Not All Passive Income Flows Are Made Equal

By: ispeculatornew
Date posted: 05.28.2013 (3:00 am) | Write a Comment  (0 Comments)

      Post a Comment

In my quest to become financially independent as quickly as possible, I’ve been looking into many different types of passive income. Why? Because I’m trying to make sure that I depend as little as possible on having a full time job, on promises such as my government pensions, etc. I’m far from alone and I’m guessing that many of you are trying to do the exact same thing.

One dangerous thing to do though is simply trying to categorize every flow into 2 categories: passive or not.

It’s Not Black And White

Obviously, working a full time job where I get paid for every hour that I work is 0% passive right? The opposite might be having an annuity or pension that is paying me money every month, no matter what happens. That would be considered 100% passive.

I would argue that most income flows are somewhere in between. Investment cash flows (such as dividends) are very close to being 100% passive but they do require some work in re-balancing and monitoring the position.

My online company that generates a decent amount of money every month is also quite passive. But if stopped looking at my websites, writing on this blog, paying writers, renewing my domain names, etc. The income that is generated would gradually decrease and eventually become a fraction of what it is today.

I’ve also discussed ideas such as owning real estate which I plan on doing in the future. Again, I know several owners that rent out condos or houses but take little to no care of their buildings. The income remains but over time if renovations are not taken care of, good tenants found, etc.. that income can also dwindle.

So Does Passive Income Actually Exist?

I would argue that we should strive to make our income as “passive as possible”. It will likely never be completely hands off but if over time I’m able to:

-Have more employees in my web business and focus on things I enjoy that require less time.
-Have a fairly automated or simple process to manage my investments (or in some cases hire someone to do it)
-Have someone that can do most of the work on my buildings, collect rents, etc

I think it’s safe to say that my goal is not only to increase my passive income and make it as diversified as possible but also to try to make that income as passive as possible over the years.

If you liked this post, you can consider subscribing to our free newsletters here

No Comments

No comments yet.

RSS feed for comments on this post.

Sorry, the comment form is closed at this time.