We will describe the concept of passive income by using money as an example. If you are wealthy, then you can invest in term deposits that provide a guaranteed rate of interest. This means that each month or at the end of the deposit term you will make money for doing nothing.
You can say the same about savings accounts in a high street bank. You invest a certain amount and then after a period you will earn interest on your investment. It is different to investing in stocks or hedge funds because there is a risk associated with doing this.
Now you are probably not rich enough to live off of your investments – few people are. But what you can do is to invest your time (and a little money if necessary) to create something of value that you can sell many times over. This is the passive income concept.
There is Work involved
Some definitions of passive income state that it is income you have not had to work for. Well, that is not true if you are looking to generate passive online income. There is always some work to do upfront. This may be creating a course, setting up a lead funnel and so on.
If you are successful with your passive income strategy, then you will not have to work as hard as someone that relies on active income. Active income is where you basically trade your time for money. Millions of people do this every day when they go to their jobs.
Overnight Success is very rare
There are always exceptions to everything, but it is rare that a passive income strategy will provide you with a lot of money quickly. One of the main reasons that people give up on the idea of passive income immediately is that they put a lot of effort into creating a product and it doesn’t sell fast enough.
You need to be patient. It could take a long time for your passive income ideas to take off. You will need targeted traffic to your offer and lots of it to make decent money. So the advice is not to give up your day job and wait until your passive income overtakes the money that you earn from your job before you think about quitting.
There is a risk with Passive Income
There is the potential to make a lot of money with passive income, but you also risk making nothing and even losing money. If you do the right things then this shouldn’t happen to you, but there is a lot of hype about passive income, and you can end up disappointed if it doesn’t happen for you.
On the positive side of things, creating passive income streams need not cost a lot of money (if anything), so if you do have a few failures along the way, then you can just learn from them and move on.