How to Build Passive Income

Have you ever heard of passive income? What about residual income? Many people have heard of the term, but they don’t know exactly what it means, and they certainly don’t know how to start earning it. For most of us, we earn our income by way of earned income. We wake up and head to a job that pays us an hourly wage for being there. There’s absolutely nothing wrong with it, but if you want to earn true wealth, it is incredibly difficult to do on earned income alone.

What is Passive Income?

Passive income is exactly as it sounds. It is income that comes in regardless of whether you lift a finger or not. It used to be that all you had to do was go to the mailbox to get your check, but today everything is just directly deposited into your account, so you literally don’t have to move a muscle!

Now, of course there must be some work involved in order to earn an income. But, the difference between passive income and earned income is that for passive income, you do the majority of the work upfront before there’s even a chance of getting that direct deposit. There’s a chance that your hard work will make you very wealthy in the future, or your tireless efforts might never produce a cent! This is the challenge of passive income. You really need to have a great vision for the future and trust that your efforts won’t be for nothing.

The classic example of passive income is from Bruno, the bucket carrier. Every day, Bruno would get paid to carry buckets of water from the stream to the village. The pay was good, but Bruno thought there must be a better way! After thinking for a few days, he figured that he could dig a trench from the stream to the village and water would flow freely. He took his idea to the governing counsel of the city. If his idea was a success, he wanted to be paid 1 cent for each cup of water that came in through his trench. The city leaders thought he was nuts, but they agreed.

Bruno worked early mornings and late nights, all with the hopes of making great wealth, but got paid absolutely nothing until his job was completed. Finally, the day came when he reached the village. Many people laughed at him when he was working for nothing, but now they realized his vision. He could simply sit in a chair and effortlessly collect his money while the village received their water. His money was now entirely passive.

Start Earning Yours

Passive income is starting to sound pretty good isn’t it? But how could someone earn passive income today?  It’s been around for a while, but this practice is still producing many millionaires each year. If you’re a talented writer, collecting royalties on your book qualifies as passive income. Music also counts as passive income since you’re collecting money each time someone purchases a song (with no continual effort on your part). If you can think of a way to work hard now, but collect money continually in the future, then you’re well on your way to developing a passive income. Do this again and again, and you will soon be a very wealthy individual.

8 thoughts on “How to Build Passive Income

  1. There are many ways to earn passive income, but one that I am looking into now is dividend investing. While it may take me some time to get it setup and running smoothly, I think it could be good.

    1. Yes, it’s not too difficult once you start. Good luck to you!

  2. Great post! Like Grayson, I too am also looking into dividend investing.

  3. I am starting to look more into passive income. I have found too many things that don’t require some work and upkeep however but they wont require me doing as much as I am doing now. Dividend investing, real estate and others are great things to get into. Right now everything I do requires a lot of time and effort. Need to get with the passive income streams.

    1. I own a few sites and use staff that I found on odesk.com to do the work for me. It is labor intensive upfront training them but once they are up and running it is minimal upkeep.

  4. Everything requires work, but some require more than others. Passive Income is one of those, especially if you want to make it into a business.

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