• Login
  • Sign Up

Just imagine, income flowing in 24 hours a day.

Income while you sleep.
Income while you eat.
Income while you walk the dog and see your friends.
Income while you relax on the beach.

As an online financial mentor in the modern day, I’d love to take this opportunity to clear up some of the fantasies and fallacies that surround this notion of “passive income”. After that, let’s discuss some real, grounded steps in the creation of genuine, sustainable and reliable passive income.

Just a few days ago, an acquaintance of mine sent me a Facebook message, announcing his retirement from the rat race in pursuit of passive income. To clarify, no streams of passive income had yet been established – though he thought it to be a wise decision to quit his job, anyway.

Naivety. Scepticism. Objectivity.

  • I define naivety as the ignorance of negative data, underlying a positive judgment.
  • I define scepticism as the ignorance of positive data, underlying a negative judgment.
  • I define objectivity as a full awareness of positive and negative data, underlying a neutral judgment.

Masters achieve objective reasoning by developing a complete awareness. The masses stay in subjective judgments, by clinging onto a polarized and incomplete awareness.

In the pendulum of mind, positivity and negativity are the opposing poles of “partial awareness”. Objectivity is the full awareness of both positive and negative sides. Mastery occurs at the level of objectivity and balance of judgment.

I have the unique opportunity to speak with 100-200 individuals per day through my social media platforms and financial education company (Infinite Prosperity). Over the years, I have grown to realise that a great number of people are completely infatuated with money, wealth and “passive income”. That is to say, their pendulum leans toward naivety. This naivety creates an intoxicating cocktail of dopamine, oxytocin, serotonin and endorphins that surge through their veins. These “feel good” hormones and chemicals have a tendency to cloud negative data, which then perpetuates the polarized judgment of “passive income naivety”.

These individuals become very susceptible to “get rich quick” schemes and “easy money” strategies.

With that said, I have also seen (in lesser quantities) the other side of the coin. Extreme scepticism to the point where the individual refuses to acknowledge any positive data surrounding the attainment of money or creation of wealth. For these individuals, even when the world’s second richest man, Warren Buffett, suggests something as basic as “buying the market” via stock index funds – this could represent a “foolish gamble” or “unnecessary risk”.

In my experience, the overly naive usually do not attain a great level of success. The same goes for the overly sceptical.

In the long run, the objective reasoner wins the game.

Fact and Fiction

Truth about passive income:

Passive income certainly does exist.
Passive income can be created via delegation of service or investment of capital
Nearly everyone can learn to build passive income streams.
It is wise to start building passive income as young as possible.
Your financial independence depends on you building these streams.

Fiction about passive income:

A sizable passive income stream can be obtained for a few hundred dollars.
A sizable passive income stream can be obtained in a very short period of time.

I recently made a 17 minute Snapchat Lesson on the topic of Passive Income. Enjoy!
(Lesson starts at 14 seconds)

Types of Income

In the first lesson of Infinite Prosperity, we introduce our students to the income matrix. All types of income can be measured on a matrix of time and space requirements. It is this very matrix that determines the “passivity” and “mobility” of your income.

Pure passive income flows in regardless of your time or geographic location (space). There are still mentors and business leaders today who refute the existence of passive income. This is absolute insanity – as any holder of a dividend yielding stock will attest. A dividend is an example of pure passive income. At the time of this writing, if you own shares in the Ford Motor Company, you will receive a 5% annual dividend.

In other words, if you have a million dollars invested with Ford, you will receive a $50,000 per year passive dividend income.

This income keeps flowing regardless of the time and space requirements of your physical body.

At the other end of the scale, pure active income requires both your time and your space. Think of an office job where you need to show up at a specific geographic location at specific times on specific days.

All income methods can be placed at some point in the time/space income matrix. Therefore, the objective to create passive income is to move up and right in the income matrix.

There are two ways to do this…

How to make passive income

There are two primary methods of generating passive income.

1. Delegation of service

This can be achieved via the employment and contracting of team members. In order to employ others, you may require full control over the underlying service that is being provided. In other words, you may need to create a business operation of some kind. Delegation of service also includes the delegation of work to automated machinery and/or software.

Recommended reading on this topic:

The Four Hour Work Week – Tim Ferris
The E-Myth Revisted – Michael E. Gerber
Rich Dad Poor Dad – Robert Kiyosaki

2. Investment of capital

This can be achieved via saving a portion of your income and investing it into sound assets that ensure the safety of principal plus an adequate return. Strategy 1 in Infinite Prosperity is dedicated in its entirety to guiding our students in setting up a long-term passive investment portfolio using low-cost index funds with 5 dimensions of diversification.

Recommended reading on this topic:

Infinite Prosperity Course
Money: Master The Game – Tony Robbins
The Intelligent Investor – Benjamin Graham

Summary

Reliable, sustainable and grounded passive income can be generated two ways: Delegation of service, and investment of capital.

Delegating service means others are working for you
Investment of capital means your money is working for you

If someone else is not working for you, or your money is not working for you, it is an unrealistic expectaction to think that you will generate passive income.

With this in mind, if you should wish to start on the journey of creating financial independence and building passive income – the best time to start was when you were 18. The second best time to start is now.

If you know someone who could benefit from reading this post, please share it with them.

Thank you! 🙂

June 9, 2017
X