Passive income is anything you earn without having to do active work. It is a kind of income where you earn with little effort to maintain. More importantly, you continue earning after work is already done.
It is said that passive income is one of the most important strategies used by the rich to build their wealth. Moreover, they continue to earn money with passive income, whenever they are asleep or awake.
So what is the real catch? Does passive income work?
YES! It does work, but there are common misconceptions about passive income that must be clear to anyone before dreaming of having a stream of cash flowing in your bank accounts.
1. Passive income requires “NO WORK.” This is a false belief.
Passive income requires that something is done beforehand. It can be time or money. The though that is most interesting is that it becomes passive after you have done your work.
If you are writing a book for a few weeks, for instance, once completed and published after, then sells out, you can enjoy the royalty fee for the rest of your life without further work.
2. Building a passive income stream is not just a walk in the park. It is not as simple as being rich overnight.
Deciding on how to create a steady flow of cash needs the right amount of work. Most importantly, it demands that you give time and investments in the right areas.
3. In reality, it takes a lot of research and work to have a source of income that will provide lasting results before you even earn.
For example, starting a blog may seem so simple. In actuality, it requires extensive research and planning to achieve your goal.
According to R.L. Adams, bloggers need to find the right niche, choose a web hosting platform. Also, buying a domain name is needed just to get started. After that, they still need to learn about browser caching, SEO, permalinks, and more — and don’t forget about writing good content and uploading quality images.
4. False: You can generate all the money you need with a single source of revenue.
One good example of this is the stock market. Relying on a single source of passive income is never a good thing. If you invest, do not put all your investments into a single company. You can be rich if stock is great at that time, but if prices fall, you will practically be broke.
Another example is a blogger with low web traffic who tries to generate extra income through other sources like affiliate links, selling of digital products, offering online courses, and freelance writing services. By broadening income sources, the blogger will likely have enough earning to cover his needs.
Time is more precious than money, just as John Wooden once said, “Don’t let making a living prevent you from making a life.”
Having the will and commitment to increasing your asset over time, and put it to work for you will surely help achieve the kind of life you wish to have.