Why There's No Such Thing As Passive Income

Richard Fang

Stop believing in the gurus that proclaim passive income

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“Make $500 a week in 6 simple steps” — said an article

We’ve all seen these headlines littered across our social media, google searches, and more (even on leading publications like Forbes).

It’s a dream for many to have passive income on the side, earning hundreds and thousands of dollars at ease. After all, having just a few hundred dollars extra a month can mean the difference in saving up for that family car or perhaps a holiday.

We are then sold this dream in the form of courses, articles, and ebooks that often come short of this and honestly can be disappointing.

And why is this?

Because most passive income isn’t truly passive income

In my opinion, passive income is often mislabeled, especially if you’re trying to earn money off the internet. More than often, most of these strategies give off a ‘get rich scheme’ vibe and often fall short of what they promise.

What is usually defined as ‘passive income strategies’ are actually not passive and can take a lot of effort to kickstart and maintain.

According to Investopedia, passive income is defined as:

Passive income has been a relatively loosely used term in recent years. Colloquially, it’s been used to define money being earned regularly with little or no effort on the part of the person receiving it. — Source Investopedia

The part of the definition most passive income proclaimers tend to focus on is the “little effort.” After all, earning money with no effort is almost entirely misleading.

Like most things, almost everything requires some effort

Ok, let’s take a look at the strategies these articles and ebooks jot down as potential passive income strategies.

I did some research and jotted down some of the most common ones.

Here are 10 which I’ve found:

  • Dividend Stocks
  • Rental Properties
  • Sell an E-book online
  • Affiliate Marketing
  • Peer to Peer lending
  • Start a blog
  • Start an online store
  • Start a Youtube channel
  • Rent out your garage/room
  • Pay off your debts

Just for laughs, I also jotted down some which honestly should never be called ‘passive income’ strategies at all:

  • Laundromats
  • Design T-shirts
  • Selling Stock photos
  • Create a course on Udemy

The problem comes with how much set up many of these ideas need

Don’t get me wrong.

I am a major advocator for setting up side-income streams. My problem lies in how passive income is marketed to the general public by most of its advocators.

For some of these so-called strategies, however, you’re almost running an entire business on the side on top of most likely a full-time job.

This quote from Todd Tresidder (Financial Mentor) sums it up perfectly:
“First, I have to spend months researching and writing the book.
Then I have to spend even more time learning all the technology necessary to create the book and implement the automated sales system.
I have to invest in the cover, software, and monthly overhead to run the system.
I also have to spend more time learning how to market the book, which involves implementing all the marketing tasks so people who need the solution contained within the book can find it.
The truth is I had to put in a ton of work up front before I ever made my first dime on an ebook, and I still have to run the business once the product is selling. — Todd Tresidder, Financial Mentor

Many of these take huge set up efforts, especially when writing up an entire course or selling goods online. Not only do you need to spend hours working on creating the content, but then marketing it as well can all add up to months and years.

More than often, these strategies are often labeled as “easy” options to start generating passive income.

The worst thing? They might not even work out in the end.

Sure the ones that do work out might help you generate some income, but even then, most of the time, these are not passive income options.

To run an online business or sell digital/physical products successfully with ‘little or no effort’ is almost always a lie. Even looking into social media strategies like starting a Youtube channel or starting a blog takes ages to start and eventually make income successfully.

Even actual passive income strategies like renting out real estate or buying dividend stocks require not only some setup but also capital. However, these strategies often need less maintenance and thus are ‘actual’ passive income strategies in my books.

This brings me to the second point that most passive income strategies often miss.

The maintenance of these businesses can often cost even more time

Let’s continue the example of a blog or a Youtube channel.

Even if you successfully get to the point of making money, you have to continue the momentum to maintain the growth of these channels.

On a technical level, you could leave your Youtube channel or blog alone, but more than likely, you still have to keep on top of it.

This means updating blogs, creating content (so you don’t get penalized for going ‘inactive’), and other admin related activities like keeping your website updated.

Without this, you will most likely get ‘punished’ by the algorithms for not keeping your channels updated.

Let’s look at another example.

On the other side, maintaining online stores, courses, and businesses still requires effort. You could argue that once you create an online course or ebook, all you need to do is run ads and let the sales roll in.

Firstly, however, there is no guarantee your ‘online course or ebook’ will succeed.

More than likely, with every social media post of a successful course sold, it comes ten that failed.

This means rejigging your content or copy constantly and, most importantly, providing actual value back to your potential customers. Even if you do manage to get sales, you still have to update your creative, copy, and landing pages to keep them relevant.

All of this still takes long term effort, which most passive income strategies often fail to include.

Let’s stop using the term passive income

In a recent article by Tim Denning (15 Micro Ideas About Money to Help You Rewrite Your Financial History), he discusses ideas to help plant seeds to financial freedom.

Others could take some of his strategies as ‘passive income,’ but not once did he use the word passive at all. Although he is one of the most successful writers on Medium and beyond, he never did any of it ‘passively.’

My personal opinion is that writers who use the word passive are almost preying on the knowledge that most of us want to make passive income without putting much effort into it.

In reality, if you want to make side income, it doesn’t come free, unfortunately, and that’s the reality of most things in the world.

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Editor at CornerTech and Marketing @richardfliu on Twitter

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