True passive income is hard to come by. In fact, I think it is a misnomer, and we should instead be thinking about low maintenance income or residual income rather than passive income. Passive income implies that no work is involved which is typically very far from the truth, although people fail to realize this.
Usually we simply look from the outside and assume that a rich or famous person got lucky without acknowledging the amount of effort that was required to get there. Sure it would be nice to go from homeless to billionaire by simply writing a novel about a boy wizard, but imagine the amount of effort spent to write that novel. And what if no one really cared. Imagine the novels that are written without ever being read. Some authors write many, many novels before catching a big break while some never reach any measurable level of success, let alone income.
Unless you inherit a fortune, achieving passive income will involve some initial effort, maybe even a lot of sweat and toil. You have to invest some sweat equity to either build a business or asset, or acquire enough capital to purchase an asset that produces income.
Sources of Passive Income
Royalties are a good source of passive income. If you are the creative type, you might be able to create an artistic work or brand and be able to reap royalties for years afterwards. Obviously, the estates of Walt Disney, Elvis, and Michael Jackson are continuing to receive loads of income from their artistic works when alive.
Stocks and Bonds
Paper investments such as stocks, bonds, and CDs, can produce income that is very passive in nature. It does take money to make money in this case so the effort occurs in trying to get the initial investment, which may come from a lifetime of hard work.
The same holds true for rental real estate. You can hire management companies to manage any and all aspects of being a landlord and simply have them send you a check. Now that is some passive income but it takes quite a bit of money to get to that point.
Owning a business is another source of passive income if you have the people in place to run it in your absence. Laying the foundation and finding the right people though can take years if not decades before an owner can step back from the daily management. No one hears about the founders during this stage. We only hear about them after they have become rich and famous.
Online Passive Income
Many dream of making passive income online. Again, it can happen, but there is a tremendous amount of effort that goes into creating content, courses, systems, and an audience such that an online venture can be self-sustaining, allowing an individual to take a step back.
Passive income is a great goal, but is not one that comes without hard work and sacrifice. As you watch the Olympics, remember that we are simply seeing a small portion of the result of years and years of sacrifice and training that lead up to that moment. These athletes weren’t simply lucky, but worked hard to get where they are. The same hard work is required to truly achieve passive income.