What I’m about to say might throw you for a loop.
I’m sure you’ve been chasing a passive income for some time, or perhaps just starting your quest. I don’t need to tell you there are limited hours in the day to earn, and I’m sure you’ve read one too many posts about “making money while you sleep” being the holy grail.
I just don’t think that’s truly what you’re looking for. Let me explain.
I was having lunch with a business associate of mine a few days back. We talked about the real estate market, about dividends and bonds, and of course, the upcoming Superbowl. He was telling me about his passive income streams over the past year – how they’d performed and what his strategies were for 2017. I shared mine as well.
He achieved an 11% return passively – which is nothing to balk at, but still, rather unexciting.
And he knew it as he asked me this:
“Had I taken that same money I’d invested and pursued the home staging company I’ve always wanted, would I have achieved a 30% return? Maybe even 40% or 50%? Even with the time investment, I probably would have been better off”.
And much more fulfilled – I could tell by the look on his face.
This made me think.
I get it. You’re looking for a passive income because perhaps you don’t have the time to invest. You may not have money to invest either, which is perfectly fine.
The passive income you’re pursuing requires low investment all around and a return that will pay your bills each month – but does that exist?
There are 3 things that people often get wrong about passive income:
1. Passive income does not mean you don’t have to invest…in some way.
Making money and side hustles are interesting – like most things in life, you get what you put into them. The measure of success is being able to put in less but receive more. That’s the magic formula.
The more you invest from the start (time, money, or both), the better the chances to earn an income you can live off of. But the initial investment is significant in either case.
2. You’re not going to “get rich quick” through a passive income.
There are no passive income streams to my knowledge that will allow you to flip a switch and start cashing monster checks. If you do happen to find one, let me know.
I believe you can earn a significant income relatively passively, but it’s not going to happen overnight. Maybe not even in a year or two.
3. A passive income will get you the best possible ROI. Because it’s passive, of course.
If you read the previous points above, you’ll realize this can’t actually be the case. Your passive income is going to take a significant investment either upfront, or throughout your income journey. You can take that to the bank.
Based on this, I’ve discovered the best way to maximize your earning potential is not through a passive income, but rather, a passion income that becomes passive.
It’s backed by this simple truth…
If you have to put in work anyway, shouldn’t it be towards something you love? Wouldn’t you prefer to be in a position to work as much or as little as you like down the road – and enjoy every minute of it?
It’s time we looked at passive income differently.
Rather than a set it and forget it approach, think about what you can build today that you’d also love to work on in the future. The goal is still to work less, and make more, but why not enrich the “work” part of it all?
The fact is, it’s inevitable.
These 3 incredible things happen when you pursue a passion income:
1. Your productivity increases exponentially.
This means that you’re able to do more in less time, and that the quality and output of your work, is enhanced. This is essentially achieving the best possible ROI for your time.
I don’t need to tell you how difficult it is to squeeze the side hustle into your day. If you’re passionate about building a business that can be passive in the future, you’ve removed any ceiling to your success.
2. You minimize your competition.
Passion is a differentiator. It’s why people choose to buy from salesperson A and not from salesperson B. It’s why people choose to follow certain blogs (I’ve listed a few below), subscribe to their mailing lists, and listen to every word they have to say.
Pursue a rewarding income and your work will stand out in every way. I talk more about how one of the keys to mastering your side hustle is playing to your passion, here.
3. You have the ability to create a passive income.
It’s really that simple.
There are so many examples of people who created earnings from passion and now have the ability to be entirely passive, here are just a few:
- Tim Ferriss and his extremely popular Four Hour Workweek blog.
- Ramit Sethi with I Will Teach You To Be Rich.
- Brett McKay and his remarkable site – The Art of Manliness.
- Ree Drummond and her highly successful The Pioneer Woman blog.
I could easily go on.
Yes, these success stories have continued working at their craft, but they’ve also created the freedom to work on their own terms. They love what they do.
So the next time you’re reading a post about an insanely fast way to achieve passive income, take a step back for a second. Measure the investment.
If the only thing you’re loving is the return, you might be better off with 11% on a dividend or bond.
After I had left lunch with my associate and he shared his 2017 plan, it had never been more clear that passive income is really just the end goal. Passion income is what gets you there.
That’s the holy grail.