Passive income isn’t THAT passive

You’ve heard the rave about passive income. You probably Googled “How to make passive income” and “ways to get passive income” before chancing upon this blog.

I’ve been there, done that. After going through many articles and YouTube videos, I am only able to conclude one thing. And I’m about to tell you the sad truth.

Passive income isn’t THAT passive.

Well, majority of the ways at least. What do I really mean by that, anyway? It’s simple. You can’t just get more money by not doing anything. You have to do something. And you have to know what you are doing. Otherwise, you wouldn’t get too far, and your money won’t grow at the rate you want it to.

Let me provide you with a few examples.

1) Getting passive income by investing in the stock market

By getting a continuous stream of income through dividends is how many people get their passive income. The process is easy. Dumping your money into fundamentally sound companies, make sure they have a good track record. And then hold, collect dividends. Reinvest your dividends, and hold, and collect more dividends. And the cycle continues. Soon enough, you’ll be collecting more dividends than your monthly expenses without having to do anything! Sounds attractive, doesn’t it?

The challenge comes when you have to cherry pick the stocks in your portfolio. How do you determine if the company is fundamentally sound or not? There is a lot of research on your side that needs to be done if you are very new to the stock market. Remember, investing in what you don’t know could eventually bite you in your ass someday.

2) Getting passive income through property rental

I realized that property rental is by far the best easiest to get passive income, if you do it right. The concept is idiot proof – you don’t need to be a genius to utilize this method. You use your money to buy a property on the market. You rent it out, and every month, by hook or by crook, you get a rental fee from being the tenant.

However, do not forget that you would need a high capital for property rental. Properties do not appreciate 100% of the time as much as what many choose to believe, so you need to scan the market for a good deal. All these take time and a keen sight. Be prepared. There will still be a chance that you might lose part of your capital. Maintenance of the property is also needed occasionally, and you need to set aside funds for that.

3) Getting passive income through an E-Commerce business

It could be starting a blog, write an e-book, set up a YouTube channel, be an affiliate marketer, whatever. Best thing about this is that it is highly mobile, and you need very little capital! There is no age limit to this. Anyone can have an E-Commerce business.

But hear this – the chances of it generating passive income for you overnight is probably close to zero.

The key thing about having an E-Commerce business (from my understanding, at least) is that you have to generate enough content for people to want to come back for more. Otherwise, you won’t have enough traffic to your site. More importantly, you can’t just be doing it for the money at the beginning. It is a kind of business that needs time to be developed and nurtured before you actually see legit returns. And you best be generating content that you are passionate about. Because you’ll have to be doing it for some time.

So the question here is, when does passive income turn passive?

To me, the answer lies within the amount of time needed for the activity, and the peace of mind that comes along with it.

Once I have gained enough knowledge to be able to judge a “good” stock from a “bad” stock, and I am able to safely trust my own judgement with a proven track record, I no longer have to worry about my purchases. I can spend less time to analyze the stock market, and use that extra time to do other activities that matter to me. That is when my passive income in the stock market is truly passive.

Once I have done enough market research to know that the property I am going to buy would probably return me a good enough yield in the long term horizon, and it will be in good condition which would minimize the time (and money) needed for me to maintain it, I don’t have to worry so much about it. I know that it would have a demand in the rental market. That is when my rental income becomes truly passive.

I know the progress of my blog improves when I have enough loyal readers coming to www.missniao.wordpress.com as I continue blogging as per normal. Or if I know that as I am sleeping or doing other things than blogging, the traffic to my blog increases. It may not be generating returns now, but I am sure if this trend continues and if I am interesting enough, the returns will come eventually. When that happens, the blog’s income become truly passive to me.

Passive income is hard work in the beginning, but pays handsomely eventually when you no longer have to exchange the same amount of time for it as compared to working in your day job to get the returns.

Do something today to create passive income for yourself. 🙂

Thanks for reading!

Miss Niao xoxo

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Author: missniao

Hello! I blog about financial matters and things that average people can do to have a better retirement. I want to inspire people to take control of their money and have a better understanding about it. If you are interested to know more, follow me @ missniao.wordpress.com! :)

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