Passive income, the kind advertised all over the internet doesn’t exist, because passive income is a lie. You are being fed a passive income lie because it’s so easy to believe it’s true. We all want passive income – money for doing nothing – and this passive income lie is the great falsehood of the modern age.
Passive income is a lie that we all still strive for
What is possible however, is continuous cash-flow – I’m also going to talk about how I have increased my continuous cash-flow by about £600 month since this time last year, and about how this will hopefully take another jump soon with something else I’m working on.
“If you don’t find a way to make money while you sleep, you’ll work until you die.”
Warren BUFFETT
Passive income isn’t real
Money for nothing. It’s not real. Nobody gives you money for not doing anything. It’s a ridiculous notion. Forget anything anyone told you about this being a real thing.
Nobody hands over their hard earned cash to you, for you doing zero for them.
There is this fantasy that gets pushed around YouTube, Twitter, Instagram, pretty much every social media platform there is, that there is this utopia of infinite wealth for anyone who wants it. Passive income – jus reach out and take it and all your dreams will come true. Riches beyond your wildest dreams, right there to be claimed.
It’s nonsense. All of it. Passive income is a lie.
But… I’ve seen passive income. It’s real…
Traditionally we think of being paid by the hour. Time is money, after all. You see job adverts offering £8/hour, or £10/hour or £30,000/year. You get paid to turn up to do a job for someone and you get compensated for your time. Your ability to earn is directly related to your skills and how much time you are prepared to give to someone else, to do a job.
Passive income is the idea that you can separate your earning potential from your time. You can start to make some money, without having to continuously trade your time for it.
I much prefer to refer to this as continuous cashflow, rather than passive income because I can tell you – as sure as snowballs will melt in hell – you won’t be getting this money by just lying on you back.
So with that rather inconvenient fact in mind let’s get into it.
Check out this tweet, from Side Hustle King…
The poor dude who came up with this got his maths wrong, but the idea of having regular streams of cash all chipping in for the same pot, is at least on the right lines!
For the purposes of this blog let’s just call this continuous cashflow “passive income”.
It’s what most people are used to hearing, it’s much more palatable!
Passive income, the real kind, comes after having front loaded some kind of enterprise either by putting money into something up front or having spent the time to create or build something in advance. Having done the hard work up front, now the fruits of your labour arrive with a varying degree of maintenance and upkeep going forward… I promise I’ll get into my forms of passive income in just a second, but let me tell you the difference between this and the dream you are being sold.
The fake passive income, the passive income that is a lie is the sort peddled by scammers and snake-oil salesmen. These guys are selling passive income schemes and courses where anyone with zero experience and zero start up money can make thousands of dollars online just by following their system.
If I had a system as good as that, I certainly wouldn’t be sharing it.
You have to work for passive income
If you want something truly passive and truly sustainable… something that will produce continuous cash flow then you need to be either getting your money to make money for you through investments (something like the stock market or real estate) or you spend time creating something and then having a low maintenance way of getting that thing to bring you income. Something like writing an ebook or creating YouTube videos.
Scalability is essential to making passive income
Something digital like this has the potential to continue to make you money over time, because a greater audience doesn’t mean extra work for you. People come to read or watch what you have created. You have built it once, it’s done, it requires no more input from you and there is an unlimited number of people in the world to use what you are offering.
It’s why those “make millions in passive income” courses sell so well. They aren’t making their money because of some great insight into the world of passive income. They make their money because there are no shortage of people wanting to pack their job in and live the easy life, so these products always have a market.
Twitter courses are another example of creating digital products to market to a massive audience.
A guy writes an ebook on how to grow and sell on Twitter, stuffs it full of generic advice, and sells it for $39. Someone looking to do exactly that (to grow and sell on Twitter for passive income) forks out the money.
But as a bonus, if you leave a five star review for the book, then, you can become an affiliate for the author, he will give you half of the sale of $39 for bringing a new customer.
Wow.. so now the author has incentivized a customer to say how great the ebook is and the buyer only has to find two people to get to buy this book to make his money back and anything above that is pure profit.
Meanwhile the guy at the top, that’s the author in this scenario, starts to post screenshots of how many sales he is making and all the five star reviews to show people how his techniques work.
And these techniques do work I suppose – you just have to look at all the sales! So this cements his position as a winner with social proof to boot. Soon he has hundreds of people marketing his twenty page fluff fest because everyone fresh to Twitter wants to make some money.
Beautiful passive income
Now, the point I have been trying to get to here is whether you like this or not, the guy at the top has put in a lot of work up front to position himself as the front-runner in this spam festival, but to be fair, he/she worked at it.
Nothing passive about that part.
Now, after front-loading all the work and because his reputation is so good, his income is disproportionately high compared to the work he has to do to maintain this regular income. Gorgeous continuous cashflow. Passive income.
It’s a simple idea and looks great on paper… get something going and sit back and watch the cash pour in. The trick is all the effort that goes in up front. The hard work part is the part that nobody selling anything wants to tell you about.
That’s one way to get continuous cashflow coming in. I hope you come up with a better digital product than that, but we are finally here, thanks for your patience – here’s what I’m doing to get my continuous cashflow coming in.
YouTube
Probably the least passive of all in this list, actually! My channel became monetized with AdSense about this time last year.
My subs grew, the views came in and I hit the 1000 subs and 4000 hours of watch time required. Now when you want to watch a video on my YouTube channel you will be served up a small advertisement before it starts.
If you watch thrity seconds, I get paid a little bit. To be honest my monthly income from AdSense isn’t that great, but I’m working on it. I’m hoping to triple it by the end of this year, but nevertheless, making a few quid from advertisements on my videos is nice.
I’d have been making these videos anyway so from that point of view it’s passive because it requires no extra effort on my part, apart from setting it up in the first place and once the videos are created they can sit there forever, continuing to bring views and ad revenue for as long as people come looking for that content. One video has amassed nearly 100k views over time. However, as time goes by there will always be a need to keep on creating relevant and interesting content to stay fresh in Youtube’s eyes so that’s why I say it’s the least passive of all.
Investing
I invest in the stock market, mostly through index funds. Over many, many decades the stock market has been shown to hold the key to enormous long term gains for those patient enough to get started and wait.
I have many videos on my investments on this channel so I won’t go into it all here. Suffice to say I am investing as much as I can into the market these days, and in return for putting in my capital upfront, I can sit back and be patient and all things being equal, enjoy some serious growth over the long term.
An average of 8-10% per year over the last hundred years or so is what gives me the confidence that this is a worthwhile long term move.
While I wait for the years to go by, I will continue to collect cash dividends from companies that pay them, and reinvest those and all.
Even better, I invest in a tax free ISA so there is no tax to pay on all those dividends and all that growth for as long as you hold those stocks and no tax to pay on cashing out.
Wonderful.
One of the best things about investing in this day and age is that there is an incredibly low barrier to entry. Investing in the stock market is no longer the preserve of the rich and fancy. You can get started with £1 with some apps. You can buy fractional shares too, so if you wanted to buy Amazon stock but don’t have $2500 then you can buy a tenner’s worth or £5 or whatever you can afford.
Even if you aren’t confident about what you are doing companies like InvestEngine are offering really affordable managed accounts with small fees. I’ll link to that video below if you want to know a bit more about them.
Affiliate marketing
Affiliate marketing is basically being paid by a business to bring a new paying customer to their front door. You recommend something to a potential customer, that customer buys something and as a thankyou, the business gives you a small slice of that sale. That’s typically how it goes.
Affiliate marketing is a great fit for me – a combination of my interest in investing and creating content around investing on YouTube and on my blog means I have some quality companies I can affiliate for.
Since I’m already doing the work to get that content on Youtube and I’m already writing articles on this blog, it wasn’t a lot of extra effort to include some links.
I have managed to forge some good relationships with a couple of investing platforms I use.
Trading 212 and InvestEngine are two of my favourites. I think they are good products and as I make content to help people make choices around investing, I include my affiliate links for those services. I have been doing a lot of work in this area on YouTube, so I’m starting to become a familiar face for anyone looking for information on these products.
Clicking links is a nice way for people to show appreciation for the content and obviously helps me out in a big way.
Affiliate marketing is really booming – it’s one of the most popular ways for people to monetize their blogs or twitter or Instagram, because it costs just about nothing to start. Promote products you enjoy using on your blog, or Instagram, keep your integrity while you do it and it’s a great way to make some money while bringing value to others at the same time. Unfortunately a lot of folks go about it entirely the wrong way and fail without ever getting going. Often it’s because they promote sketchy things or products that have nothing to do with their niche… I have a video all about affiliate marketing.
Rentals
So if affiliate marketing has a low barrier to entry, then at the other end of the getting started scale – I have rental property.
I kind of fell into it by accident through a series of life events!
Obviously to get started with a rental requires significant capital up front, but this goes way back to 2004 when I bought my first property. I grew up, got married, started a family and all that, but I managed to keep my first flat and find a tenant for it. I now pay a management company to look after all the tenant related issues and I pretty much have nothing hands on to do.
Sure, it costs me a bit more to do it this way, but to have a manager experienced in all things rental and with good contacts for repairs, maintenance, and so on… well let’s say the hassle free approach more than makes up for the money spent here. To be honest it’s not that much, around 10% of the rent so it’s money well spent for me.
I take the leftovers after tax and plough them into my ISA investments… money making more money. That’s the whole point of this building up streams of passive income after all. Of course, the asset, the flat is still there this whole time and it will have been appreciating in value over the years. There will come a day when I sell up, but today is not that day. The cashflow is better for me right now
Passive side hustles
I am a programmer by profession and in the past I have taken on some projects for startup companies to help them with different parts of their IT. Unfortunately due to NDA’s and such, I can’t really talk about who or what, but suffice to say that when negotiating the work, rather than being paid up front, I have asked for a tiny slice of their company going forward instead.
Generally speaking startups and other young businesses have been open to this, because it saves them the capital up front and they only have to pay me if they become successful. In many ways they risk nothing doing it this way and all it has cost me is a bit of my time.
Some have become more successful than others and now I get can get paid a little bit each month instead of a one time hit and it’s done.
Further since I’m already invested in this company’s success they are more likely to come to me in the future because they know I’m incentivized to do a good job again next time.
Credit card perks
Credit cards get a terrible reputation among the finance crowd, but really I think they are amazing tools. The credit cards, I mean, not the crowd that don’t like them.
Credit card companies want you to rack up loads of debt and pay crazy interest on that debt, while the whole time trying to sweeten the deal for you with cashback or airmiles or other perks for using their cards.
Far from racking up expensive credit card debt I just use my credit card as normal for everything from grocery shopping, to paying bills, to buying bus tickets. I pay the balance off each and every month in full, not spending anything more than I would ordinarily and just quietly clocking up airmiles that are going to get me a cheap holiday when it’s convenient to travel again.
Combine this with cashback sites when buying, pretty much anything online, then there is a nice little passive pot building in the background. All for spending as you would anyway. You simply don’t get this with paying cash. Here in the UK there are extra consumer protections when paying with credit cards, so for me personally, no downside at all.
The future?
So that’s six streams. What about a 7th?
Hopefully this year we are going to be opening a holiday let in Bushmills, in Northern Ireland. (update – we did it!)
We bought the property last year and while it has been a blast spending time in it and using it for the last year or so, I am excited to be creating another stream of continuous cash flow.
Granted this will probably need a bit of time and effort to get into the swing of things, but with all the work very nearly done, we are close to getting an agent to look after it, get all the support in place and kick off this new adventure. Of course, I will be creating content around this!
In the meantime, if you are interested in getting moving with setting up some streams of passive income, why don’t you check out this video on getting started with affiliate marketing.
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