Watching many of the online videos, a typical person may envision passive income as a money generator which requires little effort to get going. In my opinion, if it’s easy to have passive income, you probably don’t have so many people struggling with their finances. I visualize the typical passive income options as investment options which have varying degrees of risk, investment cost, and effort you need to invest and maintain over the holding period of the investment. Passive income doesn’t mean easy money, but earning passive income has some good benefits if done properly.
It is easy for all of us to envision money coming without having to work for a paycheck. I agree that this is a great concept. For most of us, individual labor does not scale to outsized income. When I first toured London, I was struck by how much of the land was owned for many years passed down from generation to generation by the royal family as well as other family dynasties. Unlike other family dynasties built on companies that tend to go south after a few generations, land seems to hold its value without too much opportunities for failure. This probably planted the seed in my mind to explore real estate strategy later in my career. The other way to look at the multiple investment options for passive income is that these options act as a portfolio diversification. As technology progresses, there are many older workers who fear losing their jobs. Getting passive income acts as a hedge against issues you may encounter with your primary occupation. Scaling up your income and diversifying your income sources are my primary reasons to build passive income flows.