MBA1794 Is Passive Income a Real Thing?

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Hey O. Welcome to the hunter. Welcome the to $mba show practical business lessons for the Real world. I'm your host, your coach, your teacher Omar Zenholm. I'm also the co founder of Webinar Ninja, an independent software company I started with my partner back in 2014. And in today's episode you will learn Is Passive Income a Real Thing? I wanted to talk about today's topic because I've seen so many blog posts and podcast episodes and YouTube videos showing you how you can create different passive income streams. And 95% of the advice out there is showing you how to do things that are not passive. They're simply not passive income. You have to do things actively to maintain that income. What kind of things? Well, that's what we're going to discuss in today's episode. I'll also discuss what is actually passive income. What is an example of real passive income, and is it possible to earn a passive income instantly with this option? I'm also gonna break down the common myths and misunderstandings when it comes to passive income. People go into it thinking they're gonna make X amount of money. If they do X amount of effort, realizing it's a totally different story. I wanna save you the headaches and the heartbreak and steer you in the right direction. So let's get into it. Let's get down to business.

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Coaches and gurus are saying to you it's possible for you to create passive income. You're going to do something once and then earn residual monthly income on autopilot. And they'll state a whole bunch of examples. So say you can create a passive income with a blog, with a podcast, with selling online courses, with selling a digital product like a piece of software or an ebook. You could do affiliate marketing. And they mention all these as examples of passive income streams. I'm sure you've heard of this term a million times, passive income streams. And I'm here to tell you this is just flat out not true. Passive income means you invest your money and maybe even your effort, and then you gain a passive regular income from that investment without having to do any more investment. Okay? That's what passive income is. All the examples I gave you, podcasts, blogs, affiliate marketing, digital products, courses, they're not passive. Not only do you have to invest a lot of time and some money to build these assets, especially something like an affiliate marketing marketing blog that takes a lot of time, a lot of effort, not only do you have to build that, and we're okay with that with a passive income, investing some time and investing some money, but once you get it to a point where it's making you a monthly income, whatever that may be, you can't just stop doing what you're doing. You can't just stop publishing blog posts, you can't just stop publishing podcasts. You can't just stop maintaining your digital product or even just answering customer service emails. Everything that I mentioned and what has been mentioned by so many people as passive income requires maintenance, requires continuity, requires you to continue to do what you're doing. Yes, you set up the system. Yes, you built an asset. Yes, you've invested. But to keep that thing from dying and not generating a passive income, you got to continue to maintain it. At the very least, even if you don't add any more content to your blog, if you have a blog that's earning you ad revenue, or you create a book, let's say an ebook, and that creates a passive income for you, even if you do not modify it or edit or improve it anyway, you have to invest time in marketing it so it gets to new people. You can't just stop marketing. Marketing is something you have to invest in, whether that's in content marketing or whether you're doing paid ads, whether you're speaking on stages or on podcasts. The point here is that you just can't sit idly and expect something to sell by itself. If you noticed, I'm speaking very passionately about this because I really do feel that a lot of people are giving the wrong information. It's an injustice to tell people that this is passive income. It's not. It's actually a lot of work. I know. I run a podcast, I run a blog, I have a software company. All these things that people say, it's passive income. It takes a lot of maintenance, a lot of work. If you want to be good, if you want to continue to grow that passive income, if you want to continue to maintain that passive income, even as simple as a blog, you need to update blog posts to make them relevant, to make sure all your links are still working, all your embeds are working. You're managing comments and managing emails and inquiries and community feedback. This is a business. You can't just build a business and not maintain it. That doesn't exist. A business isn't a live thing that requires you to take care of it. So let's answer the question that we've asked at the top of the episode. Is there such thing as passive income? There is. It's called an investment. Okay, like if you are an angel investor in a company, you may not manage the day to day. Your involvement is minimum, if any. If it grows and makes a profit, you will get paid a dividend on those profits if your investment pans out right. And that could be your monthly stream of income, but it doesn't happen overnight. And the moment you invest the next month, you don't get a check in the mail. The reason why they need you to invest is because they need to grow and they need some time to grow. They need some funding to grow, and therefore they asked for your money. So even if you put in money today, it most likely won't reap any benefits for another 12 to 24 to 36 months before that company can get to the point where it's profitable enough to pay you out a dividend. And of course, if that company exits or sells, you will get the percentage of the ownership stake that you have when you invest it, and there'll be a lump sum in most cases and you reap the benefits. And that's sort of a passive income. In one lump sum form of investment is the stock market or investing in an index fund like the S&P 500. You literally are supposed to put your money in there and not touch it and do nothing. That's what passive income is. And with like The S&P 500, again, you're not going to be able to live off your earnings because you want your investment to compound. You want to use the power of compound interest. You don't want to, you know, take any kinds of profits you make over the year or years or your first year or two and take them out without allowing yourself to have some compound interest. So a lot of people that invest in something like the S&P 500 or any kind of stocks they put in money, they forget about it for about five to 10 years. Then they might pull out some sort of earnings every single month or year to supplement their income or to live off, depending on their initial investment. Some people receive the investment of real estate as passive income. And this could be a little bit tricky because it's not totally passive, okay? But it can get pretty close to it. If, for example, you have, let's say, a property, an apartment building with six apartments, and you're collecting rent for all these apartments, and with all your costs, your mortgage for this building, insurance, and a property manager, somebody to manage it so you don't have to do anything. So it can be passive. They'll probably just email you to get some approvals on some quotes of some fixes or replacements. If all those costs are less than the total amount of rent, then that's passive income. Every month you're making a profit, you're making an income with very little involvement, especially if you have somebody managing the property for you. You can literally travel the world and have this company take care of it and deposit your funds in your bank account. And of course, if your property increases in value, that's an investment in itself, but you're also gaining the residual income from the rent. So these are all closer to passive income. But anything that requires you to promote, to market actively, to sell, to maintain, this is a lot of work. This is a job that is on the regular. You got to do it all the Time can't just stop, so it's not fair to label it as passive.

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To wrap up today's lesson, I want to clearly state that all the different things I mentioned today that may not be passive income, like building, building an online course, like a software, like an ebook, an affiliate, blog, whatever, these are really good business models. They're not bad, and you should consider starting one of them. But today's lesson was about defining the rules of engagement, defining that this is not passive income. This is going to take some equity, some sweat equity, some time, some patience, some investment, and continually investing in it to allow it to grow and to maintain its health. I run businesses like these. I love these types of businesses because I can continue to contribute to my audience and my community and I grow as an entrepreneur. They're challenging, it's fun, and it gives me something to do every day. Right? It allows me to wake up in the morning and take on a new challenge. I'm not retired because these are not passive incomes. Thanks so much for listening to the $100 MBA show. If you love what you hear, hit subscribe right now. So you never miss an episode by hitting subscribe, which is absolutely free. And you can do it on any podcast app, Spotify, Stitcher Radio, Apple Podcasts. You get all our episodes automatically so you never miss our next episode. You also get access to our archives of episodes, over 1700 business lessons and counting. So go ahead and smash that subscribe button right now. Before I go, I want to leave you with this. No matter what kind of business you have or what kind of investment that you have, you're going to have to take a look at it once in a while. You're going to have to maintain it for once in a while. You have to just check up on it. Even some of the more passive, like investments I talked about today require you to, you know, keep your eye on it. Even if you bought a plot of land, you need to make sure that land doesn't get squatted on, that there's security that it doesn't get overrun by wolves. Every asset needs protecting. Thanks so much for listening and I'll check you in. Tomorrow's Episode Q and A Wednesday. I'll see you then. Take care.

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