The Truth (And Myth) About Passive Income

Do you salivate at the thought of passive income and long to start your own business?

Nacie Carson, founder of The Life Uncommon, a career transition and entrepreneurship community has written an insightful article examining the truth and myths of passive income. Carson draws on her own experience to highlight common delusions as well as frame some realities.

The first time I read through their information, I interpreted their material as “passive income is easy and effortless, all you have to do is set it and forget it.” When I revisited their material, I understood that their actual message is “passive income is a great revenue source that is earned from persistent, ongoing cultivation.”

The context of Carson’s article is online entrepreneurship however I think her observations are relevant to the pursuit of easy money and passive income in traditional investing.

You don’t just get rivers of golden passive income for life just by buying any old property or share, or starting a business. Wealth accumulation takes “persistent, ongoing cultivation”.

Other nuggets from Carson include:

So what’s the truth about passive income – is there such a thing, or is passive income a myth that marketers tell to line their own pockets?

From my own experience, I say there is such a thing, but it’s a nuanced thing.

…[my] passive income triumphs required a significant up-front investment of time, effort, and tinkering on my part, and in many ways I see them more as delayed payment or ongoing dividends.

[I] would tell any fledging entrepreneur that the simple truth of passive income is this: passive doesn’t mean effortless.

Carson’s comments echo comments I frequently make about the Do It Yourself approach to wealth creation. It takes a significant up-front investment of your time and energy to first acquire the expertise you need.

Then it takes additional time and effort to apply the expertise before you earn a decent return on investment for your money.

You then have to consistently apply that expertise to get a return for the up-front time and energy you invested.