you stop working. If you get paid a salary and you quit your job or get laid off, most likely you’ll stop getting paid. You may get a severance package to help you transition, but your boss won’t keep paying your salary unless you keep showing up for work."
The simplest example of passive income is someone like the author Stephen King; he spent a few months writing The Shining almost 40 years ago but he’s still being paid for every copy that gets sold. He created something of value that people still want today.
>>>>>>>>>>>>>>START YOUR PASSIVE INCOME JOURNEY
With passive income, you would keep getting paid whether or not you do any meaningful work. You may do a lot of work up front to get the ball rolling, but eventually you reach a point where the passive income stream gets activated. At this point you can essentially stop working on this income stream if you so desire, and more money will keep flowing to you through this stream regardless what you do or don’t do.
Passive income doesn’t mean one-time lump sum payments such as an inheritance or the sale of an asset like your home or some stock you own. Passive income is a source of income with some sense of continuation over time.
Passive income doesn’t mean permanent income. Some forms of passive income may last a few years. Other forms may keep going for decades or even for centuries across multiple generations. But all forms of income eventually dry up for one reason or another.
Passive income doesn’t mean 100% secure income.
As Helen Keller wrote, “Security is mostly a superstition.” Some forms of income are more secure than others, but there’s always a risk element. For any income source, there’s a non-zero probability that something could destroy it. This is one reason it’s often wise to create multiple streams of income, so you can reduce the risk that all of them will fail simultaneously.
>>>>>>>>>>>>>>START YOUR PASSIVE INCOME JOURNEY
Passive income doesn’t mean perfectly 100% passive with no maintenance required. With any income source, you may need to do a little maintenance to keep it going. Sometimes this is really easy and only involves checking your mail and depositing checks. Sometimes it’s even more passive when the money is deposited directly into your bank account every month. But then you may still need to report this income and pay taxes on it.
Passive income is really a spectrum of possibilities. Some income streams are very passive. If you do essentially no maintenance on them for years, the income will keep coming. My book royalties are one example of this. Regardless of what I do or don’t do, most likely Hay House will keep selling my book, and people will keep buying it. Even if I shut down my website and go incognito for some reason, my book can keep selling online and in bookstores. All I need to do is deposit the royalty checks. I don’t have to process orders, interact with customers, or do any ongoing marketing.
Other income streams are semi-passive. You may need to do some work to maintain them even if you’re not working for a salary. For example, if you own a house and rent it out, you may earn passive income as rent payments from your tenants. But you may also need to invest some time, energy, and money to maintain the property, to find new tenants when the place goes vacant, and to handle the mortgage, insurance payments, and property taxes. If your tenants get ornery or become delinquent, you may need to do even more work. You may delegate much of this work to someone else, but then you have a business partner or employee to manage instead.
The Dream of Passive Income
It’s easy to see why people like the idea of passive income. It sounds great on paper.
You’re, at least in theory, able to do the work once and get paid forever. Stephen King’s family is still going to be earning money from The Shining when he dies. This is an incredibly tempting proposition.
Passive income has a few other things going for it too. All the work is front loaded. Once the book is written, it’s written. You don’t have to open up a word processor every day for the rest of your life and change a few words to keep it fresh, you did everything at the start.
I hope you enjoyed this post. If you want to connect with me. Feel free to reach out.
>>>>>>>>>>>>>>START YOUR PASSIVE INCOME JOURNEY
