#90 – Does Passive Income Really Exist?

What you will learn

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Why there is no such thing as 100% passive income
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Why you need to work on your business not in your business
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How to leverage your time by hiring people, creating systems or using services
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Why you have to have real passion to build a successful site rather than just not wanting to work in a cubicle

Many internet marketers dream of laying back in a hammock on a tropical island somewhere, sipping Piña Coladas with their phone in one hand watching the money roll in.

But is passive income even a real thing or has you been conned by Tim Ferriss and The 4 Hour Work Week?

In this week’s podcast, Perrin and Mark discuss the concept of passive income to show why it isn’t really a thing.
What is Passive Income?
The idea of passive income is earning money without doing anything.

With authority sites, this looks like setting up a site until it makes a couple of thousand dollars per month and then sitting back as the money comes in each month.

But, we find this doesn’t tend to be the case. For Mark and Perrin, there is no truly passive income.

Here are some examples:

* Earning Interest - You still need to be aware of the political climate and be ready to move your money if there happens to be a risk (as the people of Cyprus found out back in 2013).
* Dividends from Stocks - You need you to understand the market, keep an eye on performance, know if the stock is undervalued or overvalued and know when the right time to sell is/
* Renting Property - The property needs to be maintained, furnished, you need to find a tenant and collect rent every month.

None of these income streams are truly passive. The same goes for online marketing. There are varying degrees of passiveness but you will not find any income stream that is 100% passive.

In internet marketing, it is used as a sales tool. If you tell anyone that they can make a lot of money without doing very much work, they will be interested. It’s little wonder The 4 Hour Work Week has sold over 1.3m copies.

The Four Hour Work Week

For Perrin, a more realistic definition of passive income is that you are no longer trading your time for money.

He built his first site to a point where it was making $1,300 per month and at this point he no longer needed to do any work on it. He could collect $1,300 at the end of each month.

This meant he no longer had to work but if he did do more work, he could make more money.

Like almost everyone we know, when Perrin had the opportunity to not do anything he chose to work on his site and grow it. That is because people tend to care about the things that they have built.

This is different to working a job for $15 per hour. To make more money, you simply work more hours. However, at some point you hit a ceiling where you cannot work anymore hours.

In order to increase your income, you need to leverage your time. This may be hiring people to do things so that you can focus on the higher value tasks that can create more income.

The book Rich Dad, Poor Dad talks about building assets that generate income rather than just generating income yourself as a means to get rich.