I’ve found myself in a bit of a funk because I’m finishing blogs over two days later instead of one – so I’m confining this write-up to just 15 minutes:
So I got to thinking of how ‘in reality, nothing is what it seems –
This takes a couple of days instead of one being an example, and then Lydia editing my posts, Sahil adding images, Kaushal posting them and designing them, and then the SEO team trying to rank it on Google….
It’s in some ways exactly like the subject of today’s blog.
Passive Income – and it is a myth.
I’m going to see what ground I can cover over the next 12 minutes and 15 seconds (that which I have remaining) in what I’m confident will end up being a rant lol.
But hey – you (or I at least) are with me 😛
Over the last couple of years – there’s been multiple things that I’ve tried (and continue to try don’t get me wrong).
This includes but is not limited to:
- Affiliate Website Income
- A Pension
- Forex Trading
- Property Investments
- My Marketing Agency
- YouTube Monetization
- Shares In Various Companies
- Producing Online Courses
I can’t quite remember what else – but there’s no doubt likely more.
I’m also equally – in a full disclaimer – probably doing ALL of the things above badly.
I could be executing ALL of them better.
But, over 4 years of ‘serious’ business experience – at least my most serious where I’ve been about focus and progression –
I haven’t found ANYTHING in my experience that qualifies as passive income.
All of it, without exclusion, have dependencies that require some kind of time/effort on my side.
What I want to do then – is walk through each of them – and ‘BUST’ any myths associated with the crap I’ve read or what people might tell me about ‘passive income’ this and ‘passive income that’.
The Affiliate Passive Income Myth
So I own 4 different affiliate websites that rely upon income derived from the Amazon affiliate program.
Less than a year ago now – they reduced their affiliate rewards almost across the board in some cases from an 8% kick-back to 3% (that’s something like a 270% drop).
THEN, Google decided in their algorithmic update to go after Amazon when it came to their appearance within search – and they were the ‘biggest’ loser of the 2020 December update.
Also because of updates based around Expertise, Trust, and Authoritativeness – the way affiliate sites work – is that they basically have NONE of this – so they lost.
I.e I lost, i.e my projected earnings went into the toilet.
Even if NONE of these issues came up – you’re always (if you’re relying upon Google Traffic) – just one update away from getting kicked in the balls.
This, by the way, is the same for any business reliant upon organic search (which you guessed it – my agency Pearl Lemon is)
SaaS Passive Affiliate Income Myth
There may be some people who are reading this that will contend that with SaaS affiliate income – i.e the recurring commission that someone will generate for a product recommendation that turns into a sale – you TRULY can earn a passive income.
Here’s the kicker –
Many companies have dodgy cookie and attribution policies with determining that John Doe clicked your link, visited 5 different websites, and then purchased the product.
Maybe John Doe in-between cleared his cookies, maybe John Doe switched browsers, maybe John Doe used a different machine, maybe John Doe blocks cookies, maybe John Doe uses Duck Duck Go or some other private browser. Maybe John Does end up buying 30 days, 1 hour later – exactly one hour AFTER the cookie expires.
Maybe the affiliate cookie tracking has its own problems anyway. Maybe they underreport. Maybe they had an outage and lost all cookies generated within the last X days…
In these scenarios – you’re NOT getting rewarded for your hard work.
However – let’s assume that John Doe successfully makes a transaction – and you’ve given attribution for it – HOORAY – you’re now earning an affiliate commission from this software sale.
Onto more problems lol –
What is John’s intention with this SaaS product? Is it just a trial? Will he stick with it? Maybe he’ll refund me?
The Truth About Volume
Now in each of these scenarios – the way to manage this could ultimately just be volume. I.e if you drive enough traffic and if you then make enough sales it doesn’t matter.
Although please keep in mind that it could WELL be the case that you’re driving traffic and then sign-ups in BOTH these instances via SEO.
And that means you’re still ultimately reliant upon Google traffic – so your funnel is as good as your Google traffic is – and you’re potentially just ONE update away from seeing a 30% drop in returns (even more potentially).
The Pension Myth
I’m not sure this really falls under the band of ‘passive income per se as it ultimately relates to saving a load of money for your retirement.
Now, where that money you save is invested is where then it gets interesting.
You can put it into a Vanguard Index fund. You can put it into a managed pension account. You can leave it in your bank and do nothing.
So I’ve put it into a managed fund and I know through 2020 I lost a fair sum of money because of the turbulence of the world markets.
Pension plans with companies have gone belly up, and investing with funds doesn’t seem that lucrative.
And whilst there ‘are’ good pots Vs bad pots…well – it all requires some thought and it DOES require management because picking a pot and investing into it for the rest of your working life seems pretty damn risky as far as I can tell…
The Forex Trading Myth
As you can tell now, I’m going through one by one – each of the things and discussing my experience of them.
So Forex Trading comes the closest I’ve seen (when you’ve got a managed account) to truly passive income.
I have had a broker, they have an algorithm – and that is managed by them – and I had a solid 2.5-year run of making good money.
Then I lost it all.
£240,000 on account from a total of £485,000 invested in that time period (although the true number is smaller than that as I was pulling money in and out pretty regularly).
Of course – the nature of trading is that it carries a high amount of risk so it all works well until the house comes tumbling down…
Now, this is the one that is really interesting I’m sure.
I have 5 properties that I currently own – all low value (i.e one >200k, the others all <100k), and have bought them all in the hope that they will provide passive income.
It’s been almost a year into this journey and there have been the following things I’ve needed to do have arisen:
- Preparing my accounts to give to my accountant
- Making decisions by email as to property repairs
- Checking to make sure I’m actually getting paid
- Dealing with non-paying tenants
- Dealing with no tenants and having to pay the mortgage still
On balance, I presume I could identify all of the issues that tend to come up and have one of my team manage all of these types of issues.
So right now it’s not passive income but there’s a distinct possibility that if I installed the right management system there could be.
My Marketing Agency
Now this one is worth spending a little more time on as it’s the most obvious form of income that’s active.
However, it’s also the most reliable form of income I have.
At the moment I’m actually in the midst of trying to turn this into passive income through the advice of my friend Ross Tavendale.
The idea is that I slowly remove myself from every section of the business.
Doing this is a hugely complicated process and it remains to be seen how successful I’ll actually be in doing this – but time will tell.
Needless to say, there are many many moving parts within running a business of any kind
Arguably this is a form of passive income in that you can earn money from something you’re already doing anyway in creating YouTube content.
However, the money you earn is so low compared to the number of views you need I’m not sure how meaningful this is.
If you’re able to drive 50,000+ views a month to your channel then arguably there’s more value in finding other ways to monetize your audience than through YouTube.
Pearl Lemon Official is monetized and we’ll make maybe $20-30 per month (so nothing)…and of course…
If you don’t like recording videos well…
So I mention ISAs, Shares, Courses,s, and Ebooks…
I’m sure there are other things we could discuss as well.
Granted it’s also the case that I’ve only really been able to think about investing properly for maybe the last three years so I’m definitely blinded by my inexperience…
But yes there you have it.
In any shape I’ve seen so far – there’s no such thing as passive income.
There’s definitely the income that is easier to create and that can feel like ‘I’m getting paid to do what I love’ and there’s other income that takes very little of your time – but is truly passive.
I think you need to make an extraordinary sum of money, to begin with, and then just live off the interest perhaps.
I’ll write something else like this may be in the years to come and have a very different position perhaps – but as it stands – passive income simply doesn’t exist 😛