It always sounds so great doesn’t it, making enough money while relaxing on a beach somewhere?
Few concepts are more appealing than passive income. What’s better than making money without having to do anything?
You’ve probably seen headlines before that Amazon founder Jeff Bezos earns over $200,000 per second, it’s natural to wonder how you can start making money without working.
Even without crazy passive income numbers compared to Bezos, an additional source of income could be enough to let you leave the daily grind of the 9-to-5 workday so you could pursue entrepreneurial dreams, travel, or just sit on that relaxing beach somewhere.
Generating passive income isn’t as simple as some of these people and articles make it out to be. To get to a healthy level of steady cash flow requires a lot of up front work or money to invest.
If you’re serious about having passive income increase your quality of life, you simply can’t afford to fall for these seven passive income myths.
1. You can “set and forget” your income streams.
This might be the most dangerous myth associated with passive income.
Everyone likes the idea of not needing to do anything else after setting up a blog or online store. But, in reality its never so simple. Blog visitors will need new content to come or they won’t keep coming back. If you have a course or Youtube they may need support or want up to date content that is keeping up with the rapidly changing world. The internet itself is constantly changing as well.
If you aren’t doing anything to stay on top of these industry changes, customer expectations and other responsibilities found in any active business, your passive income will quickly fade away. Even when delegating responsibilities, you’ll need to check in with team members to ensure tasks are done up to your standards.
2. You can set it up quickly and kick back and relax.
It’s easy to assume that anyone can toss together a blog or another passive income source in a single weekend. To really build something that will last and have an impact on your customers and fans will require hard work, time, and research.
Take something as simple as starting a successful blog, this requires extensive research and planning to make a name for yourself out of the millions of blogs out there.
A short list of things to learn and get right for bloggers is they need to find the right niche, choose a web hosting platform and buy a domain name 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!
Needless to say, you probably won’t be able get all this done successfully in just a weekends time, sorry.
3. One source of income is all you need.
Another dangerous myth of passive income is that you can generate all the money you need with a single source of revenue. This is kind of like putting all your money into one stock, it can go up and offer big gains while on the flip side it can hurt bad when it’s down or out.
As with stock market investments, it’s better to diversify your income sources, especially if you’re planning on having these passive income streams replace your job.
An example is with blogger bloggers who have relatively low web traffic may use everything from affiliate links or selling their own products to offering online courses and freelance writing services to generate extra income. Through diversifying your income streams, you’ll have a increase your chances of earning enough to support your needs.
4. Passive income is easy
Passive income is defined as income that is received on a regular basis with little effort required to maintain it. This definition causes many people to mistakenly believe that generating passive income is easy, which isn’t necessarily the case. Passive income is not easy to create, and like we learned earlier isn’t created overnight. Most of the work required to generate passive income is done upfront when you acquire or create an asset that produces passive income in the first place, like creating a business or blog, or buying stocks or an already running business.
5. You have to choose the right vehicle
There are many different methods or vehicles that someone can choose to generate passive income. Rental income from real estate, dividends from stocks, and royalties from music or book sales are just a few of my favorite examples.
The myth that causes many people to believe that their lack of financial success is due to the wrong choice of vehicle is the myth that they have to choose the perfect vehicle at the right time to have any success. In reality, there is no right or perfect vehicle. There are people out there generating generous amounts of passive income with each of the vehicles mentioned above and many many more not list, just as there are people generating little to no income using those same vehicles.
The vehicle you choose doesn’t matter nearly as much as the knowledge, skills, and dedication that you possess as you work to create passive income in whatever path you choose. Someone can introduce you to a specific vehicle that has the potential for creating passive income, but if you’re not equipped with the knowledge, skills, and dedication to make it work, you not likely to be successful.
6. Passive income is permanent
It certainly makes sense to define financial freedom as the point at which your passive income exceeds your expenses. This definition assumes that passive income is permanent. Unfortunately, passive income is not permanent. A source of passive income can dry up or disappear at any moment if not given a certain level of care or attention.
Remember to remain relevant, and up to date in the ever changing world or you won’t attract the attention of those necessary customers.
7. You need to make money (Passive Income).
From investing in the stock market to starting a small online business, many people assume that they need a lot of money to start earning passive income. This simply isn’t true. You can invest in the stock market with as little as a few dollars with most brokers offering fractional shares. For those looking to start their own blog, web hosting is often available at less than $8 per month.
Having additional savings that you can devote toward getting your blog or business idea off the ground can certainly be beneficial, especially early on. But, at the end of the day, what matters most is your willingness to put in the time to research your market idea or investment opportunity.
Doing the right background work will help you use your limited financial resources wisely so you can generate a great return on your initial investment.
Create passive income the right way.
Pursuing a dream of generating passive income isn’t always easy but it’s far from impossible.
Whether you’re trying to add stability to you financial life, find a better way of financing your retirement, or travel and life live on your terms, avoiding these common pitfalls and misconceptions will go a long way in helping you reach any of your goals.
Success is closer than you think!