I have read a lot of articles on the internet that miss the point about the concept of passive income. The optimists think that passive income is something that you just flip a switch and it pays you forever without work. The pessimists think that there is no such thing as passive income because every income stream requires you to maintain it. The truth is somewhere in between.
It’s All Relative
To set the record straight, different types of passive income fall along a continuum from 100% active to 100% passive. Whether or not a person considers an income stream to be passive is relative to his or her main source of income.
For example, a person who makes fifteen dollars an hour in a full time retail job thinks that their bulk candy vending business on the side is pretty passive because they can make one hundred dollars an hour.
But, the full time bulk candy vendor who makes one hundred dollars an hour thinks that the real estate investor is making pretty passive money because he is raking in about a thousand dollars an hour.
The Continuum
100% active is your job, 100% passive is… well there’s nothing that is completely passive, but I would say investing in treasury bonds is close enough (you still have to check the paper from time to time to make sure your government is still solvent).
Along the way between completely passive income and completely active income is a variety of other income sources including real estate investing, creating websites for traffic and google adsense, network marketing, automated ebay businesses, etc.
Don’t Get Discouraged
Don’t let someone tell you that there is no such thing as passive income. If you hear someone say that, realize that they just have a surface-level understanding of the concept. Now that you have read this article, you will have the deeper understanding that passive income is relative the the expectations of the owner.
Start building the most accessible type of passive income, then graduate to more and more passive income streams as you grow.
Very true. And another dimension to this is whether or not you’d be doing the income generating activity even if you weren’t getting paid for it. For instance, if you enjoy writing, earning passive income from book sales will feel more passive than for someone who hates writing and would have to slog it out for months on end writing the book in the first place.