Eons ago, I wrote an article about passive income myths, but I also missed out on a few things. So In this article, we will talk about my personal brush with passive income hoax.
Today, thousands of passive income ideas exist, many of which you’ve read or seen across the internet and right here on this blog. However, it’s time we separated the myth from the fact.
It’s time to get the fantasy out.
So let’s think about this question?
Can you make money and relax on the beach?
You’ve probably heard about this a lot of times. All of those – set it and forget it – passive income money-making schemes out there.
Sure, there’s something sweet about making money without having to do any work? But it that was true, then the majority of the world will be right there before you.
So, to get the crap out, let’s start with the definition, you’ve most likely seen about passive income.
World Definition of Passive Income
According to Wikipedia, passive Income is Income that needs no effort to earn and maintain. Wikipedia further states that cash flows from property cash flows (rental income), trade or business activities (which does not require active participation), and royalties (from intellectual properties such as music, book, and video).
Bonds, Dividends, Securities, and Bank deposits are also listed on Wikipedia as Passive Income.
But, although this could have an element that makes them as passive as possible, they require a great deal of activity. We will come back to them later in this article.
What Passive Income really Is?
Before I tell the truth about passive income, let’s talk about my personal experience. Right after school, I began hearing about how I could make money without actually doing anything—sure, who would resist this fast way of making money.
So, I began falling for one scheme after another, spending my little savings, going for one “workshop” after the other, until it finally dawned that there just isn’t anything like that.
Sadly, I learned my lessons after spending the money I didn’t have. But let’s be clear, I heard about these schemes from one guru after another.
I also read tons of books about not getting stuck in a 9 to 5 job or working for a boss. I wanted to join in making money without answering to anyone.
What I never knew is that no legitimate business is possible by setting and forgetting.
The ugliest truth is that there’s no such thing as Passive Income. Even Amazon founder Jeff Bezos, who happens to be one of the most prominent billionaires, isn’t making money by leaving a life on the beach. Sure, you’ve probably heard that he earns over $230,000 per second. But he got to that position through sweat, grit, and tears.
If you’ve read about his entire story, you will see that at some point in his life, he was working at least 15 hours, even long after he had made his millions.
And to be a business mogul in his position today and continue to make money every second, he must stay active. He must have a hand on the pulse of his entire business.
So, whether you are going to pursue your entrepreneurial dream or work for someone, don’t get stuck in the mindset that you will be doing it without grinding away at a job for hours.
What Passive Income isn’t?
I’ve heard about a popular affiliate marketing scam on the internet, one that is fast becoming the oldest trick in the digital space.
It goes like this:
You can write a book about BS or hire freelancers, ready to take peanuts to write a book on some niche topic. Next, you set Facebook and AdWords campaigns on keywords. Again your freelancers are probably sending you the keywords as well. Now, all you need is a cheap landing page, and everything is all set. You can go to bed and make money -easy peasy!
As your money begins pooling in, all you have to do, hire a Virtual Assistant to check-in for you and ensure that your money is being transferred to your account. You off course, can take trips to the moon and back, and your money is pooling in – all without lifting a finger.
Another favorite scheme tells you that they have the books, the landing page, and everything done for you. All you need do is pay a measly sum, and you will begin making money.
The truth is that in the first scheme, nothing will ever come in for you. And in the second, your done-for-you guru will off-course be making money selling the hogwash to you.
Passive income is a horrible fantasy.
Yes, there’s no way to make money by staying away, or without working hard for it. Let’s look at the reasons why you cannot make money using any of the schemes I drew above.
First, to create a best-selling book, you have to spend time on research and the actual writing. Sure, you can hire a freelancer to help you out, but you must collaborate to ensure that your extensive knowledge of your target market is valid. So, you also have to spend a lot of time upgrading your knowledge, which is best gained by directly working on those concepts for a long time.
Next, you have to invest money on someone to work on your cover and landing page for your book sales, or again you can learn on your own. But here comes the hard part – getting your book visible. Don’t forget that you may also have to change the landing page regularly to remain attractive.
Now you have to learn how to market your book. You can off-course hire a marketing team to help you out, but everything about the book will be based on your personal identity on the internet. So, you will blog, quest-blog, advertise, go on workshops, or talking seminars.
And that’s not all; you have to think about setting up customer inquiries for people who download or don’t download the book – all the complaints, questions, and feedback.
Plus, your sales management, ISBN registration, tax issues, meeting trademark issues, battling copyrighting violations, and many more aspects.
All of these just to make sure you sell a single book. Sure, you can build a team to handle the different aspects, without doing anything on your own, but that inevitably means you will be paying hard money (far higher than what you make) to make a single sale.
So, even if you can outsource a few parts, you must be ready to work hard on other aspects as well. So now you see that there is nothing passive in there, it’s still a lot of work and yes, it is a big job.
Other stuff that just ain’t true
Beyond the classical passive income hoax, let’s look at other reasons why Passive Income is a big lie.
1. You can’t remain on the forefront passively
Thousands of books are being released every day, including books on your topic as well. So, there’s a chance someone is going to create a much better book than yours or service than yours. So, you can’t stay passive. You must work hard and smart to remain valid. So, you must remain active to ensure that your ratings don’t slip. You may have to revise your book and release a new version or build finer marketing for it. But you just cannot stay passive.
2. There’s absolutely no way to build a loyal tribe by going out
Even if your book is the best in the industry, if your customers cannot reach you personally, or feel that you don’t care about them, they will leave at some point. Even more, your book can only continue to be visible if you consistently do something to make it visible.
3. You can’t keep your business open without watching
Using the book again to explain, I talked about outsourcing areas. So, if you were planning on outsourcing and going away, think again. How do you make sure your team is doing the right thing to help you stay ahead of the competition. This is the precise same thing in any other business. Even more, you cannot attract great talents if you have no active interest in your business. Your highly talented team will simply focus on other things. Some people may equally say that they will simply hire a leader to keep their team focused. Yes, you can get someone to lead, but you must also lead this person or remain active. Else, your great leader may one day get tired of being shortchanged and will find a way to boot you out. It’s impossible to build a sustainable business without watching it, creating new ideas, track of everything.
What about bonds, securities, stocks & real estate?
Now, here are the things that fall into the passive income category for real. Sure, in this section, you won’t work as hard all the time, but the emphasis is all the time because you must work hard. Let’s take the rental estate, for instance:
You can always hire your legal team, maintenance crew, and a property manager to take over the heavy burden, but you must still watch over your business with the eyes of a hawk.
Your stocks, bonds, and dividend stocks are off course, more passive than the real estate, but again you must work hard to increase your knowledge. So, you know when to pocket your cash or reinvest.
All of these aspects of making money can help diversify your income, but you must also be prepared to do the necessary work to make them scale through. So, while they are more passive than most, they still need you actively involved.
It’s impossible to create passion and fulfillment passively.
Some people have been led to believe that money and passion are different. These people think now that it is impossible to be passionate about something if you are working too hard about it. I believe that passion, fulfillment, and making money goes in the same direction. This does not mean you have to become a billionaire to show that you are genuinely passionate about something. But true fulfillment comes as a result of working hard at that thing that completes you. This is why I am no firm believer in the luxury lifestyle, and I can’t even have it because, as a freelancer, I have to be available to my clients. What I do believe in is building a healthy and beautiful life on the things you value the most. It could be work and family. I believe in creating a balanced, smart, and productive atmosphere.
So, instead of concentrating on that get-rich scheme, you are cooking up, it’s time to focus on building actual wealth, which comes from fulfillment.
The bottom line
If all you know about passive income is doing nothing or little for something, then you must see that sort of thing doesn’t exist. Passive income is in itself a hoax. So, you have to look at things differently. Everything requires active input, to make money and make sustainable income out of it.
I believe that anyone can become wealthy if they spend time working hard at it. You shouldn’t aim at becoming successful temporarily. You should work towards it for the future because that’s what counts.
So, here’s my question? What are those great passive income ideas you have cooking up? Are they worthwhile and sustainable? How about the greatest passive income lie you fell for? Please share with us, let’s talk about it