One of the most common misconceptions about passive income is that it’s just that: Once you get the ball rolling, money just keeps coming with little or no effort. While passive income investments can live up to its literal definition, there’s nearly always more going on behind the scenes.
Most successful investors expect to invest their time as well as money to reach the point where the financial return starts paying dividends. Ventures that are successful without much effort are few and far between. The notable exception may be Gary Dahl, an advertising executive, who made about $6 million selling pet rocks in a short period.
Even so, Mr. Dahl had to invest in their packaging and the 32-page care and feeding instruction book each came with, not to mention the dues he paid in his advertising career to reach the point of being able to make that kind of money off practically nothing.
But it is possible to enter an endeavor and move it to the point where the amount of effort associated with income generation is minimal. As you investigate money-making opportunities, do so with these guidelines in mind:
How to Make Sure Your Passive Income Investments Stay Passive
Choose Something You Like
Work you enjoy doesn’t always feel like work. Identify the things that you’re passionate about or believe in. Instead of regarding the work as drudgery, the time you spend will be reward you emotionally as well as financially.
Associate With Others Who Are Like-Minded
For starters, working in a vacuum isn’t the natural tendency for people. No matter how loosely the group is organized, others provide valuable insight and their experience might you save considerable time as you go through the learning curve. Print and online publications, newsletters and even podcasts connect you to the larger world where you can learn from others, and networking locally is always valuable.
Spend Money to Make It
When you treat your time as money, it’s easier to separate out those activities that aren’t worth it to you to do yourself and those you fundamentally enjoy doing, or can do more easily than anyone else. Nearly all ventures that generate passive income also require assistance from others.
- People who earn a passive income from buying and holding real estate often use professional property management companies to take care of the day-to-day work associated with the property. This approach is easier and more profitable than going through the actual processes associated with property acquisition, leasing and ongoing maintenance.
- Another activities that passive investors often shift to someone else lie in accounting. CPAs not only to reduce the workload, they also have expertise in financial matters, especially for tax purposes.
- Accessing capital is another area where it’s more effective to use professionals. Putting together a business plan and all the financials it requires is another area where someone else’s expertise would actually cost less (in both money and time) than going through the process yourself.
As you develop your ideas to generate greater income, look at its elements to see which require your expertise, and those that would be best left to someone else. Counting on the help of others along the way will help you reach the point where you will truly be able to sit back, relax, and enjoy your life.
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