Is Passive Income Possible?

Passive income is something that I am shooting for on a couple of my blogs. I have one that I haven’t posted on for a couple of weeks and yet I it has still made me close to $50 from Adsense since then.

If you can build a web property that get’s a lot of search engine traffic there is no reason why you shouldn’t be making passive income!
Tom | Build That List´s last blog ..The Aweber Code….And Why You Need To Promote It!

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Ryan Reply:
February 17th, 2010 at 3:31 am

I like that you referred to it as “web property” – I started enjoying creating websites and blogs more when I could perceive it as actually building equity and something real.

Is adsense the only monetization model you use with those?
Ryan´s last blog ..Hiking Diamond Head and Snorkeling In Waikiki

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Monevator Reply:
February 20th, 2010 at 1:08 am

Personally, I think a blog is a poor format for long-term passive income. It’s true they can keep some traffic for a while – I have some niche sites from a couple of years ago where traffic is still rising! – but I feel with the evolution of the Web it’s going to become out of date eventually if you’re not bringing it up to speed regularly.

When was the last time you went to a GeoCity site, for instance?

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JadeDragon@innovativepassiveincome Reply:
February 20th, 2010 at 7:21 pm

Ya but was GeoCities ever making anyone money? Does it even exist? GeoCities is a great example of why you want to control your own core web properties and use other sites as a ring around to drive traffic and build good links.
JadeDragon@innovativepassiveincome´s last undefined ..Response cached until Mon 22 @ 4:46 GMT (Refreshes in 23.44 Hours)

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Definitely possible and Wojo’s right on target with his response. Minimal effort should be required and you should know that there are no emergencies: if you’re not around, you’ll never have to worry about your venture failing.

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Ryan Reply:
February 17th, 2010 at 3:38 pm

What do you think the best passive income stream is for the minimal effort?
Ryan´s last blog ..Hiking Diamond Head and Snorkeling In Waikiki

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While I think it is worth striving for, I wouldn’t make passive income my sole source of income. I’ve always envisioned keeping a “day job” yet earning dividends on market investments or having a rental property. A more interesting question to ponder would be how much “passive” income would you need to quit your day job?

For now, I would say no amount of money in the world. But my interests outside of work are extremely limited and they aren’t anything I would want to spend 10 hours a day doing. Maybe as I grow older and have a family that might change…
Investing Newbie´s last blog ..Word to the Wise

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Ryan Reply:
February 17th, 2010 at 3:34 pm

No amount of money in the world… now that’s a loyal employee! It’s great that you can say that about what you do, most people cannot.

Passive income might be nice, because as you mention your opinions as you get older might change. Kinda like having an emergency fund, the passive income can work as a buffer while testing new things.
Ryan´s last blog ..Hiking Diamond Head and Snorkeling In Waikiki

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Passive income is alive and well, those who do not think so, have not taken the time to do the research. I use to work in a hospital years ago, Curtis Mayfield was a patient of ours.

He told me he had not worked in a decades, yet the royalties from his music paid the bills. I watch a man who was completely paralyzed buy his daughter a car straight up cash, that image still resonates will me. He also told me that if I ever created something to ALWAYS maintain ownership of the property.

MJ’s estate owns the Beatles Collection which made him more money than he spent on it! And will make his estate or who ever owns a ton a money from now until forever, as you said great content never goes out of style.

I am writer, also know of the guy that created Married With Children he is a millionaire and works only because he wants to, the path to passive income is only limited by your imagination.

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Ryan Reply:
February 17th, 2010 at 3:32 pm

Great examples and thanks for sharing the stories! Definitely adds to the side of the argument that it is very possible.
Ryan´s last blog ..Hiking Diamond Head and Snorkeling In Waikiki

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Ryan,

As always – enjoyed reading your article. You always have some paragraph that clearly stands out and it was the last one in this case.

It seems like there’s many misconceptions about passive income as “Wojo” points out. Couldn’t pensions even fall under the definition of passive income?

To expand on royalties. It doesn’t necessarily have to be media, it could also come from a patent on an invention or trademark on a brand.

Is passive income worth shooting for? Yes, but it really depends. Are you trying to supplement or replace your current income? Are you trying to avoid work or create a legacy? Are the monetary returns or the product/experience more important?
FinEngr´s last blog ..Can Shrinking Yields Be a Good Sign?

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Ryan Reply:
February 17th, 2010 at 3:31 pm

Yup, one size doesn’t fit all in regards to working towards passive income since everyone has their own goals. Me, I’m shooting for $50k / year within the next 2 years.

Thanks for bringing more value to the page by adding the other sources as well.
Ryan´s last blog ..Hiking Diamond Head and Snorkeling In Waikiki

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Despite the seeming cop-out I’d have to give the ‘it depends’ answer. The key is in what an acceptable income level is for yourself. If you can provide for your needs then yes, passive income is a great avenue. Key point, you will only get out what you put into something. If you treat your venture like a hobby, you will reap a hobby income. Treat it like a business and work it at as such, and the results will be significantly different.

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Ryan Reply:
February 17th, 2010 at 3:27 pm

You make a very good point and something I’ve even noticed here on the blogosphere… treating something like a hobby will teach you about it, but won’t really begin to make you money from it. Good input.
Ryan´s last blog ..Hiking Diamond Head and Snorkeling In Waikiki

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I’m a dreamer – so yes, I think it is possible, however earning passive income is not something that happens instantaneously – it doesn’t just generate out of nothing. There’s got to be some initial and strategic efforts put forth – what I like to call planting seeds in the right soil…
Every step I take to build my blogs is a step in that direction in my opinion – I’ve had doors open for me that wouldn’t have been possible had I not been blogging. So, I’m going for it!
Kiesha @ Highly Favored´s last blog ..Introducing Kiesha

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Ryan Reply:
February 17th, 2010 at 6:36 pm

Planting Seeds… kinda like planting dollars

I’m there with you… as I build this blog up I think of it as online equity, maybe not to make more money, but to network and possibly collaborate with others who have similar interests, which indirectly will create more wealth.
Ryan´s last blog ..Hiking Diamond Head and Snorkeling In Waikiki

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From what I can see

passive income = the results of having built a successful business

Possible when after building a “successful” business, you decide not to “participate”. If your info product is lousy, or your website is lousy, or if nobody likes your music, then sorry, no “passive income”.

And I guess if you claim having a portfolio of diversified dividend stocks and bonds is “passive income”, then it can be achieved by being an “employee”, a highly paid one that is (most folks in upper management fall into this category).

Hence, I think we are too liberal when we use the term passive income. Passive income is the result of “being successful in whatever you are doing, whether you are an employee or a business owner” and choosing not to “be actively involved thereafter”.

once again, passive income results from simply being financially successful in whatever you are doing. It could be anything from

1. owning a few laundramats
2. owning a chain of car wash
3. earning $50mm in your lifetime as a CEO and then retiring.

why limit it to venture capital, online income, royalty income etc?

aren’t we substituting being financially successful for an easy cop out in “passive income”? We can be hugely financially successful whether we own a business or are employees. And in whatever business we are in for that matter.
Mr Credit Card´s last blog ..Credit Vs. Debit, Is There A Middle Ground?

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Ryan Reply:
February 17th, 2010 at 8:02 pm

Hey Mr. Credit Card, thanks for stopping by.

You threw a lot out there in response, but I’ve only gathered one particular statement or thesis from which it all pulls together which is:

***”I think we are too liberal when we use the term passive income. Passive income is the result of “being successful in whatever you are doing, whether you are an employee or a business owner” and choosing not to “be actively involved thereafter”

The problem I see with this statement is that everyone defines success differently. I’m willing to bet your definition and my definition of success are not nearly the same. The only reason I bring up this point is because you also mention that you have to be highly paid when you say:

***”And I guess if you claim having a portfolio of diversified dividend stocks and bonds is “passive income”, then it can be achieved by being an “employee”, a highly paid one that is (most folks in upper management fall into this category).”

A 14 year old kid can pick up some hours at Dairy Queen, invest in dividend stocks and make passive income. I once watched a PBS special on a parking lot attendant who was a millionaire through proper investing and saving using, yup, you guessed it… passive income. The amount of passive income has no effect on whether or not it exists and this is where I disagree with us being too liberal with the statement.

You also mention:

“why limit it to venture capital, online income, royalty income etc?”

I am not limiting it, the article only gives a few examples of passive income sources. In the article it says “Below I’ve listed a few ideas, from which you can earn passive income” A few ideas does not imply that it’s an exhaustive list.

The last point you make:

“aren’t we substituting being financially successful for an easy cop out in “passive income”? We can be hugely financially successful whether we own a business or are employees. And in whatever business we are in for that matter.”

If you want to be “hugely financially successful” (a relative goal) then however you structure your income is of no relevance. Collect money now or collect money later, either way hard work is going to be needed. I’m also not sure of the “we” you’re referring to. Who keeps bugging you about passive income?

Anyways, after all that I do see where you’re coming from in thinking people use the term too much. Passive income does not mean easy money, it just means structuring a business in a different way. Lazy folks combine with the word passive income could get annoying.
Ryan´s last blog ..Hiking Diamond Head and Snorkeling In Waikiki

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Types of income fall on a continuum between completely active and completely passive. A job is completely active, the closest thing to completely passive is something like treasury bonds (but you still have to check the paper every so often to make sure your government is still around!)

Most of us who are pursuing passive income are trying to move down the continuum to get more and more passive.

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Ryan Reply:
February 19th, 2010 at 5:43 pm

Great way to look at it… perhaps we could make a passive income scale??

Really like your website and the real estate videos you made BTW.
Ryan´s last blog ..Hiking Diamond Head and Snorkeling In Waikiki

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Ryan,
Good point, Ryan. I will comment thi spost following the analogy of your blog: “Planting dollars”. Everything in life including money follow the law of Harvest. Now, imagine that you prepare the soil properly, you plant some seeds of apple, you take care of the small trees, and someday, you have some healthy apple trees giving you hundreds of apples without requiring a big investment of energy from you. Of course you can get your own apple trees, but you have to sow them first!
All the best,
Boris
Boris´s last blog ..Your mission, should you decide to accept it…

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Passive income is like a dream, We must believe and work for it to realize. i believe with my online presence, i’m going to design a passive income system.
harvestwages´s last blog ..Top 5 Social Media Business Models For Entrepreneurs

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I hear that blogs sell for a P/E of around 2. In other words, it sells for two times annual earnings. Granted, blogs are a new way to make money “passively”, but it suggests that the risk of not having the price earned back is rather large. Essentially, buyers are demanding a 50% yield, which is somewhere between sub prime and payday loans. Conversely, bonds and stocks tend to sell at 5% [earnings] yields which indicates that they are safer and more passive because they require less monitoring/effort.
Early Retirement Extreme´s last blog ..Guest post on Monevator about extreme retirement

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