Passive income is something everybody talks about when looking to start a business or create a second income from home.
They discuss it as though it’s something they don’t have to do anything for, almost like it’s just going to appear.
In one sense passive income is exactly that, income that you don’t have to do anything for.
In fact, that is the whole point of passive income. Income that comes to you irrespective of whether you’re sleeping, on vacation or engrossed in your favourite pastime.
In other words, not while you’re grinding away at the 9.00 to 5.00 trading your time for money, but literally while you sleep.
However, the route to creating streams of passive income can be a huge and expensive challenge.
Money creates money as they say, and you often need money to start generating your income streams….But not always.
So what is passive income?
Passive income, or residual income as it is also known can be described as income that you receive while goofing around (or certainly not working for it). Whereas active income is money earned by trading your time in exchange for monetary reward.
Passive income often takes quite a bit of work up front, but once the ball is rolling then it comes in without any effort on your part and you can start work on another income stream.
Passive income isn’t a one off, like an inheritence or selling a property. It can have continuation which can be any time span, even beyond your life.
A good example would be Elvis Presley or John Lennon.
Their estate and family members receive passive income from royalties earned from songs being played on the radio and still being sold worldwide, even though they both died many years ago.
The same applies to many authors who’s books are popular year after year, and even after their death. The income is passive income, even for the generation after.
Another good example would be Beatrix Potter and the Peter Rabbit stories.
Long after her death, Beatrix Potter is selling huge amounts of books and merchandise, especially in Japan. In fact the village where Beatrix lived in England is a mecca for her fans, receiving thousands of tourists a year and selling truck loads of merchandise.
All passive income for the relatives of Beatrix Potter…
So what is active income?
The difference with active income is that it can only be generated while you are working. That may be working for somebody else, or running a service business of your own for example.
There are only so many hours in the day that anybody can work and once you stop, then you stop earning money.
Even CEO’s of large companies are victims of active income. Generally they are in the office hustling, negotiating, having meetings etc to drive the business forwards, but it’s still active income. If they stop, the business stops.
Now I’m not saying that passive income is the be all and end all, nor am I saying that it’s easy to set up. If that was the case then everybody would be on to it and we’d get nothing manufactured or serviced because everybody would be vacating around the world and spending quality time with their families.
The reality is that creating your own business to produce passive income takes time and effort up front. However, once you’ve put in this time and effort to create your income streams then it becomes a whole lot easier.
And as I said earlier, a lot of passive income streams require a significant amount of investment up front, but not always… More on that later.
Examples of passive income.
Patented Products or Technology.
Property is probably the most obvious form of passive income. You purchase or mortgage a property, let it out to tenants, the tenants pay you rent every month and that is your passive income.
Other than maintaining and managing the property, which you can get a managing agent to do for you, it’s pretty much income that keeps rolling in while you do other stuff.
Investments are another form of relatively hands off income. By investing your money into business and commodoties that have an increasing worth, you can create profit streams that pay you an income while you pursue other things in your life.
The obvious similarity with both these examples is that they require a significant cash input up-front, thereby excluding the majority of people looking to create passive revenue.
Books, songs or technology such as downloadable apps all have the potential to create passive income. You put the effort in upfront to create the product and then generate sales without any extra work.
I.e. You create the product once, build the sales funnel, (whether that be a website of your own where people purchase and download your product, or you go through an agent who takes a percentage for handling the marketing effort) and providing you’ve put significant effort into marketing or driving traffic to your website, then you have passive income.
And remember, we live in a 24 hour a day connected world. So while you are asleep or sat on a beach somewhere, there may be people purchasing your products without you doing anything extra.
Now that’s passive income…
However, I’ve saved the best until last, and that’s Affiliate Marketing.
Affiliate Marketing takes the concept of passive income as described above, but with a very positive spin.
Instead of creating your own products, training or services to sell online or through social media etc, you take the same concept and sell someody else’s products instead.
But why would you want to make somebody else rich on the back of all your hard work?
Because it’s a win/win situation for both parties. Somebody else goes to the trouble and expenses of creating superb high quality products, but in return for you recommeding the product the product creator splits the profit with you when a sale is made.
In some cases this can be as much as 75% of the sale for downloadable products such as ebooks or training.
There is no shortage of high quality goods or products to promote, so you don’t ever have to worry about creating your own products or holding any stock.
When you’re business gets established then you may want to create your own products and receive 100% of the sale. But for now the beauty of this form of business is that you can set up as many affiliate promotions or websites as you can manage with each one being a separate income stream.
Your primary job is to become a communicator of information, and an introducer to the solution…
You can run this type of business from anywhere in the world and without the cost of an office or staff.
It’s the perfect way to get into Passive Income.
But I’ve no experience on where to start or how to build a website.
As with anything in life, you rarely know how anything works from the get go.
There’s only two ways to learn. Trial and error (the hard way) or have somebody show you.(the easy way)
Trial and error is fine but it can be costly, very time consuming and most people end up doing it wrong and earning nothing.
Having somebody show you how to do it, and how to do it correctly can save you months, or even years of frustration and cost. And it’s always the difference between making no money and some money, or some money and lots of money.
I work with a training organisation called Wealthy Affiliate.
Wealthy affiliate isn’t a business opportunity and will not try to sell you anything or allow other members to sell you anything.
It is an online training platform that teaches you how to build small micro websites especially geared towards affiliate marketing. It also teaches you the concept behind successful affiliate marketing, and best of all it hosts your websites too so that you can manage your business from one platform.
In fact you can launch a website and have it online in under 30 seconds, so imagine how many affiliate marketing campaigns you could set up.
And no, you don’t need any prior knowledge of building websites. It’s all done for you with a few clicks of your mouse, plus there’s countless hours of training videos and material on how to get started with your first website.
Not only that, but by joining WA through this website you will get my personal attention to help you get started with your first website so you get it right.
Read more about me HERE. Paul and OneNetBiz
How much does it cost to join WA and get started?
There is no cost to join Wealthy Affiliate and access all of the training, web building and hosting, but there is a very modest monthly fee if you wish to become a premium member
You can read my full review and honest opinion of Wealthy Affiliate, along with options and prices Here
You can start as a FREE Member to try it out and see if it’s a good fit.
You can build and host 2 websites, plus access the initial training modules.
You are not required to provide any credit card details or commit to anything, and you are free to leave at any time.
So to answer the question ‘What is the best form of Passive Income?’, then the answer is a resounding thumbs up for affiliate marketing, and it’s far, far easier than you think.
So What’s Holding You Back?
Is something holding you back, paralyzing or freezing you from taking action?
You know you have to do something to change your situation, right?
You also know what you need to do.
But in 6-months time you’ll likely be in a worse situation than you are today because you’ve been undermined by your own fear and scepticism.
Don’t worry, it happens to everybody at some point. You just need to learn how to get over it.
Watch the video below and take inspiration.
Then you can and you will earn all the money you want, deserve and desire.