Some books are of the view that passive income is a scam, whereas others say that passive income is the key to all of your dreams, you can make money while you sleep, and it’s an easy way to get rich.
As someone who has multiple passive income streams, I’m here to tell you the truth about it.
Does passive income exist?
The answer to that question is yes; passive income does exist. I can verify that because 95% of my income is derived from passive income!
What that basically means is that I’ve disconnected time from money.
In order to earn a wage, most people have to go out to work. They have to spend time working, and they get paid for that time, usually at an hourly rate.
I don’t work that way. When you have passive income streams you don’t have to be physically working in order to get paid, although there is still work involved.
This gives you the flexibility to run your day as you please, take time out whenever you need to, and still continue earning money without having to conform to the 9-5.
Earn while you sleep?
The reason that passive income is sometimes accused of being a scam is that it has been heavily mis-sold as a kind of miraculous magic where you do nothing, and money just falls into your account.
That’s not exactly false, but it’s only one side of the story that paints a picture viewed through a pair of rose-colored glasses.
You do have to work to generate a passive income, but that work is all front-loaded. So, you have to put in a lot of work upfront whilst earning nothing.
You need to spend hours/days/months or more creating content, making videos, building website links, inventing products, etc. without receiving a single penny. But once that work is done, it’s done. You can then begin to earn an income from it over and over again.
For example, I created a book for another website that I run. I spent four months working solidly on that book without a paycheck. I put the book on Amazon and immediately began earning money. I’m still earning money from that book now, two years down the line.
This is where the notion of ‘earn money whilst you sleep’ comes from. Although this notion is not false (I do indeed earn money whilst I sleep) it’s not the full picture. As in order to earn money whilst you sleep, you also have to spend hours working for ‘free’ whilst you’re awake!
Maintaining your passive income streams
The thing to understand about passive income is that you must have an audience. This can be created via a website, social media, email subscribers, or any other type of following.
Creating the audience is hard enough, but the work doesn’t stop there because you then need to maintain it.
Your audience must be constantly managed in order to keep people engaged with the brand, to attract new followers, and to continually grow that audience.
The bigger the microphone you have, the more opportunities you have for passive income, and the more money you can potentially make.
Types of passive income streams
There are many ways to earn money through passive income, but there are three main types of passive income streams:
Affiliate marketing is when you recommend a product or service through the use of your own affiliate link. If someone clicks on that link and then makes a purchase, you receive a small commission for helping to make that sale.
The most common affiliate marketing program that you’ve probably heard of is the Amazon Associates Program, where you get paid a commission for recommending products on Amazon.
Print On Demand products
Another popular passive income stream is generated by creating Print On Demand (POD) products which can include a whole range of things.
As an example, I’ll use a product that we’re all familiar with – books.
Amazon has it’s own print-on-demand book service which allows you to self-publish your own books. Once it’s on Amazon, if someone purchases it, Amazon prints the book, fulfills the order, and handles any customer service queries. You get paid a royalty based on the number of books sold.
The last main source of passive income that we’re going to talk about is advertising.
If you have a website, you can earn passive income through the use of Google Adsense where you grant website space to Google for them to fulfill with advertisements. You are paid on the number of views and clicks to those ads.
Another example is the adverts that appear YouTube. Again, the creator is getting paid based on the number of views and clicks.
There are three things that you need to know about passive income:
- Yes, passive income does exist, and there are many people all over the world who are making a full-time salary from passive income.
- Passive income is frequently mis-sold. You do still have to work, but the work involved is usually front-loaded.
- The audience is key. If you are to make a living from passive income, you must create and nurture an audience.
So, I hope I’ve helped to clear up a few myths about passive income.
You can’t use passive income to make you a millionaire overnight, but it’s not a scam. The truth lies somewhere in the middle.
If you have any more questions about passive income, please enter them in the comments box below, and I’ll do my best to answer them.