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Is Passive Income Really Passive?

Imagine if you could earn money simply by sitting back and doing nothing. The opportunity to make money while we sleep is one few of us would turn down. And passive income, at face value, suggests we can do just that.

Imagine if you could earn money simply by sitting back and doing nothing. The opportunity to make money while we sleep is one few of us would turn down. And passive income, at face value, suggests we can do just that.

There Is No Real Definition of Passive

Keep in mind that there’s no clear point where income turns passive. For some, it could be when no work or upkeep is required, or for others, it could be when a minimal amount of work each week is required.

We all have this fantasy of sitting back and doing nothing to earn a living. But life doesn’t work like that, and neither does any profitable, ongoing, sustainable, valuable business.

In Order to Earn, Be Ready to Work

Earning money without working for it may sound too good to be true, and there is a catch. Passive income doesn’t materialize on its own; it requires an up-front investment of time and money.

Investing money you inherited or won in a lottery may be the only path to truly passive income, start to finish. But for most of us, creating this new revenue stream will involve investing money made from more traditional means like a job, or investing our time building a source of income from the ground up.

Is It Really Worth It?

There’s no promise your investment, whether that’s time or money, will pay off. Inevitably, there is risk involved. It’s a myth that passive income requires no work. However, much of that work is done at the start so you can enjoy the cash flows later with less effort.

Invest in a reputable dividend stock, and you don’t have to do much at all. Just oversee your position, and you might collect a 2% or 3% yield on your investment for many years, while a small-business launch, which could have much larger return potential, typically requires much more time and energy. You could put in full-time hours for months before the business is stable enough for you to step back from the front lines.

Hearing about other peoples’ achievements can trigger that fear of missing out on a good thing, but remember that there is no such thing as an overnight success.

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