Why I do not believe in passive income
Passive income has been all the rage for a while now. Ever since the world was hit by COVID-19, people have been attempting to build multiple streams of ‘passive’ income.
Before we move ahead, I just want to clarify that this article is my opinion of the ‘passive income’ trend that I’ve seen grow over the past couple of years. You’re welcome to disagree.
Let’s start with the definition of passive income.
According to Investopedia, Passive income is earnings derived from a rental property, limited partnership, or other enterprises in which a person is not actively involved.
If you look closely at the definition, it says that you earn from rental properties, or some other enterprises but the issue here is that these incomes realistically can never be passive in nature.
Let’s assume you own a couple of properties and you give them out for rent. Your responsibility as the landlord is to maintain the property according to the housing code, ensure that property taxes are being paid and fix anything that breaks in the house.
Clearly, you’ll have to be actively involved in it.
Apart from that, what if a disaster like the pandemic hit again? We’ve seen California enforce rent moratoriums so that people don’t get evicted. That’s good for society and bad for you because you’ve got bills to pay but no income.
You could pick any method of ‘generating passive income’ and they’ll always fall into one of the two categories.
The first one is where there’s a high barrier of entry followed by semi-active involvement.
This category would house renting properties out, buying stocks and living off of dividends, running an online shop, etc.
They require a significant amount of capital which allows you in there and once you get in, you must have the necessary knowledge and/or experience to at least maintain your initial position.
If you’ve seen TikTok videos by Gen-Zers, you must have come across the second category.
The category that houses methods like dropshipping, affiliate marketing, and fancy unga-bunga.
To me, these TikTokers sound like cavemen in suits, parroting the same thing which no one can understand, over and over again.
Sure, they may work out because you’ve seen a lot of success stories.
But, how many failures did it take to get there? For every successful drop shipper, there must be 100s who failed at the very least.
I’ve never tried these methods so I can’t tell if they work but on the surface, all of them do take one very important thing as capital- Time.
Time is THE most important asset we have in our arsenal.
We trade our time in exchange for things like money, entertainment, and simple pleasures like spending it with your family.
However, if you used that time to say start a dropshipping business, you would need a lot of time to set it up with the returns being marginal in the average case.
Hence the reason why I don’t believe in passive income.
If your goal is to make money by spending time, then following these methods isn’t the best way to do it.
You could rather learn to code for free on YouTube and then use those skills to get a job as a developer.
And that is the vaccine to the pandemic of ‘passive income’.
Use your time to learn new skills, use those skills to make more money and use that money to build streams of income that will make you richer.
Sure, those streams of income won’t ever be passive in nature but it is sustainable and proven to work over the newer models.
If you think otherwise, let me know your thoughts in the comments sections and we can discuss them in detail!
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