Updated: January 16, 2021
Passive income is the most desirable type of income. After all, what’s better than having your money work for you and not the other way around?
And if financial freedom is your goal, then seeking passive income opportunities should become part of your life.
However, while there are many personal finance articles out there that talk about its necessity in wealth generation, I think that most simply encourage and inspire.
And only a few can likewise emphasize the proper mindset that will make one’s pursuit truly successful.
If you’re someone who is on an active pursuit of financial freedom, then I’m sure you know how passive income can be so difficult to build – yes, there’s no instant formula for it.
And that’s just one lesson I’ve learned through the years about passive income opportunities. So what else have I discovered? Here are more realizations:
Passive income is not for the lazy.
People want it because they’re tired of working for money. Having this mindset can be bad because it could mean that you’re not prepared to work hard enough for passive income.
It takes time to build and it requires a lot of work, energy, and dedication. I realized that if making passive income was easy, then everybody would be doing it, right?
So perhaps the better reason why you want this is because you know that you cannot work for money forever.
You’ll grow old, your skills and knowledge will become outdated, or your priorities in life could change. And for whatever reason that may be, it’s your passive income that will sustain you and that’s why you want (need) it.
There is such as thing as semi-passive income.
Semi-passive income refers to opportunities that earn well but require occasional work. And in my experience, pure passive income opportunities relatively give low returns.
But semi-passive opportunities, in exchange for a bit of your active time, can easily give you as much as you would normally earn as an employee (active income), and sometimes even more.
But what’s important for you to realize here is that many of what other people say as a passive income opportunity is in reality, semi-passive.
For example, a vending machine business is often referred to as a passive income business. But it’s actually semi-passive because you still have to monitor your sales and inventory.
When you pursue a semi-passive income opportunity with the mindset that it’s purely passive, then you’re probably leading yourself to disappointment.
Never neglect active income.
I believe that there’s a trap that people often fall into when they first realize the idea and power of passive income. And that is to give active income the least priority in their lives. This is obviously a mistake.
While passive income is the most desirable type of income, it doesn’t mean that you shouldn’t pursue and commit to active income anymore.
Passive income “pays” for your future expenses but it is active income that mostly covers your present-day expenses.
I’ve seen a handful of people who have lost interest in giving their best at work because their minds are always busy with finding passive income opportunities.
Again, success doesn’t happen overnight, and while you’re still waiting for it to grow, you have to realize that there are bills you need to pay.
What about you? How’s your pursuit of passive income going? Do share them below by leaving a comment.
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Passive income is my life. hehehe. 🙂 Yan lang ma sheshare ko. ^_~
Hi Fitz, nice article. As for me, real estate sold through rent-to-own is truly passive income. It has become so passive that at times I forgot all about them and only remember when I have to deposit the post-dated checks of my tenant-buyers. Yes, for done deals, that’s the only thing I do, deposit checks every month. Of course all of the effort has to be done upfront, but still, working on a deal at an average of 1 hour a day for only a couple of months is not bad. 😉
I agree that one should never neglect active income but when passive income already pays for major expenses like monthly amortizations of the house/car/utilities/etc., the logical thing to do would be to start giving more focus on building more of those passive income streams. It comes to a point when active income really becomes an obstacle in achieving financial freedom.
Nice comment Jehz! Hehe… Passive income is the best way of making money.
For me, slowly but surely, I’m building assets that will provide me passive income. What’s more important is to “earn more and desire less”. No matter how huge your income is, if you don’t know how to save for the future, chances are you will be left with nothing or minimum savings. I always believe in the saying “ubos ubos biyaya, bukas ay nakatunganga”
Kailan kaya ako magiging solely passive income dependent? I love to join you Fitz and Jehz and become huge passive income earners as well. 🙂
ey, i want to join you as well. =)
halu…your points are well place about having one’s goal to have a passive income, especially this steep financial situation. But, to aspire in having a passive income is not enough, one must be focus and financially literate since to amount is of value if one cant save the fruits from his or her labor. Your right about having an active income while having a semi passive income, in this way as a beginner entrepreneur you can still learn and afford to make mistakes with less financial setbacks. As Robert K.(RICH DAD POOR DAD) has said ” we can only face FEAR by having constant EDUCATION”.
Hi Fitz, nice article. As for me, real estate sold through rent-to-own is truly passive income. It has become so passive that at times I forgot all about them and only remember when I have to deposit the post-dated checks of my tenant-buyers. Yes, for done deals, that’s the only thing I do, deposit checks every month. Of course all of the effort has to be done upfront, but still, working on a deal at an average of 1 hour a day for only a couple of months is not bad. 😉
I agree that one should never neglect active income(like earned income from being an employee) but when passive income already pays for major expenses like monthly amortizations of the house, etc., the next logical thing to do would be to start giving more focus on building more of those passive income streams. It comes to a point when active income really becomes an obstacle in achieving financial freedom. Of course, semi-passive income generating activities like internet marketing is a good complement to truly passive income.
great read, very informative.
I think out desire for passive income shows in our willingness to participate in pyramid schemes, some of which are still popular today albeit presented in a different manner. Hehe.
Mine? I’m still looking. My income at the moment comes only from my day job + interest from the bank (not much, considering inflation). If you have suggestions, I’d be glad to hear it.
its better to find passive income while still sticking with your active income…if you think your business will earn more than your current work then its time to quit your job and spend full time in your biz..always stay motivated and believe in yourself that everything will happen on how you imagine it…ask receive believe and you will achieve
Great article. Too many people abandon active income for the lure of passive, without thinking of the work it takes to GET to that place first!
Hello passive earners, particularly Jehzeel Laurente, can you please tell us what is the csource of your passive income. Is it all from adsense or from affiliate programs. I think affiliate programs are semi-passive and adsense is purely passive (my opinion only). For Tyrone of Millionaire Acts, is you source of Passive income from your stock investment or from other source? Please share.
Hi RTFVerterra,
For me, my passive income sources are my portfolio investments (TD, mutual funds, etc.), online income (Adsense, etc.) and my real life business.
I consider my business income passive because I’ve been able to automate it and run without my presence. Although it still requires minimal supervision, I could however, leave it for almost a month with worries. 😀
Hi RTFVerterra, hopefully, you can visit my blog as well. 🙂
My source of passive income are stocks (including stock dividends and rise in stock prices), deposit account interests credited monthly, unit investment trust funds, and of course, adsense.
They are all in support to my main income which is active income – my day job as Competitive Intelligence Analyst.
I’m waiting for the time when my passive income is greater than my active income. 🙂
Hi Fitz,
I like your articles a lot. I’m so glad you created a site like this that can help people especially your kabayans on how to be smart on their money and awareness on how to spend wisely. Anyhow, it made me think how to manage my finances as well. Now, I’m planning to start a small business or even this passive income. I am an expatriate together with my family here in Middle East. Can you help me what passive income I can start here or maybe small (franchise business)to start in the Philippines. Any suggestions? Looking forward to hear from you soon!
Kiwi
Hi Kiwi,
From experience, passive income can either be a paper investment or an automated business.
In general, acquiring an asset that generates income higher than current inflation rates can be considered passive income.
Personally, that’s the reason why I have stock market investments, mutual funds, etc. They’re passive enough and grows slowly through the years.
On the other hand, an automated business can be a good source of passive income but it is not something you can immediately build. It requires a few years before you can really “perfect” the business processes and systems so that it becomes automated (runs without you).
Anyhow, because you’re in the Middle East, I think it would be best if you can start with paper investments firsts. Build a diverse portfolio and put money into it little by little.
As for franchising a business, that can be a good option but you’re limited physical presence in the early stages of business can be a disadvantage. I advise that you pursue this venture if you have someone you can really trust to manage it while you’re abroad.
Lastly, starting an online business can be a good option. It’s not passive income, but it’s good active income. Selling products on eBay or putting up a Multiply store is a path you can pursue.
I hope I was able to help. 😀
Hi Fitz,
I’m a regular reader of your blogs, and would like to get started on building a passive income. but i guess i needed more research on this particularly on how to get started and what are the possible opportunities out there. I know one like real estate, but I feel I need to know more about it. I hope you can write more on this.
Thanks a lot! 🙂
Nice one. Sarap basahin ng articles mo sir.
Mr. Fitz, u r a big help especially to those who are thinking of investing their hard-earned money like me. I have a TD account but I’m planning to invest also in some investment instruments that would give me higher returns than TD for future business and retirement.
Hope to read more about investments.
nice articles.
Thanks!
Hi Fitz, this is an eye opener to most of us. I would say that most of us focus on our daily needs but forget to look forward. There is no fast way to get to passive income. Good planning and proper priority is needed to achieve this.
[…] If you want passive income… if you want to learn how to make money work for you, then you need to understand three things: […]
A Great Passive Income as Jay knows all about is Real Estate and to achieve this you need to have a PLAN with NO PLAN = NO PASSIVE INCOME. Most important is to have the goal of buying one 6 family “door” every 3 to 4 months then in 5 years you can retire in the Philippines easily and live nice calm stress free life style.
BUT GET YOUR PLAN FIRST – write it on paper and discuss with your wife as a team plan and goal to retire and life life fullest
thanks for all the info i have been getting while reading all the comments, it’s good to know most pinoys nowadays are beginning to realize the importance of financial literacy. Cheers to all…!!!
Thanks a lot for this info ..
OK, OK, Fitz, you are correct, I give up, it is time for us to develop a few totally passive income streams. My thinking was all of our family income is semi-passive except my beautiful Bride’s income from academic writing. She loves what she does (two decades and counting) and often states that: “it is like being paid to stay in school as I do research for my writing projects, learning new thing as well as keeping up with new information in my fields of specialization” The boss-lady finally agreed that yes, there may come a day when she can no longer continue.
I know that most folks consider Social Security payments as fully passive and secure. They are, as long as the government issuing the checks remains solvent. I have always lived with the thought that SS, could, one day come to an end or be cut to meet a budget. Not a likely event but I think it wise to plan that NOTHING is 100% for sure. I always worked to have retirement income from other sources than SS payments.
The local business ventures we developed are, again, semi-passive in my opinion. Our largest operation requires my wife to go out one day every two weeks to sign contracts, complete bank deposits and a few other minor tasks. Sometimes, due to delays beyond the control of our clients, my wife must go out for part of a second day. During her pregnancy last year, the attorney / account for our business did all of the leg-work while my wife was in hospital and on bed rest much of the time. Totally passive earnings for a while there but a deep cut into our income. We can agree that our attorney had a wonderful Christmas season!
Now, the COVID-19 pandemic has been devastating for the people of the Philippines and the economies of countries worldwide, no doubt about that. What we did receive and should be thankful for is the gift of time. My wife worked on and finished a business plan for a service she has wanted to provide for many years. A brick & mortar operation has always been expensive and these days not what many clients want.
She used this time to build business number four and yes, this one can eventually become totally passive. She has her educational product kits developed and could easily have someone else print, laminate, package and ship the products. (after school job for our troops????) The on-line part of the service does require her to work but once all recordings are completed and edited, no ongoing work. Simply provide clients who purchase with a product key to access the on-line materials. Again, a helper can send the product key to those who purchase. My wife’s new venture could well be her first 100% totally passive income. Great work Honey!!!
I have also jumped in with an oppertunity we have had in discussion for a period of time. One of our friends and part time driver for us mentioned how difficult it is for members of his association to get small business loans at affordable rates. They were looking to borrow directly from me to get out from under the burden of the 5/6 illegal loan operators. Emergency loans for one week have interest of 20% to 30% and higher these days. If the borrower misses the payment, they could well be in a very serious debt situation!
I was reluctant to create a loan business with people I might have difficulty tracking down, however, I really want to help this group. We sent our business attorney to meet with the group members and a solution was born. The association has formed their own CO-OP. Members pay a small fee to join their own CO-OP and association will issue loans, make collections and members cover for one another in the event of a missed payment. I hope that this model will be copied by others so that hard working people will no longer be abused by illegal loan activity.
So, where do I fit into the picture? The association had to have access to capital to begin operations. Does this make me a venture capitalist? This business deal will be 100% passive for me. My revolving capital loans to the association will be paid back by direct deposit into a segregated bank account. Yours truly will not even need to go out to deposit a check. Both my wife and I have feelings of great joy at the number of people and their families that will benefit from their better financial situation. Hopefully, in the future the association will have enough funds of their own piled up that they will no loner need any outside investor.
I will end this lengthy post with what my wife came home and shared with me on the last day of funding. Some CO-OP members got their requirements in a few days late. The CO-OP did not have enough cash to cover their requests because we did not have an accurate total. One fellow desperately wanted to end his 5/6 loan because there would be yet another P2000 interest payment added to his total loan if he did not pay the next day. On an emergency basis, I asked my brokerage firm to transfer enough cash the cover the remaining loan requests. The man approached my wife, literally with tears in his eyes to thank her for ending the horrible burden of debt on his shoulders. He pledges to be smarter with his borrowing in the future and then only from his CO-OP if there is a serious need!