The ugly truth about passive income
You hear a lot online about passive income, but is it really that promising as those 'gurus' tell you?I discuss in this article the ugly truth about passive income.
But don't get demotivated: if I can do it, you certainly can do it.
Passive income is an income stream that is kind of self-sustaining, once you've set it up, it keeps on generating money. Sounds perfect, isn't it?
If you believe those Lamborgini Youtubers, you can become a millionaire in one month by only buying their course. Let me tell you, the only people who get rich from it are the influencers. But they are right; creating a million-dollar passive income stream is easy: selling courses to ignorant people is a passive income stream.
Seriously, if it were that easy, everybody would be a millionaire, right?
I'm an honest person, and I only tell the hard reality: setting up a passive income stream isn't easy at all. But once you've got it rolling, it will be very rewarding.Passive is not passive at all
It takes lots of time to set up a passive income stream. No matter what idea you have, it will take a big amount of your time. Making an online shop, creating a course, writing a blog, etc., all require lots of your precious time, time that you can use for other stuff.
And even if you have created a 'successful' passive income stream, you also need to maintain it. You need to answer emails, rewrite or adjust content, and researchNote from the author: I had to list around 100 items before my (digital) Etsy shop became profitable. And every item took me around 1 hour to create. If you do the math, it's more than four entire days of non-stop working.
And even now, I spend one to 2 hours weekly on maintenance and creating new items. And that for $120 per month.
The only real passive income streams are dividends, rental income, and capital gains. But these require a big initial investment to earn anything meaningful.
Note from the author: I have a dividend portfolio, which gives me a total yearly yield of 6.5%, which I reinvest in buying new stocks. I don't look at that portfolio, I just let it grow, and every three months, I buy some new stock with the dividends I received (I receive around $150 in dividends per month)
Hidden costs
Setting up and maintaining a passive income stream is not only time-consuming but there are also many hidden costs people don't see when they start.
Time equals money, this is also true for passive income. Designing your website, writing your first 20 blogs, creating art, writing and recording a course... it all takes time. The time you could have spent on a side job (Fiverr, freelance, etc.), and you'll be surprised when you calculate the money you would have earned via this side job.
Not only are there the initial 'hidden' costs, but you also have to pay for hosting and maybe a logo or templates. This all adds up.
You still haven't earned any money yet, only expenses. If you want to get an audience or buyers for your course ... you will have to advertise on different platforms, which also costs you money. You will use online tools, you will use paid software, ...
And this is not all: the first months, your revenue will be around 0$, and there is no guarantee that you will ever make an income from it.
You need to be an expert
Okay, you created your first product, wrote your first blog, published your first YouTube video, and got your first viewers or clients.
The purpose is to gather a big audience or clientele, which you can only do when you stand out as an expert in your field.
There is so much competition; people can choose from a large variety of products nowadays. You have to ensure they keep coming back, and you can only do this by delivering quality. To deliver quality, you need to be an expert.
Being an expert doesn't mean you will get clients or visitors; you also need to add value or something extra. If you have a product nobody wants, it is worth $0. So, you also have to market your product so that people want it.
As you see, you not only need to be an expert in what you do; you also need to be very good in marketing, social media, PR, networking, ...
You are a business on your own, where you are in all the divisions. You not only deliver the product, you also have to make sure it sells, do the follow-up, answer emails, ...
