The 2 words “Passive Income” has been the craze for quite some time. Thoughts of going on a vacation to the beaches in Bali, lying on a hammock under the coconut tree, can seem very appealing to many of us.
However, the reality of passive income is that you still need to put in the time to ensure that the income you get remains passive.
These are the 5 things you never knew about creating passive income. Hint: it’s not as passive as you think it is!
1) There Is No Such Thing As PURE Passive IncomeSorry to burst your bubble folks. But there is no such thing as PURE passive income. Passive income requires a lot of hard work and capital at the same time.
Did you think that Facebook was an overnight success? Or how about Snapchat?
Truth is, there has been a lot going on behind the scenes before these companies became big enough to generate passive income. It takes a lot of hard work before you can actually reap the rewards.
That is why there is no such thing as pure passive income because it always requires effort.
2) Passive Income Is All About Automation
In order to truly get passive income, you need to automate your workflow. No matter how you get your passive income, be it real estate or stock investments, you need to ensure that it stays automated.
One way to do this is to get a real estate manager or a stock broker to execute your strategies. Getting someone else to do it will free up more time on your side, hence automating the passive income process.
3) Always Factor In RisksIf you are a landlord, the reality is, you need to factor in a lot of other moving parts. For instance, getting the yield on rent is not simply the monthly rent times 12.
You need to account for spoiled furniture, late payment by tenants etc. If you had calculated that the initial yield is 6%, you may want to factor in a margin for risks. So in the end, you may only have 4% yield.
4) Understand Your Market
If you are a website owner, you want to understand your market. This could be their fears, their dreams, or what they want to achieve. Learn what their needs are and cater to them.
Don’t see other people in the same niche as competition. Instead, look at them as a support network, helping each other out. Also, there is no such thing as a one size fits all.
Don’t try to sell to everybody. Define your market and its demographics. By understanding your market, it makes it easier to create passive income.
5) Get Creative With Savings StrategiesThere are many creative ways to go about saving money. However, one of the best ways to save would be to live below your means. This is much easier than trying to earn more money.
This is because living below your means is something that you can easily control.
Whereas earning more money is dependent on a lot of external factors such as whether your boss is happy with your work, whether you can meet sales targets and etc.