Creating a Passive Income

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What are Passive Income Opportunities?

First let’s look at a few definitions for “Passive Income:…

This one comes from Dave Ramsey:

“Passive income is money you earn in a way that requires little to no daily effort to maintain. Some passive income ideas—like renting out property or building a blog—may take some work to get up and running, but they could eventually earn you money while you sleep”.

For those of you who do not know Dave Ramsey, he is a popular Radio Host who helps people with creating aggressive and realistic financial goals. He hosts a show call “The Dave Ramsey Show” and has a website www.DaveRamsey.com.

The MotleyFool.com defines how passive income works  as “You make an initial investment, which generally requires you to not only put up some money, but do some legwork or research. But from that point on, you sit back and enjoy an income stream without having to make any more of a substantial effort.”

Now based on these very highly regarded websites, we can put in an inital investment of time, effort and perhaps money and then sit sack, relax and reap the rewards for our hard work.  That is to say, you continue to earn an income with little to no ongoing work or investment.

earn an income onlineThis is where I will have to agree to disagreeWhile it might be true that “passive income” has earned the common definition of “income with little to no effort”, those of us that have actually achieved it know full well that it requires continued effort to maintain.

I want to briefly talk about the Three Rules of Creating an Income Online.  This is the first time I have added these rules in a post, but you will hear me talk about these often:

  • Number 1: Establishing a web presence takes time (6 months to 2 years).
  • Number 2: Creating value for your customers takes effort.
  • Number 3: Quitting guarantees failure, Perseverance guarantees Success.

As I have mentioned before, you will succeed at this type business if you give it the time and effort if requires.  Unfortunately, 90% of the people who attempt to earn an income online, quit before they see much in the way of results.  In fact, I have heard several stories about people who have built sites, left them sit idle for several months only to come back and realize that the site actually has traffic and in some cases earned an income.

This business is just like any other business in that it will require some investment of resources.

More about how this business compares to others soon……

Types of Passive Income

what is a passive incomeI want to spend some time, talking about the types of businesses that generate a passive income.  This will help us to understand the concept a bit more.

Investing in the Stock Market – I believe that investing in the stock market can be a great source of residual income.  If you invest your money well and the stocks you purchase, increase in value, you can sell them at the higher price and earn a profit.  Also, if the companies who’s stock you purchased pay a dividend to the stock holders, you will also profit from the dividend.

Generally, investing doesn’t take a whole lot of effort.  You may do some up front investigating or research and you of course need to make an initial investment, but beyond that you just sit back and wait for the price to go up.  In some cases you may even pay someone else to manage the investment for you.  But of course this plan does not work if the stock you purchase does not increase in value or worse yet, decreases in value.

  • Investment of resources: Research time and effort, substantial money
  • Expected source of income: Increased value and dividends
  • Potential for success: Based on several sources, 50% – 80% based on experience
  • Risk: Potential to lose entire investment

Installing Alarm Systems – How do you think companies like ADT or Slomin’s Shield can afford to install a “FREE” alarm system in your home?  The answer is “Residual Income”. And when each project is looked at individually these organizations rely on passive income.

When an alarm company comes into your house and offers to install a free alarm system with monitoring they will likely want you to sign a long term contract.  So the monthly payments of $65 for a period of three years,  will far exceed the cost of the system.  So even if the system cost is $750 the unit will be paid for in the first year and the next two years are mostly residual income for the company.

  • Investment of resources: Alarm system cost, installation and overhead
  • Expected source of income: Continued installment payments 
  • Potential for success: Return is low, success based on number of customers
  • Risk: Potential to lose entire investment

Lending Money / Saving Money – Banks earn passive income from money they lend in the form of loans and then charging interest on the money as it’s paid back.  The bank doesn’t really spend a lot of time or energy earning the money, they simply lend it to someone and then wait for the payment to come in.  This of course doesn’t work out so well when the money doesn’t come back.

passive income online

This works both ways of course, you can lend the bank money in the way of savings.  When you put money in the bank it does not just sit there in the vault, like you might think.  The bank uses your money and lends it to other people.  In return for using your money the bank will pay you interest, of course it will be much less than the interest they charge others.

  • Investment of resources: Cold hard cash
  • Expected source of income: Interest payments and other service charges 
  • Potential for success: Return is low, success based on number of customers
  • Risk: Customers may default on loan

In each of these examples, the organization invests a certain amount of resources and with time expects that the effort will return a profit, which if done often will generate a nice income.  The examples I have provided here have many similarities to generating a passive income online, with a few exceptions worth noting.

Why Should I Generate a Passive Income Online?

This is where we get to the meat of our topic, creating a business that generates a passive income online.  There are a few “undeniable” reason to pursue this type of business over any other.  That’s right I said you should pursue this type of business regardless of your current method of earning a living.  Here’s why:

Generate a Passive IncomeVery low monetary investment required – It is possible to create, maintain and grow a presence online with zero money invested.  Don’t get me wrong, it certainly makes things tougher, but it’s possible.

The question you should be asking right now is “OK. Glenn how much will it realistically cost to get started?”

And of course my long answer is “It depends”, but I will say this…

You can make a serious effort at creating an online presence with all necessary tools at your disposal for less than $500 per year.  And you can expedite your efforts substantially with a $1,000 per year investment.  And get this, you can pay in monthly installments, so for just over $40 a month, you can make this happen.

Passive Income Opportunities Work!Now, let’s get to the “It Depends” answer.  At some point, you are going to look for ways to speed things up, maybe re-invest some earnings in an attempt to double your returns.  So in that case you will be spending more to make more and we will certainly talk about ways to do that.  IT ABSOLUTELY WORKS.

Extremely high potential for success – It’s important that you remember this one thing, and I will bold it, put in quotations and give this statement it’s very own line on this page:

“The probability of success for creating a passive income online is entirely up to you.”

Honestly the probability of success for this type of business is very high, nearly 100%.  Yep, once again I said it and I understand if you don’t want to believe it, I was skeptical myself.  Quite frankly I still have a tough time believing this is all happening, but anyway…

The ONLY obstacle, the one single thing that stands between you and a successful passive income source is YOU.

Earn while you learn – I know you have heard this before, but in this case it is 100% true.  You will earn as you build your business.  Now think about this seriously, if you try to start a Coffee Shop, invest 25 – 50K, with no experience, in an attempt to create a secondary income, YOU WILL FAIL.  And you will likely lose your entire investment.

I am suggesting that with a with a minimal investment (say less than the price of one casual dinner for two per month)…  You can learn how to, with no experience necessary, create and maintain an online business which generates a passive income.

Personal Mentor BonusYou will have a Personal Mentor and Coach – I will help you succeed, plain and simple.  I will not do the work for you (actually I will, for a price), but I will help you every step of the way and ***BONUS TIME***, I will show you where you can find others, a whole team, a whole community of like minded people who are willing to help.

Reader’s Digest Version

A Passive Income is created when you put in an initial investment of time, effort and money to create a business, which will later provide you with an ongoing revenue stream.

The size of that stream is directly proportional to the amount of time and effort you invest.  Money can help you to accelerate the growth process, but is absolutely not necessary.

Please continue to read more, if you are interested in learning how, I will help you every step of the way.

Here’s wishing you much success, Niche Website Newbie.

 

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