The promise of ‘Passive Income’ has been used by many internet marketers to lure millions of opportunity seekers online to part with their hard earned money but few have ever delivered on that promise. Let me share my thoughts with you and you can decide if it makes any sense at all.
So…
WHAT IS ‘PASSIVE INCOME’ ?
For most people, there are fundamentally 2 types of income:
- Earned Income – where you trade time for money – which is flat linear income, and if you stop working, so does the income.
- Passive Income – where you do not trade time for money – you do the work once and you get paid over and over again.
BUT…
There is a 3rd type of income which I call ‘Progressive Passive Income‘ – this is leveraged income and it is what I am passionate about.
Let’s not waste any time on ‘Earned Income‘ – we all know what it is and there’s really no prospect of ever living ‘The Freedom Lifestyle‘ with it; not unless you’re willing to work hard and save for at least 40 years! If that’s you, leave now because you’ve got work to do!
So…
How does one create ‘Passive Income’ ?
Firstly, although many types of income are referred to as passive income, in reality, most are not really 100% passive, with most being semi-passive at best.
Examples of semi-passive income include income derived from blogging, affiliate marketing, online investments, online lending, etc. They are not totally hands-off and you’ll still need to be continually and directly involved in some capacity if the income level is to be maintained.
On the other hand, real passive income is where you continually derive a steady regular income with literally no involvement from you, except for an initial effort to get it all kick-started.
So, if you had a choice, what income would you prefer?
Real passive income, right? Of course it would be!
For every type of passive income, there are 2 important aspects that need to be considered:
- How much will it cost to get to that level of passive income?
- How long will it take before that level of passive income can be achieved?
These are critical questions because a lot of people who want to or need to make money online are usually already facing financial cash flow problems and have little to no spare cash for anything else in their lives except for survival.
They certainly cannot afford to have to work hard on something for another 9 – 12 months before they can generate a meaningful level of income. They want to be able to get started with a minimal outlay and be able to start generating income within days, not weeks or months.
Unfortunately, most types of passive income cannot deliver as needed and we’ll scrutinize some of them mentioned above to ascertain the reasons.
Let’s start with…
Blogging
Yes, without a doubt you can make money from a blog – a lot of people are doing it. However, the number of bloggers that have actually achieved sufficient passive income to live ‘The Freedom Lifestyle’ are probably quite low. Blogging income takes time and effort! And with blogging, you must love writing. If you can’t write or hate writing then blogging is out.
If you plan on starting a blog to make money online…
- you will need to learn how to setup a blog (probably using WordPress)
- you will need to register a suitable domain name
- you will need to identify a popular and profitable niche to blog about
- you will need to be passionate about the subject and have useful information to share with your readers
- you will need to be disciplined and committed to publishing new posts on a regular basis
- you will need to have a way to capture leads to build an email list
- you will need to consistently drive targeted traffic to your blog
- and last but not least, you will need to find a way to monetize eg. create and sell an eBook or course, or earn affiliate commissions by reviewing and recommending affiliated products, or earn from display ads served on your blog
So, be honest and ask yourself – how many of those things in the list above can you do right now?
Yes, you can spend time watching and learning from thousands of free YouTube videos by so-called “blogging gurus”, or you can pay someone to help you. But, do you have any budget available to get professional help?
We’re not talking about a few dollars here. To achieve all the above, there are professional blogging courses that cost $2,000 or more! Yep…shocking! How that is going to help someone who is already strapped for cash I’ll never understand – it’s a cruel world!
And even after attending those courses, which do not even guarantee that you will ever achieve the level of income you were hoping to achieve, you are still expected to work hard for months before you are anywhere near earning a basic $1,000 a month. Sounds like a really tough gig if you ask me.
Don’t get me wrong – if you do everything right and got lucky, you could in essence achieve anything between $5,000 to as much as $150,000 or more each month from your blog. But do you feel that lucky? Most people don’t and it is therefore hardly surprising that many bloggers give up after a few weeks with little to show for their efforts.
Next up…
Affiliate Marketing
I am sure you have come across countless YouTube videos with titles such as “How I made $28,076 a month with Affiliate Marketing” or “How I made $10,000 in my 1st month with Affiliate Marketing” and all the presenter shows you is the same re-hashed bullshit you have seen a hundred times before.
There are no deep dark secrets to success. With affiliate marketing, you just need to follow this proven strategy:
- you need a website or a blog that publishes relevant content in a specific niche
- you need to become an affiliate for a few products in your niche
- you need to write reviews about these products and insert your affiliate links within these reviews
- you need to drive targeted traffic to your website or blog and when your visitors click on your affiliate links to make a purchase you earn affiliate commissions
- you need to have a lead capture mechanism on your website or blog to build an email list
- you need to regularly email your list to nurture and build a good relationship with your subscribers
- you need to continuously look for new products or services to review and occasionally promote them to your email subscribers and when they make a purchase you get paid
Again, how many of those things above can you do right now?
How many free YouTube videos have you watched and yet remain confused about how affiliate marketing really works? How many of those income claims on YouTube do you really trust?
The truth is, Yes! Affiliate Marketing does work and you can make a lot of money from it but the path to success is far from easy and certainly not free.
Almost ALL successful affiliate marketers have a size-able budget to throw at advertising on Google, Facebook, Instagram, Pinterest, or some other advertising network to drive targeted traffic to their offer pages.
They have worked out that, based on a specific keyword that cost them say $1 a click, if they get 20 clicks they can get one sale where they can earn maybe $50 per sale. So for every $20 spent they can $50 back – a profit of $30 – not bad at all!
Hence, professional internet marketers often invest $1,500 or more into a campaign because they know what they can get back for their investment. Most people starting out do not have such budgets and if you think you can just start small with say $25 – $50 to give it a go, you should, instead, buy some fireworks where you will at least get some real bang for your money, as it is highly unlikely you will see any returns from online advertising. In Fact, if you do not have at least $500 – $1,000, it will just be a complete waste of money.
Listen…
I really am not trying to make you feel depressed or put you off blogging or affiliate marketing. I just want you to appreciate that blogging and affiliate marketing both require money and continuous effort even after you have built a respectable monthly income and if you let your guard down, the income will plummet and you’ll have to do it all over again. That’s NOT the kind of passive income I am interested in.
Next up…
eBook Membership Websites
Over the years I have tried creating passive income that can be self-sustaining. One idea I had was to sell premium content via a membership website whereby I do do the work once and earn forever. As always, I still had to drive targeted traffic and build an email list and it worked quite well. There was, however, a major problem.
When I started, I simply published my eBooks in downloadable PDF format, and that was a huge mistake, and many eBook publishers are still making this mistake today.
PDF files offer absolutely no security and your intellectual property rights are not protected at all. You spend thousands of hours researching the topic to write that eBook and then offer it as PDF download. You spend time and money to promote your newly published eBook. You start generating brisk sales but after a while you suddenly notice a sharp drop in sales. What happened?
Casual piracy, that’s what!
Often, customers innocently and illegally share PDF files they purchased without thinking how it affects the author. When I first published my first eBook in the PDF format, sales reached about $10,000 in the first couple of weeks and then dropped sharply and I immediately knew the cause of that sudden drop.
It was too late to change the publication format and it was a lesson learnt. After that, I switched to the 3D page-flipping format where my intellectual property rights are better protected and I have never looked back since. I still have eBooks I wrote over a decade ago that are still generating income for me today!
eBook Membership websites can help you create passive income but the income is, from my experience, quite unpredictable. It is also not really 100% hands-off – more like 90% hands-off but close enough. However, it is quite difficult to generate a steady $5,000 – $15,000 a month that is required to live ‘The Freedom Lifestyle’ and it is definitely not something that can be achieved in a short space of time.
Finally…
Progressive Passive Income