Is Earning Passive Income for Real?

This is the first article of the “Baby Steps to Financial Riches” series. Today, I’d like to share some insights on whether earning passive income is indeed for real, or not.

My first thought when I first heard about earning passive income was…is this for real? Aren’t these one of those ‘scams’?

I can understand how a rental apartment can earn passive income…but translating that into the online world or to other unusual  income streams seemed like “too good to be true” for me.  One thing that has served me well, is allowing myself a moment to suspend disbelief if only to keep my mind open to more ideas. I imagined, what if it’s true? What’s the worst thing that can happen if I decide to check it out.

With that in mind, I decided to give myself a chance and check it out.  I am thankful to this day for that moment of disbelief because it started my journey of earning passive income.

No, I haven’t reached the level of Mark Zuckerberg or any of those young billionaires, nor have I reached millions in passive income yet.  I believe, however, that I will eventually get there…for the journey has already begun, it is only a matter of time.  My hope is by sharing what I learned with you, you will soon too.

Active Income vs Passive Income

Before I go on any further, I want to make sure we are on the same page when I refer to “passive income”.   It will be easier to define passive income by differentiating it from the more popular source of income which is active income.

The most notable example of an active income is the salary you get from your job.  Each month you have to go to the office, render work for a specified number of hours, and at the end of the month, you will be paid your monthly salary.  If you decide to not go to work, you will not get paid.  In short, no work, no pay.

Passive income on the other hand is income you derive from rental properties, licenses or royalty income from your books, songs, or other information products, or income from businesses that requires little or minimal amount of your time.  If you can leave your business for one whole year, and when you come back you can find it still standing, chances are, that business is a source of passive income.

How can you earn from passive income?

There are many ways to earn passive income, whether online through the use of the internet or offline through rental income from real-estate or royalties from books, or even the license income from using the Angry Bird characters in commercial products.  In the advent of the information age, the number of ways multiplies each day as new ways are being developed by the continuing improvement of business systems.

Of all the ways you can earn from passive income, however, one thing is common to all of them – a BUSINESS SYSTEM.

A rental property may be in the form of real-estate, but it is earning money as a business.  There are systems involved, like marketing systems when the owner advertises through the local newspaper or in the neighborhood; or the collection systems when the owner or his assigned collector collects rental from its tenants every month.  The rental income is passive income.

Books have an entire publishing industry composed of different systems like financial systems issuing royalty checks to authors, production systems printing the books, as well as fulfillment systems distributing the products to the different bookstores.

Online businesses have their own sets of systems.  Each company has its own different way of earning income.  Facebook for example is earning through advertising.  Google as well.  Amazon is like a big bookstore in the digital sphere.  Apple creates amazing products and earns from the sale of those products.

A network marketing business also has its own systems in place to train new distributors, market the products to users, as well as seamless technology systems to make sure commissions are computed correctly and credited to the distributors, and more.

In order to earn passive income, then, you need to learn about business systems, and how the different business systems work to create for you a passive income stream.  In the coming weeks, I hope to give you more information on how you can create your own business system or buy into an existing system so you can also earn from passive income.

How not to be scammed?

Obviously, the upside of earning from passive income is very big.  However, with the many opportunities sprouting left and right, sometimes, it is very hard to distinguish which one is legitimate, and which one is illegal or a scam.

This, unfortunately, has led many to fall into get-rich-quick scams.  People have the tendency to go for the easier route.  Passive doesn’t mean it’s easy.  Passive doesn’t mean no work.  Passive doesn’t mean money will come to you without doing anything (at least in the beginning).  Everything in this world comes with a price.  It’s up to you to know what that price is, and to decide whether you want to pay for it or not.  There’s no such thing as free lunch.

More than any other industry, the network marketing industry has had its own fair share of get-rich-quick scams, pyramiding or illegal activities.  Some people may even have their own stories to share.  I feel for those people.  Sadly, scams do exist, not only in the network marketing industry, but in all kinds of businesses.  In the hope of helping you discern if a network marketing business you want to get into is legitimate or not, you can read my article “5 things you need to know before joining a network marketing business.”

In addition, you can also read my article about the MYTHS & REALITIES about PASSIVE INCOME.  The article contains helpful tips you can use to guide you in determining whether an income opportunity presented to you could be a scam or not.

In the end, having integrity, being professional, truthful and ethical is still the cornerstone from which all great businesses are built.  In the same way that there are no shortcuts to success, doing good, while it requires a higher level of integrity, is still a sound long-term business strategy.

How have others earned passive income?

Now that you know online/offline passive incomes are REAL for those who work on it, I’d like to share with you stories on what these passive income streams have earned for some people.

A good resource for earning passive income through the internet can be found in Pat Flynn’s blog Smart Passive Income.  Pat fully discloses what he earns every month from his blog.  You can see a sample of his income report here.  He is averaging around $20,000 – $30,000 every month.  That’s what some people earn in a year or even two years in the Philippines. Obviously, it took him a LOT of work in order to get to where he is now.  But the great thing about it is, nobody can fire him because he doesn’t have a boss, and when one stream of income dries out, his other income streams pick up the slack. I’m not sure about you, but I think that’s a better way to earn than just having a single income stream called a job.

Closer to home, I learned about the house that blogging bought in the Philippines a few years back. This was when earning from the internet was still at its infancy in the Philippines. I was surprised to say the least.  I believe the income was used as  down payment for the house and not the whole payment. In any case, it really doesn’t matter.  It just shows you that there are indeed passive income streams from the internet, and the good news is, you too can earn from it even when you’re in the Philippines.

I’ve also interviewed a few young entrepreneurs in this blog, and learned how they’ve earned passive income in their different ventures.  I’ve had the great priviledge to get to know and interview some of the successful young entrepreneurs like the young Real-Estate Millionaire and Rent-To-Own specialist Ms Eden Dayrit, the internet marketing expert Mr Jomar Hilario and a good friend of mine, the owner of the most popular real-estate investing site, Foreclosure Investing Philippines, Mr Jay Castillo.

I have also personally gotten to know and received mentoring from several successful people in other types of businesses, especially in the network marketing industry.  In the past year, I have had the priviledge of being mentored by one the most ethical and professional group of leaders in the industry I have known (XTRM 1-11 Inc), while building my own network marketing business.

I will share more about the things I’ve learned in the next coming weeks. Perhaps, in the future, I might even interview and feature one of my mentors here.  I understand, some people have a lot of misgivings or even violent reactions when network marketing in the Philippines is brought up.  I can’t blame them for I was once very skeptical at first.  If you’re thinking of getting into the network marketing business in the Philippines, my only tip for you is to allow yourself the moment to “suspend disbelief” but to match your decision not only with sound business practices but with your gut feel of the people you will be working with.  Network marketing business, more so than other types of businesses, is about being able to relate well to people.

Personally, I have had my share of success and failures tinkering with all the income streams, from earning a few dollars here and there, to a few thousand pesos from offline/online ventures as well as my network marketing business.  As they say, a picture can paint a thousand words.  So to save effort, here’s one of the fruits of those income streams.  This is my first car, and until now I still can’t believe that a day will come that I will drive my own car.  Thanks to “suspending disbelief” and allowing myself the chance.

Cheers to your success!

P.S.  Watch out for the next articles in the series “Baby Steps to Financial Riches” in the coming weeks as I go into detail on how I earned from each of the income streams.  If you’re curious to know how I managed to buy the car in just a year, feel free to email me or add me as friend in facebook.

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