The Smart Passive Income Guide (2015)

Chapter 2: The Truth about Passive Income



Many people have heard about passive incomes. They hear the stories about how people are able to become rich in no time and often they think that very little, if any, work is involved. Honestly, these are the kinds of people who get taken advantage of when it comes to the passive income game and often they will be the ones who get in a lot of trouble and lose all of their money. These beliefs are prevalent in so many people that the market is becoming saturated with new people who are excited to make the money. However, since many of these people are not ready for the work and investment involved in earning a passive income, they will soon drop out and just those who are serious about the work will stick with it.


This chapter is going to talk about some of the common thoughts about passive income that most people have, but which are usually way off the mark. It will then go into some of the realities about passive income and the hard work that is involved in the process.



Common Misconceived Thoughts about Passive Income



As mentioned above, there are a lot of different thoughts which people have when it comes to earning a passive income. They may have heard some things from their friends or family about passive income. Often this information is from a friend of a friend, so it may not be based on first or even second-hand experiences. The fact is, this is actually better than the information many other people are going on; they might be relying on something they heard in a YouTube video or from a website about all of the benefits that come from passive income. This is dangerous because most of the claims made on these kinds of mediums are false. They lead you to believe the work is easy, but often they are just trying to take your money.


Because of all of the confusion about what passive income is and how it works, there are many notions about it that are false. This section is going to look at some of the misconceived thoughts about passive income that might be the reason why so many people fail when trying to gain one.






The first thought that most people have about passive incomes is that they are easy. This might be a combination of the things they have heard in the past, as well as connotations that are brought up by the name itself. Most people have the idea that when they are making a passive income, they will take a few hours to do the work, pay a little bit of money, and then they will be all set to make a lot of money for the rest of their lives without having to do anything else except receive  their checks each month. And this is the reason that so many of them get taken advantage of by the flashing lights on a website.


Passive income is more like an alternative way for you to make money. It does not mean that you will not be working in order to get money; you just will not be going to a traditional 9 to 5 job in order to get a paycheck. You have to be able to multi-task, problem solve, and see trends in the market in order to get ahead of the game and keep the money coming in all of the time. The work will never be done—this is another reason that a lot of people fail. They are not ready for the risk, the dedication, and the time that they have to put into the entire process in order to make it big. Learn from their mistakes and you will have a much better chance of success.



Very Profitable



One reason that a lot of people will get into passive income is that they think they will be able to make a lot of money in a very short amount of time. While it is possible to make some good money with a passive income, it is not going to be something that will make you a million dollars overnight. It is something that will take you a lot of time and effort before you can even make a little bit of money. In fact, you might find that you will need to invest some of your own money to even get to that point.


It is important to remember that you need to be careful about what you are investing your money in when trying to earn a passive income. Yes, there are times that you will need to input some money to make a profit, but this does not mean you should not think it through and just hand out money left and right. For example, if you stumble across a website that you have never heard of which promises to give you the secrets to making millions a month if you just give them $200, you should probably stay away. They are just going to take your money and send you a video to convince you to send them more. They have found a good way to make a passive income by becoming rich off the desperation of others without being willing to put in the work like you are. On the other hand, if you want to start making a passive income on apartment buildings, you will have to put in some money to purchase a property, advertise the space, maintain it, and so on. Both situations involve money being spent at the outset, but one is going to make you money while the other is just going to lose you money.


If you are willing to put in the time and effort that is needed, it is possible to make a very good income by doing this. But it is not just going to happen overnight, and you will have to work quite a bit to achieve it. Plus, the work will continue and you will still have to show up and do something in order to make the passive income. For example, let’s go back and look at the apartment income option. You cannot purchase the apartments, clean them up, fill the vacancies, and then walk away and still make money. You have to go in and fix things if they break, answer questions and complaints, keep it looking nice, and fill up vacancies when someone moves out. Or you could get away with not doing this work by hiring someone else or letting the apartments fall into disarray. However, choosing this option is just going to end up with you having empty apartments you cannot fill and which are a money pit.


As you can see, it is possible to make quite a bit of money from passive income, but it is not a get rich quick scheme and it is something you will actually need to work hard at in order to achieve. However, it is a way to get some freedom and earn some financial success if you are able to do it in the correct way and work hard to get ahead.



Little Work



This is one of the areas where people are most likely to fail. They might be ready to dedicate some of the risk and some of the monetary investment, but they just are not ready to put in the time. They might have heard from someone that making a passive income is easy and that other than a few hours of work, they are not going to need to do anything for the paychecks to keep coming in. They think a passive income is like a hobby or something they can just spend some time on when they want to. When they get to actually doing the work, they are amazed at the effort they really need to go through in order to make any money. In some case, it's much less money than they were promised.


There is a lot of work that will need to be done in order to actually make the income you are looking for. It is not as easy as you might like and you will find that it might even be harder than the work you are doing. Plus, with the risks so high, you may not be able to make the same kind of money. It takes a certain kind of person and a certain kind of situation in order to make it big with a passive income, and although it would be nice to just go home and have a big fat check waiting for you without having to do the work, it just is not a reality that most people get to live with. If you want to make the money, you have to do the work.



The Reality of Making Passive Income



As you can probably imagine by this point, the realities of making a passive income are not as nice and rosy as many companies would like you to believe. If you find a company that is offering to help you make an easy passive income or tell you that there will not be much work involved, it might be in your best interests to run the other way! Anyone who has actually done passive income and who is not trying to steal all of your money will be able to tell you that it is a lot of work and that you will need to put in the time and effort in order to make it all come together.


There are some realities that will come with making a passive income. Most people do not start to realize these until they have started on their project.  Once they get started, they realize it is more work or money than they are willing and able to do or pay. Here are some of the crucial realities that come with making a passive income which you should know and understand before you get out there and start. These are not meant to put you off trying for a passive income. Rather, these tips are a way for you to understand what is actually going to happen with this stream of income, so that you can get those thoughts of easy money out of your head. It is possible to make money, but it is not going to be handed to you. If you are not ready for the risk, investment, and hard work, it is better to know that ahead of time before it ends in heartache.



Some of the realities you should be prepared for when it comes to passive income include:



It is not always easy — you will have to work hard in order to get the things that you want out of this source of income. The money is not going to be handed to you and you will not be able to sail away on your boat while others do all the hard work. If someone is telling you this, they just want to make money off you and you are the one financing their expensive trips all over the world. You have to be dedicated to the work and ready to put in the hours. Think of it as your own little business; you wouldn’t expect the business to be done and earning money in a short amount of time, and neither will your stream of passive income.


It is hard work — get ready for the long days and late nights. Unlike your regular job, there are no set hours and if something needs to be done, you have to take care of it. This is not a good venture for someone who just wants to be lazy or have things done for them. Sure, you can do it this way, but you probably will not be that happy with the results you get.


There will be an investment — this can mean many different things. You may need to invest your time, your energy, your money, or all three. But please be careful where the money goes. Just because someone is asking for your money does not mean you will be given everything as promised.


Risk — there are a lot of risks that come from making a passive income, and this is not always about the loss of money, although that could be a factor. It is risky to give up your current steady stream of income in order to make something happen. It is risky to give up the security you are used to, a job in this economy, and the health benefits or retirement fund you may have at your job. You may fail at the end; many people end up not seeing the results they were looking for. You have to realize that there is a risk in this kind of thing and without the right confidence and the right knowledge about the subject you may increase your risk of failure.


Potential of high income — you may be able to make some good money from getting a passive income, but not everyone will. Some people will back out before any money is spent. Others will lose a little bit of money in the process, while some will lose it all. Still others are going to find that they are making a little bit of money but not really enough to give up their other jobs or to get far ahead. It is those lucky ones who are able to plan ahead and make things work that are going to be able to potentially make a lot of money from all of this. Making a good passive income is going to take work. It is not always going to come to everyone who tries, but it is something that can happen.


As you can see, the realities of a passive income are quite a bit different than the thoughts and notions most people have about it. As mentioned above, these are not meant to scare, but to give you have a clearer idea on what a passive income entails so that rather than relying on the wrong information given by others, you will be more prepared for the work and for making the decision on whether this is the right income stream for you to pursue in the first place.