A few years ago when I read Rich Dad, Poor Dad, the concept of passive income lit my brain on fire. I had never thought of the idea of making money for nothing. I assumed that money was achieved only due to the hard-pressed exchange of time for filthy lucre. Kiyosaki, the author of RDPD, assured us that passive income was the key to wealth.
Where is the passive income?
I plunged into research. I identified rental income, investment income and even creating original content as “passive income.” I had visions of checks flowing in, one after the other, landing in a pile on my desk called the PI pile. But after time, I realized that the pursuit of passive income was nearly impossible through these routes. How can you really make passive income? Inquiring minds want to know, when they aren’t trying to figure out how much of a jerk John Edwards is for cheating on his wife with the anti-heroine of this story. These are the top 8 “real” ways to make passive income, but even they have a catch – all but the last one.
2. Marry someone rich. You’ll have to do some work, true, but if you aim high enough we’re talking about a huge return on investment here.
3. Hook up with someone rich and desperate enough to pay to keep you around – the classic “sugar daddy” scenario. Granted, you may have to do some work here… but I’ve seen this work out where surprisingly little effort is expected in return.
4. Have someone else do the work for you; a nice trick if you can manage it. Ask your buddy the web designer to create a website for you – for free. Why would he do it? The exposure? The joy of being taken advantage of? Don’t worry – you’re getting passive income!
5. Win an office lottery pool. OK, you risked a few dollars, but someone else went to the bodega, bought the ticket and checked the results. You didn’t put much sweat into your share of the Mega Millions, did you?
6. Gamble. There is, of course, a potential downside here. But if sitting around sipping free martinis while playing a game and winning isn’t as close to passive income as possible, I don’t know what is.
7. Invest in dividend-paying stocks. This point is a cheat. You have to earn the money that you use to buy the stock. On the other hand, everything that happens after you buy it is gravy. That income becomes close to truly passive – so the trick is to use windfalls (an economic stimulus check, for example) to invest in dividend-paying stocks.
8. Be born rich. Yes, you have to be nice enough to great-aunt Milfred to avoid getting cut out of your trust fund, but let’s face it: this is as close to passive income as you’ll see in this life.
Don’t think you’ll get rich without working for it. Everything you can generate wealth from takes effort. Writing a book is hard work. It may create a wealthstream for years to come, but that’s what you should be aiming for: wealthstreams, not passive income. Don’t imagine that there’s a magical key to wealth that doesn’t involve either hard ongoing work or a good bit of upfront work.