The Truth About Passive Income

Passive Income – Sure, passive income is great, but here are the dangers that everyone conveniently forgets to mention.

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Hey, this is Leo for actualized dot-org. And in this video, I’m going to tell you the truth about passive income. Passive income is a really interesting thing and if you’re studying material or products on how to start your own business, maybe you want to start an online business, maybe you want to start an offline business, you know whatever you want to do. One of the things you hear talked about a lot when you’re doing that, just getting started is the whole passive income thing.

And there’s this ideal kind of this Holy Grail that everybody talks about which is passive income. And now that I’ve been in business for about five years for myself, I live primarily off, passive income. I used to live a lot more off. Passive income that I do now. Now, I little bit more active income now that I do one-on-one coaching, but the passive income thing so I’ve learned quite a bit of money with passive income. And I have a couple of ideas, just some thoughts that you should understand about passive income because I think that’s some of the stuff out there that you can watch on YouTube or anywhere else can be a little bit misleading. There’s really three main points here that I want to make about passive income. Number one, is that it’s awesome. It is awesome. Number two, is that it’s not really as passive as you’re told. And number three is that it’s dangerous.

And I really want to cover. Why? It’s dangerous. And some of the traps and pitfalls of passive income, because when we start off if you’re working a salary job, if you’re within ninety five job, the way that I was before I started my business, then you’re probably thinking, like, well, passive income, that means what that I get to sit at home in my underwear and do not thing. And I’m still getting income. And that’s basically what it means. It means that if you’re on vacation, you’re still getting income. It means that if it’s Christmas or if it’s a labor day, you’re still getting income. It means that if you go on vacation somewhere far away, you’re still getting income. And so this is is a cool thing? It might seem like, well, what could be the downside of something like this? So let me go into that in some detail. So first of all, yes, it is awesome. And I love that feeling that you get when you first get even a little bit of passive income, I remember when I was getting just.

Five dollars a day or ten or twenty dollars a day that already feels like a lot to you especially if it’s in addition to the salary income that you’ve got $10 a day $20, a day you’re thinking in your mind stuff like well that’s like a free meal. Like if I get 20 bucks a day extra that means I can go for some nice Sushi, every single day, I don’t even have to work for it. It’s just coming in, like, that’s awesome. Now, what if we can ratchet that up to $100 a day? Well, damn, for $100 a day, you know, I could I could be buying cool stuff every day or I can be using that to pay my bills or whatever. And if then you increase that to two or three hundred dollars a day, then at that point for most people, that’s kind of the area where they start to feel like, oh damn, if I had that much, I would quit my job and I’m go travel the world. I wouldn’t have a single worry in the world anymore because that is that magic number where, basically, your expenses are all covered and you even got a little bit extra for the luxuries of life.

And so I mean, that feels sweet. That’s awesome. The other really cool thing about it is the freedom of the schedule that you get. So the whole key to passive income is that you get it without having to sit there and punch on the keyboard or whatever other type of work you’re doing. It just comes into you, right? It’s just like a guaranteed stream of income every single day for for me. It was owning websites websites that get traffic. When the websites get traffic, that traffic is usually fairly consistent throughout the day. And throughout the week throughout the month throughout the year. So that’s a pretty reliable source of income. And you can have statistics that track all that stuff. So you can be knowing exactly how much you’re earning per, you know, 1,000 viewers, or 10,000 viewers, or whatever your traffic levels are. And when I started basically, within a year, I was able to build up the business to the point where we were making six figures, passive income,

And ultimately, I generated probably over a million dollars and in passive income over the last three or four five years or so kind of don’t really keep track of that stuff anymore, but it’s just like he just comes in. So this is a really awesome thing, the freedom to schedule that this allowed for me. It’ll offer some really awesome stuff. Actually. This is kind of what allowed me to do a lot of person development work that other people are able to do because they’re so busy with their nine-to-five job. Right. The ninety five job really drains you. Not only does it drain you. But it’s also like I’m very fixed schedule. C can’t really work around it. Like for example, when I wanted to go date and I want to get better with dating and relationships, I would literally take months off of my work or I’d be working. But my work was flexible enough that I can do just a little a little bit here little bit there. And basically, I was able to spend like almost pretty much a whole year just really pursuing a mastery of relationships to the point where I wasn’t working that much.

Just focusing on that. And that that have that really build me up, really fast, and got me to the point where I was really satisfied and then I could go back to work. And so it kind of allows you to swing your pendulum from one thing to the next thing without having to simultaneously be doing 10 different things and stretching yourself, too thin. So, that’s a really cool thing with this freedom of the schedule. And the other really cool thing about passive income is that it’s very scalable. So unlike doing something like manual labor you can’t scale it That much you can only do nine hours of that per day or however, many hours you do. But with passive income, there’s really no limit at all. So, if you’re getting $100 a day, there’s no reason you can’t be getting 200, 500 1000 or even more and they’re your mind just kind of runs while it’s like, oh man, look at the possibilities. If I’m already earning $100 a day, I can already picture how I could turn that into 200 or 300 and then it’s like damn that’s you know, that really opens up the doors for anything. So, that’s why it’s awesome.

The other point that I wanted to make, is that it’s not really as passive as you’re told. So passive, we kind of assumed like, oh, well, you know, I can go do anything I want and the income keeps coming in. Well, the reality of is, it is of, it is a little bit different. The fact is that the way this passive income is generated is that usually you spend a lot of time initially without any income at all, building it up. So basically, you’re kind of paying it forward. You might sit there for a year or two, Two years working on your business, building it up and not be seeing anything. Then the passive income starts rolling in. So first of all, you got to take into account that the passive income is paying for all the work you did the, you know, the hard work you did months earlier. So you got to get paid for that. But then, in addition to that, once you do have the passive income, there’s always maintenance work required.

This is an interesting phenomenon because you this means that. Really? It’s not a whole. The Holy Grail that is made out to be because the Holy Grail. Is that you just have some sort of product or business or service that you’re selling or whatever it is, and that customers just keep coming to you? Well in reality, there’s work that way because markets are evolve ing pretty quickly. And especially if you’re running an online business man, online stuff evolves very, very fast in six months time. The whole landscape can change of your industry. Even if you’re doing an offline business, the landscape, the landscape can change quickly, too. So this is actually why a lot of businesses go out of business. This is actually why a lot of really big corporations fail and go into bankruptcy is because they’re actually not proactive enough.

At looking at the Horizon of where the landscape is going. So it’s kind of like you’re going 100 miles an hour in a car and you’re not looking too far ahead, you get lost, you make bad turns to make bad decisions. And so, that’s the thing that I found with passive income is that. Yes, once I was even getting six figures of passive income, the challenge was that I always had to be on my feet and I was actually working, I wasn’t doing the four hour work week. I was doing the 60-hour. Workweek. Why why? Because I’m always looking at the Horizon to see how I need to adjust my business. So that the passive income can stay preserved. You might say, well, maybe that was just your business. I don’t know about that. See, I think that this is going to be the case in any business where you’re earning decent money because if you’re earning decent money fairly easily, that means that you’re going to have more and more competition creeping in there.

Just by the way that the market system works, that’s how the free market system. Works really business about finding areas and imbalances in the market and then explain those mountains those imbalances, usually the kind of gold rush, you know, you first buy a bunch of Golden Hills. Then you go there, you dig it out. The first person spotted, he becomes a billionaire, the next person might be familiar. The next person might just get a hundred thousand dollars and the more people come and come and come like that that resource of goal just gets exhausted until afterwards. Maybe, five years later. There’s nothing left of this mountain of gold is just a plain old mountain. It’s been sucked dry. Now, of course, there are evergreen businesses that will never be sucked dry, but I find that you still have to engage with with like development. You have to be better in your product better in your service better in your business. I’m not even talking about the very basic maintenance work, that’s required. So, for example, if you’re running an online business at the very minimum, you’re going to have to have some sort of customer support if people are buying stuff from you.

So if you sell one hundred products is guaranteed that at least, perhaps two to five percent of the people who buy that product will come back and has this problem a technical issue, whatever. So just for that, you’re gonna have to have some manual labor. And you could say, sure, why don’t we just outsource that. And you can you can outsource some of that stuff and hire somebody to do it for you? But then you still have to own versie, that person. You can’t outsource literally your entire business if you try to do that, what’s going to happen. Is that your business is going to collapse? It’s just a matter of time. It might take two years, five years, ten years, but it’s gonna collapse.

I’ve seen this in my business. The more time I put into it, the more I’m looking at the future the more I’m spotting cool trends that I’m working towards that. I’m proving my products and services and then stuff is growing as soon as I stop doing that it’s not this thing stay the same, they start to die and sometimes that death can be really quick or can be more drawn out but I find that for example with online businesses just one or two years is enough to kill your whole business if you’re not on top of the ball. So that’s the maintenance work stuff. But also So because there’s this kind of pressure to always be looking at the future. It’s also stressful and one of the things with passive income is that it’s kind of addictive, it’s like a drug. You start getting it then. Usually, what people do is they ratchet up their lifestyle to match the passive income.

So now you’re feeling nice, but what now happens if your passive income is threatened and your lifestyle has been improved, you might say, well I’ll just go back to my old lifestyle. But see you say that now because you haven’t ratcheted up yet. Once you do, ratchet it up, then you’re going to have a different opinion about that. You’re going to be very worried or afraid. And so, what it’s going to do is kind of put you in, like, fear mode and you’re always going to be in in this mode where you’re trying to protect yourself against other people, taking your income away from you. Because you’re kind of dependent on it’s your lifeline. And so, this creates a constant source of stress. This is the kind of stress that entrepreneurs and business, people always have to deal with, but I think it’s even worse when you’re dealing with passive income streams and kind of basing your lifestyle on the passive income that you’re getting, which is a really popular kind of idea nowadays especially online.

So it’s not all peaches and cream. You do have a you have this problem. And this stress, you know, gets to you. Especially if what I found, you know, if if you just want to put your business in maintenance mode and you don’t want to keep growing it, then what you’re gonna do is you’re going to always you basically kind of kind of doom yourself to the death of your business. And you’re just to kind of waiting and just seeing and drawing out and drawing out, you’re going to see that the end is coming for you. The way to deal with that is to put all your attention and resources and time and energy into growing the business. But then that takes a lot of time growing. The business is like a full time job plus.

It could be a 60 hour a week job. So in reality most online entrepreneurs, it’s not like they’re sitting on the beach sipping pina, coladas. Most of them what they’re doing is they’re looking for the next thing. They’re doing research and development. There are testing stuff out, there are building new products, creating new Services polishing, everything up, improving the quality of everything they’re doing because they do have competition, and they’re very mindful of that. And also, because if they didn’t do that, you’d start to feel really bad, just psychologically. Because you would admit to yourself that. Well, this is the best that I could do. I’ve already reached my Peak. This is the best business I could do. This is the most income going to have now. I’m just going to maintain it. See when you go into maintenance mode, it’s really hard to motivate yourself to get up in the bed out of your bed in the morning because you you wake up and you’re like oh man I have to go do more maintenance or maintenance work. Nobody likes to do maintenance work. That’s not work that you can get passionate about so just keep that in mind.

And the last point I want to make is the dangers of passive income. Here’s where I can really see people screwing up their lives. The problem with passive income is that it makes you lazy and it makes you complacent. You don’t have that thirst that fight anymore to go out there and grow the business. Look for New Opportunities and really work hard. I’ve really noticed it in myself. You even lose the drive to do proper good. Quality maintenance work, even maintenance work. What you’ll start to do, is you’ll start to just kind of like shrug it off, not want to do it procrastinate on it and this really even if your business is going to perform decently the problem, is that like your mind? Your head space is going to become so screwed up. And so like, toxic that is just going to put you like into this rut.

And I can definitely see this rut growing larger, larger and larger and really robbing you of that extraordinary life that you want. The reason you went and you want to get that passive income is probably because you’re a type person. You wanna go out there? Accomplish big stuff with your life and in the world in impact people, well, what I see is that when you get a six figures, passive income every single year that like totally robs you of all your motivation, even if you didn’t go in to the business for money, this funny thing happens where you just like someone throws a lot of money at you and all the sudden it’s like, well, you know, that big, ambitious goal that I had to help people as unimportant.

And you know, this impact that I wanted to have in my community. That’s not important. And this product that I wanted to create is going to be all super special and really make a you know a cool impact in my industry or my Niche. You know I’ll do that next year and so you just kind of procrastinate and procrastinate procrastinate. The other problem that I see is passive income, keeps you in the wrong niches within your business, it keeps you the wrong niches and it also Encourage you to encourages you to pursue the wrong niches. What I mean by this is that your business should be also kind of self-actualizing with you. This means that if you start a business, which is all about profit,

Maybe you have to do that, just to get some cash in the coffers, okay cool. But then what happens is that, if you get the cash, what you should do is, you should evolve your goals. So that your business is not about just earning cash, but your business is about helping people or living out your passion doing something really meaningful for the world for society. Your life purpose, right? This is getting into the topic of life purpose and what I really find is that the stuff that is your life purpose, many times. That’s not the Most lucrative and profitable thing, and it’s also not necessarily a guaranteed passive income source. So, just to give you an example, let’s say that I have my online business and then what I discover is that, oh, I’m really passionate about art, and I want to become a painter.

Well it’s going to be very difficult for me to make that transition. Even if I’m really dead set on becoming a painter. And I know that that’s what I want. I’m really passionate about. It is gonna be very difficult because I’ve got this source of income coming in, and it’s incentivizing me to stay in my online business. And there’s probably gonna be new opportunities within this online business. Why? I can grow it even more. I can increase the income even more. So what? You’ll find in practice that you can have this kind of really difficult choice. One you can stay doing the thing that you know isn’t necessarily your passion, but you can grow and earn even more money, or you can go become a painter. Becoming a painter is going to seem like, well. That’s kind of risky. You know painters. They don’t make that much money, not most of them. There’s a high failure rate. There’s a there’s all sorts of risks involved. And this opportunity with the income like, why would I give that up? I might never get this opportunity again. A couple of years go by. This opportunity might go away if I don’t capitalize on it now.

That’s how your mind tends to think. And then what happens is that you’re like this painter, think it can wait, it can wait. I’ll just put it off till, you know, two years down the road, five years down the road and that inevitably leads to putting it off forever. So you’re wasting a lot of your time and energy into this passive income thing. And what I found very interesting about that is that it’s not even the best thing. If you want, actually lots of money, I find that the passive income thing. It will make you think so small. That you’re not ultimately going to put yourself in the position to earn the most money that you can, because here’s what’s going to happen. If you were really passionate, becoming a painter and you were really sure that was your life purpose. Then you should go and do that. That’s the proper strategy. And if you go and do that then,

Perhaps you could make millions of dollars selling your paintings. Now, if you go to the passive income thing, you might be earning six figures or something like that, but the problem there is that like, it’s just that’s, that’s going to be kind of your max, even if you grow that business, more and more and more because you’re not passionate about it and because, you know that the passion is over there, but you’re looking over here, that’s going to suddenly undermine every action that you take. It’s going to rob you of your motivation and you’re just not going to be as engaged with this business anymore. As Used to be all the stuff I’m talking about from personal experience and I think that I was better equipped than most people to have this infusion of cash and this passive income coming in. I was stuck really kind of an in a Whirlpool of chasing money. Even though I was, I’m not materialistic and I never really was, and I knew the dangers of that, but still it trapped me for a couple of years.

And it was very difficult to say no. So I really feel like passive income is one thing that’s so dangerous because it can keep you from pursuing your life purpose. It can keep you from even looking for it if you don’t know what your life purposes. And you’re getting passive income. Ninety five percent chance that that person will never even bothered to go looking for the passive for the for the life purpose. Because they they’re just not. You know they’re not feeling the pain of it. They feel too comfortable. They’re getting more more comfortable there. And the other problem I find is that passive income robs you of the willingness to do real work. It really kills your work Ethic.

This again connects with life purpose. Because for example, if you’re getting this passive income You’re probably not working too hard for it, after you establish your business, so maybe you’re putting in 5 hours of Maintenance, work a week. But you’re getting back six figures. That seem like a really amazing ratio of effort versus reward that seems so sweet. It’s like you can’t you can’t beat that. Now if you try to go becoming an artist, well if you want to become an artist you gotta go take maybe some classes, you gotta go put on Galleries and Exhibits, you got to go to maybe travel the country, you’ve got to practice. This your Technique, you got to sit up for hours, practicing your Technique drawing painting, you know, getting a studio going. So, all that stuff, that would be so much work, and that would feel like real work to you.

Because this little maintenance work that you’re doing on your passive income, business is just like, you know, you’re kind of. You’re basically phoning it in. You’re doing very dumb stuff that you’ve already done many times before, it’s not very challenging work. But now when you’re going to do the artist thing that all the sudden becomes really challenging work, it really starts to push your comfort zone. Makes you uncomfortable and because you haven’t been doing that kind of work for years because you just been coasting here with the passive income, what it does is that it means that you’re never to go and consciously want to do that work anymore. And so you’re going to quit, you’re going to come back. So what this creates is kind of Whirlpool effect where you leave but then you come back you leave and you come back. It’s almost like getting addictive drug to drugs or like like being in the mafia like that kind of thing, right. Just when I thought I was out, they pull me back in that’s what it tends to become because the rewards are too high.

And that’s why criminals get sucked back into criminal activities is because again that the criminal activities, the rewards there are really, very high. You don’t have to actually go in and into a lot of labor to get a lot of reward. Of course, there’s a risk there. So it’s not smart. So in the end I think that the way that you deal with this, you know, what’s the takeaway here. The takeaway is that passive income. It’s a great thing. I think that if you want to become a self actualized person, you actually have to develop passive income sources. I think that’s a really important thing for people. If you value independence, if you value freedom, if you want to be in country, troll your life, then go for passive income. Just be aware of all these pitfalls. And I think the most important thing here, the takeaway is that the more passive income you get, the more you should balance it out with personal development work.

So, one of the reasons that I was able to handle my passive income and I can still handle it today is because I’ve been doing lots of personal development work that gave me the wisdom that I need to see these pitfalls and to not fall into them. I actually did fall into them but to pull myself out, it gave me the tools. If you go to an ordinary person on the street random person and they don’t have any personal development training, they haven’t learned these kinds of things. They don’t know the right mindsets. They don’t know the day. Jurors of this passive income stuff then they’re just going to fall into it and they’re probably never going to recover. So watch out for that. I think that you need to really balance it out so maybe make some goals for yourself. Say something like well if I’m going to be earning $100 a day of passive income, then that means I have to read at least one personal development book per per week.

And if I increase that to $200 a day, then that means I have to take one paid seminar live, in-person seminar for personal development, somewhere, around the country. And then if any increases beyond that, then maybe I’ll go do you know some sort of training program here something else? They’re just so that like you’re getting that higher-value wisdom. Rather than the lower value of just pursuing money and just running a successful business because in the end having lots of money in pursuing a successful business, that’s very low value. You want the high value? The self-actualization is found in doing high-value stuff like pursuing. Beauty Excellence, truth justice?

Contribution to others helping others in some way, making a meaningful impact. That’s high value stuff. That’s the stuff you want to be aiming towards. Right. That’s why passive income is so powerful that it can actually enable you to do this high value stuff. But most people cannot be trusted to use the money for that. Most people use that money for stupid low value stuff. So just be careful about that. All right. This is Leo. I’m signing off. Go ahead, post your comments down below. Click the like button like this video share as well. Throw it on Facebook, share with friend and finally come sign up to our newsletter. Right here. Actualized Dot Org newsletter, it’s free. I release new videos about self actualization topics. Every single week I covered a lot of deep mindset stuff and a lot more stuff coming about business and about money. But I also talk about relationships.

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