Hey, this is Leo for actualized.org And in this video I’m gonna tell you the truth about passive income. Passive
income is a really interesting thing and if you are 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 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 a little 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 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 it past them 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 here with a nine to
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 nothing 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 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 for 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 ten
dollars a day twenty dollars today 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 have to work for it is just
coming in like that’s awesome now what if we can ratchet that up to a
hundred dollars a day well damn for a hundred dollars a day you know I
could I could be buying cool stuff every day or I could be using it 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 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 only
websites on websites that get traffic when the website to 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
know exactly how much you’re earning per you know a thousand 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 generated probably over a million
dollars and and passive income over the last three or four or five years or so
kind of don’t really keep track of that stuff anymore but it’s just like it just
comes in so this is a really awesome thing the
freedom to schedule this allowed for me it’ll add for 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 nine-to-five job really drains you not only does it drain you but it’s also
like a very fixed schedule so 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 you know I’d be working but my work was flexible enough that I can do
is just like a little a little bit here a little bit there and basically i was
able to spend like almost pretty much a whole year just really pursuing a master
of relationships to the point where I wasn’t working that much just focusing on
that and that that had 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 to swing your pendulum from one thing to the next
thing without having to simultaneously beats feels doing ten different things
and stretching yourself too thin that’s a really cool thing with the this
freedom of the schedule and the other really cool thing about passive income
is that is very scalable so unlike doing something made like manual labor you
can’t scale 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 a hundred dollars a day there’s no reason you can’t be getting
200 500 thousand 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 a
hundred hours 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 assume 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
years working on your business building it up and not be seeing anything then
the passive income starts rolling in so first we got to take into account
that the passive income is paying for all the work you did 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 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 holy grail that’s 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 this work that way
because markets are evolving 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 what 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 kinda like you’re going to her miles an hour the car and you’re not
looking too far ahead you get lost you make that turn 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 travelodge was that I always have to be on my feet and I was
actually working I wasn’t doing the 4-hour workweek I was doing the 60-hour work why because i’m always looking at the
horizon see how 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 can 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 is about finding areas and imbalances in the market and then
exploiting those imbalances and those imbalances usually they’re kind of like
a gold rush you know you first spot a bunch of
golden hills then you go there you dig it out the first version of spots that
he becomes a billionaire the next person might become a
millionaire the next person might just get a a hundred thousand dollars and the
more people come and come and come like that that resource of gold just gets
exhausted until afterwards maybe five years later that 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 the with like development you have to be bettering your product bettering
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 a hundred products is guaranteed at least perhaps two to five
percent of the people who buy that product will come back and ask for a
problem a technical issue you know whatever so just for that you’re gonna have to
have some sort of 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 oversee that person you can’t outsource literally your
entire business if you try to do that what’s going to happen is that your bed is going to collapse it’s just a matter
of time it might take two years five years ten years but it’s going to
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 on spotting cool
trends and I’m working towards that I’m improving 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 can be really quick or to be more drawn out but I find that
for example 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 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 life style 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 just go back to my
old life style 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 and
afraid and so what’s going to do is kind of put you and 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 you have this problem and
the stress you know gets to you especially if what I found you know if you just want to put your
business in maintenance mode and you don’t want to keep growing it then what
you’re going to do is you’re going to always you’re basically going to kind of do it
yourself to the death of your business and you’re just going to kind of waiting
and just seeing and drawing out 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 they’re testing stuff out there are
building new products creating new services polishing everything up
improving the cult 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 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 for 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 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 in myself you even
lose the drive to do proper good quality maintenance work even maintenance work
will start to do is you 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 and larger 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 in a type person you want to go out there accomplish big stuff with your
life and in the world input impact people well what I see is
that when you get up oh 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 when 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 and it’s not
important 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
it’s going to be all super special and really make it you know cool impact in mine it industry or my
niche you know i’ll do that next year so you
just kind of procrastinate and procrastinate and procrastinate the other problem that I see is passive
income keeps you in the wrong niches within your business it keeps you in the wrong wishes and
also encourage it encourages you to pursue the wrong wishes 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 you
know get some cash in the coffers ok 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 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 guarantee passive income
source so just to give you an example let’s say
that I have my online business and then when i discovered 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
up danger and I know that that’s what I
want to really passionate about it it’s gonna be very difficult because i 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 where i can grow even more I can increase the income even more so
what you’ll find in practice that you’re gonna have this kind of a 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 to 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 years ago 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 page or think it can wait I 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 put 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
and i find that the passive income thing it will make you think so small that
you’re not ultimately 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 yours your max even if you grow that business
more and more and more because you’re not passionate about it because you know
that the passion is over the air but you’re looking over here that’s going to
suddenly undermine every action that you take its going to rob you of your
motivation and you’re just not going to be as engaged with this business anymore
as you 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 you know in a world full of chasing money even though I was 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 could 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 are
getting more comfortable there and the other problem that i find is
that passive income robs you of the willingness to do real work it really
kills your work ethic this again connect with life purpose because for example if
you’re getting this passive income you’re probably not working too hard for
it after you’ve established your business so maybe you’re putting in a five hours
of maintenance work a week but you’re getting back six figures that seems 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 be an artist you
gotta go taking some classes you got to go put on galleries and exhibits you’ve got to go to maybe travel the
country you’ve got to to practice your technique you got to set up for hours practicing
your technique drawing painting you know getting us to do going to 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 your kind of your 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’ve just been coasting here
with the passive income what it does is that it means that
you’re you’re never going to go and consciously want to do that work anymore
and so you’re gonna quit you’re going to come back so what this
creates this kind of Whirlpool effect where you leave but then you come back you leave and you
come back it’s almost like getting addicted to drugs – 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 the the criminal activities the rewards they are really very high
you don’t have to actually go in and do 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 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 control of 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 I passive income and I can still handle it today is because I’ve been
doing a lot of personal network 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 kind of things
they don’t know the right mindset they don’t know the dangers of this passive
income stuff that 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 a hundred dollars a day of
passive income then that means i have to read at least one – development book / / / week and if i
increase that to two hundred dollars 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 they like
your 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
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