Is It a Myth? – the Genuine Truth About Passive Income
Summary
- Every business or investment requires continuous attention or improvement.
- Therefore passive income without work doesn’t exist in its clear form.
- To reach a satisfactory regular income you need hard work. Or a lot of funds and high-level professional or business skills.
- You can make it, but get well prepared.
Dreaming about a World Without Working
“Passive income” has become a very popular topic in recent years. Countless websites, blog posts, and books are detailing the benefits of this method over other earning opportunities. In these times many people are dreaming of living in such wealth and not having to work at all – or working almost nothing. Young people often want to do things differently than their parents, and they don’t want to struggle with working through all their lives as elders did.
We all, not only older people, are dreaming of golden retirement years spent in peace. And, of course, living in a good financial position – thanks to our continuous income from some constant source. Many of us also imagine reaching this with little or no work at all.
The dangers of passivity
So does “passive” mean you don’t have to work? Not at all. In reality, if you try to use this strategy for making some extra money, it can be very dangerous. You can lose all your income or at least face a constant decrease in funds.
Let’s see some real, practical examples to understand this:
1. You Are Renting Apartments
If they are in the same building and it burns down, or this district of the town gets abandoned, or the whole city decays, like Detroit, mostly a ghost town today... In each of these cases, your investment loses value considerably. (It does not matter whether you inherited, purchased or acquired the property in different/other ways.) If you have different real estate objects but a general recession begins and many tenants are unable to pay the rent, your expenses can exceed your incomes for years.
2. You Have Bought Different Stocks on the Stock Exchange
You are living from the dividends, but most shares lose value. This may happen due to a recession, or new, disruptive technologies that may cause companies to shrink. Your dividend income falls also to a fraction of what it was before.
3. You Write a Great Book
The book sells very well at the beginning, but later it goes out of fashion. People are interested in other works, sales fall to a fragment of their initial volume. You have barely any income from it.
4. You Make Your Own Successful Business
But competitors are also strong and your earnings shrink below the industry average over time. Maybe automation makes most of your efforts pointless. Your business and your income declines.
5. You Own a Limited Partnership in a Business
That means you are a silent money lender in the business without management rights. But your managing partners may steal your ideas and step down, transferring all your value to their own business. You have nothing or a very little left.
6. You Have a Low-risk Bond Portfolio
You are living from the interests and yields of this investment package. But the government or the central bank generates high inflation and this way your investment diminishes. This is a common practice among governments, and not only in unstable developing countries.
Continuing, read More on Agelessfinance.com
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Dear @deathcross
I kind of found it a bit strange to read 'summary' at the very beginning of the post. It kind of feels like I'm jumping into very deep water. Right away.
And at the end I felt from the start, that I will have to come back to this summary once I finish the post. Did you consider some warm up? :) Perhaps short introduction? :) Just a thought.
Personally I think world without working would be the most awful world to live in. Imagine amount of people - everywhere. Noone seem to like crowds during public holidays. And if we would all not have to work - then there would be nowhere to hide from others.
Lack of purpose (work is a purpose for most people) and being surrounded EVERYWHERE by people would drive many to suicide. Not my dream place to live. People need to work, need to keep themselfs busy. Otherwise many will end up taking their own lifes.
Back to the main topic :)
Investing into passive sources of income may be a dream for many, but so far most of us seem to only dream about it. About passive income, which we do not need to worry about.
Taking into consideration how fast is current world moving forward - I would say that it's going to be very hard to find sources of long-term passive income. Businesses will raise and fail. Amount of scams will increase. Most people will lose their savings, searching for that 'passive income'. Dreaming of enjoying rest of his/hers life :0
Or your own business partner is slowly changing all passwords, initially pretending that he had to reset them for security reasons and reassuring that it's all under control and that he will pass you new passwords once you see each other off-line.
And slowly you're realizing that for to long you simply enjoyed free ride (dividents) and somehow you've lost grip over company, which you co-founded.
I've experienced it once. It was my wake up call - I've learned to understand that even passive income require active amount of real work :) So income isn't passive so much any more lol
Good read, upvote on the way :)
Yours, Piotr
I wrote a nice long reply to your nice, long comment, and then made some movement with the keyboard, and all was gone. (Ctrl+arrow, I think, on Steempeak.) Again:
Thank you for your time, opinion and for sharing your business experience.
Oh jezz @deathcross
I hate re-writing my own comments. It did happened to me several times already so I know how could you possibly deel.
Well. I actually did read second part of your 2 latest posts on your site :) And I will continue doing it in the future, since we're collaborating quite closely already. So I kind of care about your work and your content even more :)
Yours, Piotr
I think in the land of crypto, one can find passive income without any big work. Well, yes one need to due own research and put own funds, but then it can do nice gains.
Where are my gains.... Lost in the crypto-winter.
It is a ruse to sell books and courses.
Income always requires decisions, work, uncertainty and risk - to varying degrees
Posted using Partiko Android
Ruse? Trick?
Thanks.
Thanks for this interesting subject.
I believe that there is no such thing as passive income. To generate an income you need to do something for it. It the internet a lot of people speak about passive income but it is actually not that passive at all. When you promote referral links or affiliate programs it is not enough to just post your link somewhere. To make real income with such programs, you need to build up a downline by offering knowledge or added value to them. Affiliate income can seep to be a passive income but actually it doesn't work without work either. Simply you work first to get referrals and affiliates and you earn later.
Best regards,
Achim
I see a lot of work with it. Most people selling you the secret of passive income has a good income just from your money.
Exactly. There are a ton of so called gurus that sell you the passive income dream just to make a passive income themeselves ;-)
Regards @deathcross.
The possible scenarios you raise really seem to work, but as you said at the beginning, a passive income without effort does not exist.
As I see it, generating income passively implies a previous effort to accumulate capital. Once we have resources (movable or immovable, liquid, passive, fiat or crypto) then we could concentrate on developing a recipe that allows to be placed these on "autopilot", generating interest or ROI.
Thank you for sharing your thoughts and knowledge with us.
Your friend, Juan.
There are also some authors saying "take a lot of loan, buy houses and rent them". But this is dangerous, if the housing market goes down. And, loans have limits, you have to risk a lot of own capital.
Traditionally the real estate market has always been quite solid. Investing in properties, houses, buildings, land ... has always been considered a low risk investment.
But as long as you do it with your own capital. Applying for a loan to make such an investment would be a risky move. This is due to interest rates, which are really very volatile.
In other order of ideas:
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Please let me know what you think and leave a comment whenever you can. Your opinion is a gold mine for me.
Thanks in advance
Has been considered, but wasn't. See people having home in Detroit (partly a ghost town), or simply the housing crisis of 2007-2009. Precious metals are also moving just like stocks, the price can surge or decline 20-30 percent a year. Leverage - credit - makes this only much more dangerous. Loans multiply gains or losses.
Real estate may seem stable - in the background of hyper-inflation.
There are many aspects and variants to consider. Everything is much more complex than it seems.
But definitely investments will always have a risk margin.
Hello dear @deathcross, very interesting topic.
I don't know if passive income is something that really allows you to live, I think that passive income generally to be something continuous in many cases is very little what is offered.
I think that in order to have something that really allows you to live off that income you have to apply a good workload but in the end it ends up being diluted, if you do not apply effort it is difficult to generate something important, a substantial income.
Yes, that's the point. Thank you.
Some good thoughts to consider. I think that there are some forms of passive income that can serve as a supplement to a 'conventional' income. For example, Lending Club allows you to earn a much better interest rate of return than your average savings account while being only moderately more risky if set up properly. I have a small amount in an account there using an automated re-investment tool they offer. There are other similar opportunities as well, I'm sure. You might not get rich, but you can stay ahead of inflation :).
And to set it up properly, you have to work hard.
(I'm not sure if it is only "moderately more risky"...)
There are some ways to get a really passive income, for example Fluidstack which allows you to sell your bandwidth and get up to 50$ a month. We know it's not much but if it can pay for your internet bills, you're earning!
Read our review and experience here.
Have a lovely weekend!
What does your internet provider if it finds it out? Do you have expenses like electricity, amortization of computers?
The internet usage is very low. About 700mb to 1gb per month.