Comments on: There's No Such Thing as Passive Income

By: This Week in Personal Finance - February 19, 2010 | Redeeming Riches

This Week in Personal Finance - February 19, 2010 | Redeeming Riches — Thu, 29 Jul 2010 10:25:21 +0000

[...] Fiscal Fizzle takes an interesting spin stating that there is no such thing as passive income. [...]

By: Aury (Thunderdrake)

Aury (Thunderdrake) — Tue, 25 May 2010 01:52:44 +0000

I strongly believe in the idea of passive income. I strongly DIS-believe in the idea that you can just generate that passive income through lazy decadence. It takes hard work, financial tenacity and creativity, and prudence to get there. And even these passive portfolios require not only maintenance, but to keep that financial intelligence in tact to ensure one bars off cataclysmic changes.

I shamefully admit I’m a big fan of Robert Kiyosaki’s teachings, but what I took out of it more than anything else was the need to be financially educated; to know what’s going on around you in the world around you. Passive income is one thing. Getting that income to exceed your expenses is completely another!

By: Shekhar Lele

Shekhar Lele — Thu, 11 Mar 2010 11:50:14 +0000

Hi Folks,

This has been an interesting read. I work as a middle management executive with a multinational financial services company in Mumbai, India and am 32 years old. I actually believe in the concept of financial freedom. While earning a passive income does not mean no work at all, it does mean having more time on hands compared to our 9 to 8 drudgery. In Mumbai, rental yields are an abyssmal 2.5% of capital values for residential properties and hence, in my opinion, owning more than 1 home may not quite be such a great idea, especially with real estate already very steep (and hence the future growth potential limited).

I have deliberately saved over 50% of my income over the last 10 years I have been working. Having a working spouse and living in my own home have helped me do this. Today, I can well say that I generate a fair amount of money as interest on my investments. But this brings me to another subject. Would we want our best asset to be under utilised? I mean, would I allow a great plot of land to just idle? Not at all. So why do it to ourselves? Are’nt we our greatest asset? Sure, we’d have some years of exponential growth and some where we don’t quite make it, but is’nt that the way every asset class behaves?

True financial freedom probably does not mean sitting at home doing nothing. To me, it means having a job you enjoy or probably don’t really dislike. It means having enough money coming in every month where you are not ‘forced’ to work in a hostile / thankless environment. Now, is’nt that ‘freedom’ after all?

By: Wojciech Kulicki

Wojciech Kulicki — Thu, 25 Feb 2010 13:33:28 +0000

I wanted to bring a couple of follow-up posts to everyone's attention, if you'd like to continue the discussion: Is Passive Income Possible? at Planting Dollars (written by Ryan) Passive Income – Further Thoughts From Mr Credit Card – Guest Post at Planting Dollars (written by Mr. Credit Card)

By: Wojciech Kulicki

Wojciech Kulicki — Sun, 21 Feb 2010 22:45:25 +0000

“the work is usually minimal as compared to a full-time job or a regular business…” That’s a key test, I think, of any “non-active” income strategy. I really like Brian Lee’s approach (above comment) of figuring out where things lie on the active-passive spectrum, so your type of business would clearly be very passive.

Thanks for your comment!

By: Wojciech Kulicki

Wojciech Kulicki — Sun, 21 Feb 2010 22:22:50 +0000

I really like your analogy of the “continuum.” In essence, we’re not looking for “passive income,” but for the “MOST passive income”–something that’s as far as possible down the scale.

With that understanding, we can say that EVERYTHING is active income–but some are more passive than others. Awesome!

By: Wojciech Kulicki

Wojciech Kulicki — Sun, 21 Feb 2010 22:19:46 +0000

I think what you’re talking about is essentially the process of building many businesses–a lot of work up front, and then a hands-off approach as other people take over the reigns and you collect a residual check. I’m not sure if I could say blogging is included in that (I think it actually gets harder as you go!), but the income definitely increases exponentially if your blog is successful.

By: Wojciech Kulicki

Wojciech Kulicki — Sun, 21 Feb 2010 22:12:17 +0000

Good points–in the end, there is no “free lunch” with anything. The question becomes–how much do you want to leverage your time for the income you get?

By: Wojciech Kulicki

Wojciech Kulicki — Sun, 21 Feb 2010 22:09:34 +0000

“100% passive will never be achieved but you can find ways to take your hands away.” I think you’re definitely right. Defining passive as “100% passive” might be a fool’s errand, but understanding that it will never be 100% allows you to find things that are as close as possible.

By: Wojciech Kulicki

Wojciech Kulicki — Sun, 21 Feb 2010 22:01:03 +0000

You bring up an interesting point–I think Mr. Credit Card to argue that, unless your website income is indefinite, it cannot be considered passive (in other words, if in 5 years you have to modify your income-generating strategy, then it’s not truly passive).

My thoughts? 5 years is a pretty good amount of time to earn income while doing nothing to maintain it, even if you do have to change your strategy after that time period.