The opportunity to make money while we sleep is one few of us would turn down. And passive income, at face value, suggests we can do just that.
Contrary to what the phrase suggests, however, you need to put in work in order to attain a truly “passive” income.
Investing money you inherited or won in a lottery may be the only path to truly passive income, start to finish. But for most of us, creating this new revenue stream will involve investing money made from more traditional means like a job, or investing our time building a source of income from the ground up.
Without a large initial financial investment, people often underestimate the “sweat equity” or time and energy required at the beginning, says Jannese Torres-Rodriguez, a Florida-based entrepreneur and creator of the “Yo Quiero Dinero” podcast.
“That initial workload, that time it’s going to take to get to a place where it’s passive, is what freaks a lot of people out and makes them think that, ‘Oh, well, this is obviously a scam because I just want to make money quickly,’” says Torres-Rodriguez.
For both Torres-Rodriguez and Pat Flynn, a California-based entrepreneur and creator of the “Smart Passive Income” podcast, it took at least a year. Both said that it took consistent work during that period before they started seeing money come from their blogs, including from affiliate marketing, ad revenue and selling courses, among other sources.
The amount of work upfront can depend on the income stream and what you want to get out of it. For instance, if you’re making income from rental properties, you can hire a person or a company to take care of all the property management. That’ll take away from your earnings, but putting in your own time will make the income more active than passive.
If you’re looking to make passive income, keep in mind it’s not guaranteed down the road—even if you do put in the work. There’s no promise your investment, whether that’s time or money, will pay off. Inevitably, there is risk involved.
Seeing other peoples’ successes, or hearing about them, can trigger that fear of missing out on a good thing. But before you try to emulate them, consider the journey. It’s not unattainable, but it won’t happen overnight. NerdWallet/AP