For the last several years, passive income has been hailed as a near-perfect approach to generating wealth, appealing to entrepreneurs, investors and average working professionals alike. But the promise of effortless income generation sounds suspicious on its surface. Is there really a way to generate revenue without hours of work? And if so, is it accessible to the majority of the population?
The Idea Behind Passive Income
Strictly speaking, passive income is any kind of recurring income that is generated without ongoing demands for your time and effort. Wages are paid hourly and salaries are paid on an annual basis, with both forms of compensation contingent upon your working a specific number of hours; these are not passive. Instead, a passive income source would be one that sends you a check in the mail periodically, without any effort on your part.
To better understand what passive income is and how it works, let’s look at some of the most commonly cited examples of passive income in action:
Dividend-paying stocks. First, there are dividend-paying stocks. Stocks represent fractional shares of ownership in public companies. In many cases, those companies decide to distribute profits regularly in the form of quarterly dividends; shareholders can count on a set amount of quarterly income based on the number of shares they hold.
A monetized blog. If you start a blog that generates a sizable amount of traffic, in the realm of thousands of visitors per month, you can start monetizing it with the help of ads, affiliate links, premium content or other paid features. You’ll earn a share of revenue based on the number of people you attract, the number of sales you make or other factors.
Rental properties. With rental properties, you can buy a property, attract a tenant and collect an amount of rent that exceeds your monthly expenses. With a decent profit margin and a few properties under your belt, this can add up to be a lot of income.
Digital goods. You can also make passive income with the help of digital goods, like eBooks or stock photography. After developing these digital goods and marketing them consistently, you may be able to generate recurring revenue from all their future sales.
The “Passive” Income Myth
All these methods are proven to be capable of generating income. More than that, they’ve been responsible for developing many self-made millionaires. But it’s not the “income” part of the term we’re concerned with as much as the “passive” part of the term.
Passive income is rarely passive in the truest sense; while these (and other) passive income sources may require less effort than a full-time job, they may require effort in other formats and in other contexts.
Let’s take a look at each of these:
Stock research and initial capital. It’s not hard to get involved with dividend stock investing, but you’ll still have to spend time researching which stocks are available so you can maximize your return. Additionally, you’ll need a sum of initial capital to achieve a meaningful stream; many dividends only pay 2 to 4 percent annually, so investing $100 won’t give you much of a return.
Blog setup and maintenance. According to The Blog Starter, “It’s easier than ever to start a blog — but even with a good plan in place, there’s no guarantee you’ll be successful. It takes a lot of time to create content for the blog, research your target audience and refine your approach over time.” Since you’ll also need to produce new content on a regular basis, even a successful monetized blog will require at least a part-time job’s worth of effort.
Property research and maintenance. Investing in rental property requires significant upfront capital (not unlike investing in stocks), and to be successful, you’ll need to carefully research and vet each prospective property. You’ll also need to maintain your properties and manage tenant turnover, or else cut into your profits by working with a property management firm.
Digital good development. If you want to sell an eBook or stock photography, you’ll need to produce those assets first, then find a service like Shutterstock where you can sell them. This often requires dozens, or even hundreds of hours of upfront effort, and then you’ll need to market your work.
Some people have claimed that passive income is a myth, but that may be a little extreme. Instead, a more accurate assessment may be that passive income isn’t truly passive. No matter what, you’ll still need to put in the time and effort to make your income-generating strategy work; it’s just in a different format than your conventional job.
If things you thought were true were actually wrong, when would you want to know? When I was a child, I recall my mother saying that drinking and driving was against the law. For many years after that, whenever I saw someone drinking a soda while driving, I assumed they were criminals. Years later, I figured out that my mother was talking about drinking alcohol while driving.
I can laugh at the absurdity of this today, but it is the perfect example of how easy it can be to carry around half-truths when you don’t know what you don’t know.
Many people go through life believing things without ever considering the possibility that those things are actually wrong. I see it every day in nearly every conversation I have with people: the misinterpretation of financial terms, the misapplication of various wealth strategies and confusion about how much risk they are actually taking.
Why does this happen? Well, the internet gives everyone instant access to unlimited amounts of information. Unfortunately, there is rarely any context, and we have a tendency as human beings to process information as true or false based on the source and a basic understanding of the topic. If Google says it, then it must be true! As a result, people end up with a false sense of confidence and a laundry list of beliefs that aren’t necessarily true.
Misconceptions come with costly consequences
Your financial future rests on your understanding of what you’re doing and why you’re doing it, and the consequences are real. Any misinterpretations you may have about money could potentially destroy your quality of life and reduce your chances of experiencing true financial freedom.
The biggest obstacle to unlearning something you have always thought was true is to accept the possibility of having inaccurate information. Once you do that, unlearning bad financial information is not as complicated as you may think.
The biggest misconception I see over and over again is the focus on accumulation. People tend to evaluate their progress or level of financial success based on how much money they accumulate. While having money in the bank is important, reliable cash flow should be the ultimate goal.
Think about it: You can survive without any money accumulated, but you cannot easily get by without cash flow. Cash flow can be generated in any number of ways: a paycheck from your job, a business you own or a passive-income source. Regardless of where it comes from, cash flow is like water – you simply cannot survive without it. (To see some strategies for increasing cash flow in retirement, check out my Cash Flow Guide (opens in new tab).)
How to know if your money is fulfilling its primary purpose
Money is obviously a big part of our lives, so we have a tendency to desire more of it. But how do you decide how much is enough?
What I find is that people often use arbitrary account balances and rates of return to assess how much progress they have made, but neither of these things actually indicates whether your money is fulfilling its primary purpose: income replacement, also known as cash flow.
While having money is, of course, part of the equation, it is the wrong measurement for success. A lot of people with plenty of money still struggle with not feeling financially free or confident, and that is a problem.
Achieving financial confidence starts with answering these two questions:
How much actual income do you have coming in right now that you don’t have to work to receive? I am talking about actual dollars being deposited into your checking account or brokerage account.
If you quit working tomorrow, how much money would you need to cover all of your expenses? This includes taxes, trips, lifestyle expenses, etc.
If you’re like most people, there is a gap between how much income you’re receiving and how much you need. (That is why you work, to fill that gap.) If you want to stop working, you’ll need to figure out how to close this gap with passive income.
How is financial security different from financial freedom?
So, how do you do that? Start by understanding the difference between financial security and financial freedom.
The idea of financial security cannot necessarily be defined by exact numbers or percentages and is often expressed as a feeling of safety. That’s why most people focus on reducing debt and accumulating money. They believe that spending less, paying less in interest and earning more on their investments is what will lead them to a successful retirement.
Having large sums of money brings a sense of financial security, but it does not create financial freedom. If you’re like most people, knowing creates more confidence than assuming, and a good way to know is to complete a Gap Report™. (Get your GAP Report™ here (opens in new tab).)
Security vs. independence vs. freedom
I speak with people every week who have millions of dollars saved but don’t feel financially free. They say things like, “I think I will be OK,” or “I feel OK with what I have,” but their word choices — “I think” and “I feel” — say it all: They are not confident.
In short, if you have large sums of money, but you are still working to support your income needs, worried about market returns or uncertain about the future… that is not freedom.
There is a middle ground where you have both financial security and lifestyle flexibility in the short term, which I refer to as “financial independence.” For instance, many business owners have companies or real estate that create a revenue stream. Their business runs without their full attention, allowing them flexibility to do what they want when they want, but they must still contribute at some level in order to maintain their income sources.
Rental properties are the perfect example of great cash flow machines that generate income to potentially support your lifestyle and help you achieve financial independence. It is obviously a good thing to have these assets growing and producing income, but it still takes time and effort.
You may have a pretty great life collecting rent from your tenants, but the simple fact that you must collect it is work, not to mention addressing repairs and upkeep, managing expenses and (worst of all) dealing with unhappy people.
There is nothing wrong with running a business to provide cash flow. For some people, their business is their passion, but it is difficult to achieve true financial freedom when the business income relies upon you showing up.
This is why many people who have considerable rental properties often cash out and move to sources of passive income — because they want true financial freedom.
A true source of passive income is one where you don’t have to do anything to generate it, including Social Security, pensions, annuities, private markets and royalties.
Now, we can argue about the definitions of financial security vs. independence vs. freedom, but that would be missing the point.
Passive income is the path to financial freedom
Failing to understand the differences comes with a cost. If the point is to have enough passive income to cover your cash flow needs, why would you spend thirty-plus years measuring your progress based on account balances and rates of return?
As you can see, words matter, and definitions are important. These conflicting ideas could be why so many people think that they are on the path toward achieving freedom but never seem to reach it. They fall short of the goal because they don’t truly understand what is needed to have financial freedom and are steadfast on accumulating assets.
To have financial freedom, you have to have passive income. If you have to have passive income, then focus on building reliable income sources. It is that simple.
It’s never too early, or too late, to start thinking about your retirement goals. No matter if you’re hoping to retire early or work until you can’t any longer, having a plan for how you can retire comfortably is essential.
Get started on these steps right now so you can reach your retirement goals.
1. Have A Professional Review Your Plan
If you’re fortunate enough to have plenty of retirement savings and investments, now is the time to futureproof your funds. But that takes time and skills that most don’t have, so the best option is to turn to a professional financial advisor. The hard part is finding the right one.
There’s no cost to you and no obligation to hire the advisor, so there’s not much to lose.
2. Keep An Emergency Fund
Common wisdom suggests you should keep three to six months of expenses in an emergency fund. Once you retire, however, you’ll likely want to bump up that amount. Generally speaking, accidents occur more often as you age, whether through accidental falls, reduction in driving abilities, loss of general dexterity or simply through spending more time at home rather than in an office. The best way to plan for emergency expenses in retirement is to build up your nest egg while you’re working, rather than making it a monthly line item in your budget.
Sign up for a new SoFi Checking and Savings Account today so that you can start stashing cash. You can earn a cash bonus of up to $300 with direct deposit and you can get up to 2.00% APY (Annual Percentage Yield) on all checking and savings balances with no balance cap restrictions*.
Plus, there are overdraft fees, no minimum balance fees and no monthly fees. You can even get paid up to two days early when you set up direct deposit.
3. Think Outside Your 401(k)
A 401(k) retirement plan is an excellent way to save for retirement, but it does have limited investment options, so you may also want another account with more investment flexibility.
And no matter what your retirement goals look like, working with companies that understand how to invest will help you.
Vanguard’s Digital Advisor is professional money management at a low cost. They can help you invest your retirement savings so you can focus on other things. With a minimum enrollment amount of $3,000 and a cost of no more than $2 a year for every $1,000 you invest, Digital Advisor provides ongoing, automated investment management at a low cost.
With no advisory fees for the first 90 days of your enrollment, there’s no better time to get started.
4. Diversify To Mitigate Risk
With a sinking economy and rising inflation, it’s important to diversify so all your investment eggs aren’t in one basket. Gold is traditionally a popular investment during a recession because it’s negatively correlated with the stock market.
Goldco offers both precious metals IRAs and direct purchases of gold and silver. It’s a top-rated company and is now offering $10,000 or more in free silver with qualified accounts.
5. Invest Creatively
A strong way to diversify your investment may surprise you: Art. With a 13.8% return, art handily outperformed the S&P from 1995 to 2021.
Masterworks allows everyday investors to own shares of iconic works of art by the likes of Pablo Picasso, Banksy, Andy Warhol and more.
You can get paid when the painting sells or sell your shares on the secondary market, providing more liquidity than would typically be available when investing in art directly.
6. Generate Passive Income
Passive income plays a key role in many successful retirement strategies. Here’s one that’s about as effortless as it gets. You can rent out all types of extra space around your house – garage, shed, basement, driveway, closet and more – to people who need to store their stuff. And you can make hundreds of dollars a month doing it.
Neighbor is a website that lets you list your extra storage space for rent and connects you with potential renters. It’s free to post a listing, and you won’t need to write up a contract or collect payments – Neighbor handles all that stuff. However, you are in control of where you should be: You review renters’ requests so that you know exactly what they plan to store before you decide whether to approve the deal. Plus, you set the move-in date that’s convenient for you.
You’ll also be protected with up to $1 million in liability insurance, and Neighbor will cover the cost if a renter doesn’t pay.
Rental real estate is popular as an additional, passive income for the long haul. Unlike investing in stocks, real estate is somewhat shielded from the constant ups and downs of the market and has offered a return of up to 6% over time, which makes it a smart way to diversify your portfolio.
Arrived is your gateway to the world of real estate investing that’s historically required lots of upfront capital. With a minimum investment of just $100, Arrived makes real estate investing truly accessible to everyone.
It’s simple to get started: Create an account, decide how much you want to invest and watch for property appreciation and quarterly rental income payments.
Investing in real estate is a great option for anyone looking to build long-term wealth that can stand up to risk and market volatility.
If you’re tired of the B’S… the Loopholes and complicated software… Then maybe it’s time to build a real business instead. An Evergreen Business that makes you passive income month after month after month… for years and years. Ace Social Media Marketer Godswill Okoyomon will unveil SocialAgency360. It is an all-in-one platform that combines Content Marketing + Social Media Management to help businesses, publishers, brands, agencies, & startups…
FIND, CREATE & SHARE the best performing content consistently… to increase their traffic, leads and sales. Social Media Agency is unlike any other Social Media Marketing tool out there. Run-Of-The-Mill Social Media Marketing Software Vs. SocialAgency360: They don’t help you find clients – This software does that. They don’t provide tools (marketing resources) to close clients – This software does that. They don’t help you search for content – This software has a built-in A.I.-Powered Content Finder. They lack true Agency Training and Mentorship – This software has that.
They have 2 Angles: Real Agency Solution to setup and earn as a social media agency. All in one social media tool to traffic, leads and sales angle.
Social Media services are still very high in demand, and since the Pandemic, more and more businesses are looking to grow their brand and business with Social Media. With SocialAgency360 for the First Time users get everything they need to Start a Social Media Agency Fast and Easy and Long Term including the software to deliver these services in a snap.
They are offering every aspect of the Agency Setup: DFY Assets (They get all the assets they need to set up their agency). Workspace: Features to create multiple brands and manage clients efficiently. Client Finder to find leads for their agency. Client Feedback system to engage with clients and keep them coming back. Brandable report and up
Social Media is the best way to drive traffic, leads and sales to any business. Users get a complete set of social media management and automation features to create engaging content in a snap, manage their business on socials and drive consistent traffic and sales. They get features like: AI Content Discovery (All content types). AI-Assisted Composer. Social Media Planner. Social Media Automation. Analytics.
Step 1: Setup Your Agency: Use their Done For You Social Media Agency Business Assets to Setup your Agency in a Few Clicks
Step 2: Find Clients: Use their InBuilt Client Finder System to Find Leads on Demand
Step 3: Deliver and Repeat: Use their Social Media and Content Management tool to deliver service in minutes, get paid and repeat.
SOCIALAGENCY360 FEATURES
Part 1. Agency Feautures: Full set of features to setup, find clients and grow a successful Social Media Agency Business
Workspaces and Brands: Users can create workspaces/Brands for clients and exclusively manage each client social media service. For the SocialAgency360 FE they are giving 20 Seats, If they charge an average of $199 per month, that is an estimated $3,980 per month. They can get additional seat with Upgrade
Dedicated Social Media Agency Client Dashboard: They have created a Robust Client Management Dashboard. Users can Create special client login with dedicated dashboard and custom permissions. Clients can also engage in realtime via inbuilt client messaging system
Client Finder: The Client Finder allows users to run a simple location and business category search to find highly targeted clients via Facebook that can reach out and sell to.
Complete Done-For-You Social Media Agency Setup: They are giving Users a Complete set of DONE FOR YOU Social Media Agency Assets to Position their Business, Build Authority and Sell the Service.
Brandable PDF Reports and Analytics: Users can Schedule the Analytics Reports to be sent out to Clients based on set frequencies. Users can Eaisily brand these analytics and reports data and send to clients with their logo and branding each time…
Inbuilt Client Feedback System: Collect feedbacks and Communicate with clients from a secure inbuilt chat system. SocialAgency360 keeps clients Engaged and increased Client Retention. Heck, your clients might even tip you.
Intensive Social Agency Business Bootcamp.
Part 2. Social Media Software Features:
AI Content Discovery: Discover the top performing content and Insight to power you and your clients business. Find, analyze and share top performing content for any topic or industry. Their Huge Database allows you follow any topic across all Content Types and use this for you business or Clients Business
Multi-Channel Composer: Create Content HassleFree with their Multi- Channel Composer. Witness true composing power with their Multi-Channel Composer to easily create beautiful Images, Articles, Audio and Social Posts. This Composer comes with Real time Content Assistant to create Unique in a snap using their Proprietary Drag and Drop Editor to bring contents from across the web into the editor in real time.. (Live Search for Quotes Stock Images, Youtube Images).
Social Media Automation: Auto Post and Auto-Discover: Spend Less Time and Share Content Handsfree with Automation Recipes. Take Back your Time and Set your Content Strategy rolling without Interuption with rules to Auto-Discover and Auto-Post relevant & targeted content to your channels according to your own needs and settings.
Analytics and Reports: Get Robust Analytics that help you and your clients business grow. Use the feedback from analytics reports and fine-tune your social media strategy for optimal performance. With their Advanced Analytics, You can Make informed business decisions through meaningful insights from social media analytics.
Share your message with the best scheduling workflow. Robust Social Media Calendar and Planner to Stay ahead. No More Clunky Spreadsheet – Streamline your content workflow by collaborating with your team members and planning campaigns from an interactive calendar or list view. Plan, approve, reject or schedule content for all your marketing channels
Image Designer: Robust Social Media Image Designer. Use the feedback from analytics reports and fine-tune your social media strategy for optimal performance.
Being online for businesses has become very, very local.Everyone on social media is being located, by the things that they like and the things that they do. Social media marketing is very effective in creating greater visibility for businesses.
This is the reason every business owner wants to hire a social media agency to help them out on a daily basis. Another plus is the fact that social media marketing is an on-going thing i.e. when a business hires a Social Media Agency – its for long-term. With Social Agency 360 you have everything to cater to multiple clients from a single dashboard.
Voicebuddy is The Last All In One Text To Speech Option You’ll Ever Need. VoiceBuddy encomposses the best of both worlds when it comes to text to speech technology. Simply stated, they’ve combined Google Wave Net and Amazon Polly into one software platform and added a ton of features as well.
HAVE YOU HEARD? Speech To Text Is Now More Natural Sounding Than Ever! That’s right. With the advances in speech to text technology you can now create great sounding media in mere minutes. This Means That You Won’t Have To: Search endlessly on freelance sites for voice over talent. Waste hundreds of hours recording your own voice scripts. Spend thousands of dollars per year on voice overs only to end up disappointed with the quality. Spend hundreds of dollars on expensive studio equipment to record your voice. FINALLY! Boring Robotic Voices Are A Thing of The Past!
There’s nothing more frustrating than watching a video or listening to an audio and hearing a voice that sounds like monotone garbled metal. Ugh! It’s not only terrible quality, but it’s also downright distracting. If you’re using this type of audio in your projects, you need to stop immediately. Because with the technology they’re giving you access to today, there’s not only a better way of producing text to speech audio, but the quality is leaps and bounds above the competition!
They’ve Just Harnessed The Power of Google Wave Net and Amazon Polly Into One Amazing Soft Platform With A Ton of Features! When you’re trying to seamlessly create natural sounding text to speech, you need to be able to add pitch, natural pauses, strength of voice, and more. So they set out to find a solution that would not only offer all of these things (and then some), but also that combined the top two text to speech technologies into one. Introducing VoiceBuddy.
It Creates Realistic Sounding Voices In Only 3 EASY STEPS. You can pump out natural sounding audio asap with VoiceBuddy. All you need to do is:
With VoiceBuddy you could create up to 20X more videos than the competition. No joke. Just think about it. You could have videos churning out every single day that earns you money from affiliate sales, ad revenue, and more! And you could do it across multiple markets as well!
However, you’ll need to act fast because the price of VoiceBuddy is going up every single day. So if you finally want to break into the YouTube scene and create tons of content you can monetize, go ahead and use the link above. You won’t believe how incredible the voices are in VoiceBuddy!
(X Number) of Voices To Choose From: As they’ve mentioned earlier, they’ve combined Google Wave Net and Amazon Polly into this platform. Therefore you’ll get the best of both worlds!
(X) Languages To Choose From: English isn’t the only popular language today. That’s why they’ve made sure to include multiple languages inside of VoiceBuddy. This way you can create audio in some of the most popular languages today without missing a beat.
It Is Easy To Use EVEN FOR NEWBIES: Listen, they’ve made using VoiceBuddy incredibly easy right out the gate. You simply cannot mess this up. Even if you have the technical skills of a blind caveman!
100% Customization At Your Fingertips. No Other Text To Speech Platform Comes Close! Other text to speech software apps either include Google Wave Net or Amazon Polly. Where’s the value in that? This, in their opinion, is incredibly underwhelming.
Easy To Use Dashboard: Everything is right where you need it. No clicking around trying to find the tools to use. The layout is designed to make sure you can start generating high quality text to speech fast.
Text To Speech Editor: You’ll also be able to edit all of your text you put into VoiceBuddy at a moment’s notice. The wide layout makes sure you can comb over your text with ease.
Add Notes To Each Audio File – Had an idea for a particular audio? No worries. Just click to add notes to any audio and you’ll never forget your thoughts and how to use that audio in the future.
Find Previously Created Audios Easily – They’re sure that once you get going with VoiceBuddy, you’re going to be creating tons of audio files from text. That’s why they’ve made finding any audio easy just by doing a simple search.
EVERYTHING IS 100% CLOUD BASED. No Need To Install Anything. You’ll also love the fact that VoiceBuddy doesn’t require you to download or install anything. This works on every device you have.
DELIVERS ON TIME EVERY TIME. Without The Nasty Attitude. It delivers your audio voice over right when you want it. Immediately.
SAVE THOUSANDS On Voice Overs. Unless you’re producing a 200 million dollar budget movie, then it just makes sense to save money on voice over work right? Even lower level talent charges by the minute.
Export And Use With Any Software You Choose. The great thing about VoiceBuddy is that you can download every single audio you create quickly and easily by mp3 format. This will allow you to import to every possible software available because mp3 is the normal format that a lot of software take nowadays.
LiudmylaSupynska | Getty Images
The “Passive” Income Myth
Related: 10 Ways to Make Money While You Sleep
