Passive Income has become increasingly popular over the last few years. Having a look at Google Trends, you can see the relative popularity has increased steadily over the last ten years. The following graph was captured the day this article was written (May 2016) and shows how popular this Google Search Term has become:
It seems more people want to be able to make money whilst sipping cocktails on the beach. And whilst this idea is theoretically possible, passive income rarely delivers a luxury lifestyle with no effort whatsoever. Instead, it is best thought of as a top up to compliment your main source of income and to help reduce burdensome mortgages and other life expenses. This is how passive income supplements my income and is used to help accelerate the rate in which my mortgage is paid off.
Passive Income Fundamentals
The first thing everyone needs to know about passive income is that work is required up front, maintenance is often required and to make a profit, you need to earn more than you spend on creating your passive income stream. This all may sound easy, but you’ll typically find to start off with you spend more than you generate to get things off the ground. And without the right kind of motivation, you may give up and end up losing any start-up investment.
Diverse Passive Income Streams
It is best not to put all of your eggs into one basket. When one stream is performing well, it may be supporting other less established streams, or providing you with the capital to develop new streams and scale your ideas. Diversifying means that you are less likely to lose everything if one stream performs poorly. For instance, if you have a stream of income which depends upon organic Google search traffic and the search algorithm changes, then having a passive income stream dependent upon Facebook might save your bacon. Being as nothing is guaranteed, you can take out your own insurance policies by having diverse passive income streams and keeping them all ticking over.
Others Can Help
You may be put off by the sheer amount of work involved in setting up your income streams. Don’t fret as you can always outsource some or all of the work to others. Before you do this though, you will need to have a clear idea about who you want to do your bidding and how they will go about it. The use of Fiverr and other freelance sites can help you get things done quicker, however you should spend time working out whether the work done by others is going to need lots of additional input from you.
Tim Ferriss in his book the Four Hour Work Week writes a lot about using virtual assistants and making the most of their capabilities. To make these pay you need to have first worked out whether your money making stream is going to generate enough income to cover all of these costs. And, again you need to be careful when selecting someone who will work under your brand.