If you’ve read, watched, or heard personal finance content, you’ve heard of passive income. In fact, a very significant part of the world of personal finance seems to be positively obsessed with the idea of passive income. There is indeed a plausible reason for this obsession.

Passive income is The Holy Grail, but is it possible to make money without actually doing anything? What could be better than that? Is Getting A Passive Income Really Simple? Can you really make money without doing any work?

Sorry but I’m going to ruin everything now. It is not so simple to achieve a profitable source of passive income. Most of us will not earn enough passive income to leave a full-time job altogether. But in fact, you can do enough to significantly improve your cash flow situation or perhaps accept a job that you feel most passionate about, but that does not pay as well as your current job. This is not going to happen overnight, and you will need a variety of investments.

Here’s the deal. Now is the right time to act. Commit to these strategies in the coming days, and do not give up! The hardest part of getting on the right path and finding your way to financial freedom is to take action.

“Action is the foundational key to all success. ”

— Pablo Picasso

What Is Passive Income?

According to Wikipedia, passive income is generally defined as a stream of income earned with little effort, and it is referred to as progressive passive income when there is little effort needed from the individual receiving the passive income in order to grow the stream of income. Examples of passive income include rental income and any business activities in which the earner does not materially participate during the year.

Passive income is a periodic stream of income and a tool that will help you to experience more of the world and have a fuller life. The idea is to create or buy a system that generates a recipe with little effort. There is a spectrum of passive income opportunities, and they all require different energy in time to create or maintain.

Passive income allows you to earn an income freeing up your personal time, making more of your life, and working less. There are different passive income systems, and each of them requires a different amount of initial investment, or to maintain it. A fundamental aspect is to realize that the right mentality to obtain and maintain a passive income is the delayed gratification mentality, investing the present time and energy into something when benefits can only be harvested weeks, months, or even years later! The main advantage of passive income is to free up your time to pursue whatever your dreams are.

How To Create Passive Income?

Time, Money and Personal Inventory

Personal Inventory

The first step to start generating passive income is to take a personal inventory and get to know your real motivations, goals, strengths, and weaknesses a little better.

• Why would you like to have a source of passive income?

• Would a source of passive income shape your life differently? How?

• How much money do you need in order to be financially free?

• How do you cope with failure? Can you pick up after failure and rebuild it differently?

• What is your tendency to postpone and abandon projects before reaching the goal?

• How committed were you to projects in the past? In particular, those projects that have taken time from the things you enjoy doing?

• What are your strengths and weaknesses?

• Do you enjoy communicating with people?

• Are you willing to spend many hours in front of a computer?

• (…)

Your energy and focus will tend to vary with time. You excel at some tasks and subjects, but not at others. It is crucial to take a deep dive into those brain cells and understand well who you are, what you want, and why do you want it. This kind of knowledge is the basis of preparation for the path to success. Seize your strengths and mitigate your weaknesses. Most projects fail due to a tendency to be superficial about the core knowledge of the self and its purpose.

Time and Money

After the tough part of the process, it comes another no less important but, more objective, how much money, and/or time you have to invest. There are three ways to create passive income:

1. Investing capital upfront

2. Investing time upfront 

3. Investing both time and capital upfront

The choice is easy if you know the capital and time you can invest in.  

Choosing and researching

Having clear answers to the previous subjects will make it easier to choose and research your future source of passive income. You know what kind of assets will have the greatest chances of success for your specific strengths, weaknesses, and resources. Observe what you are passionate about and realize if these passions can be turned into a passive income asset. If you do not remember anything, search for the traditional passive income assets and then make them yours. Innovate. When setting your goals, it may be a good idea to research similar projects and see the risks and success rate stories that you can find about this passive income asset. Success can never be achieved by a sudden flight, success is the product of consistent and uncompromising effort. So instead of looking for the fast return investment to start, look instead for the investment that you are willing to stick to, regardless of the surrounding circumstances. Investing has its inherent risks, evaluate well all details, and aways D.Y.O.R.

WHAT KIND OF PASSIVE INCOME WOULD YOU LIKE TO GET OUT OF YOUR PROJECT(S)?

There are eight forms of capital,  Financial Capital, Material Capital, Living Capital, Social Capital, Intellectual Capital, Experiential Capital, Spiritual Capital, Cultural Capital, choose the one(s) you would like to accumulate passively and hands-on pasta!

 Read More About The 8 Forms Of Capital 

Setting Goals

When embarking on this process, the important thing is to see where you want to go, if you have the determination and mindset, you will find out how to get there. Your goals should be milestones for your ultimate goal. Each of these milestones will help you create the confidence and essential attitude to get to the next checkpoint. Break objectives into sub-goals, follow your commitments, and have fun in the process. Some roads lead to other purposes and discoveries.

“The mind that opens to a new idea never returns to its original size.”— Albert Einstein

Keep Track Of Your Assets Efficiently 

Creating a passive income source comes from the will to be more efficient. Passive income projects require different levels of attention, some weekly, some monthly, and some annually. In the same way, you set milestones, let’s also set reminders and notes so that when you need to check in again, you know where you left off. 

On the other hand, the fisherman who checks his traps all the time never rests and enjoys the beach, so find the best time to check your investments and don’t dwell too often on results. Balance is the key!

Measure The Success Of Your Investments

Success criteria summarise the key steps or ingredients you need in order to fulfill your passive income goal, and success can be measured through concrete points. These measures are there for you to know, that the goal is attainable and is within everyone’s reach. In order to measure the success of your endeavors, calculate the total amount of passive income generated, the total percentage of your expenses paid for this project. Think about the impact and influence generated, and also about the time or energy that you spent on your project. Evaluate the returns and optimize them, a good passive income portfolio grows with time.

“Successful investment may become substantially a matter of techniques and criteria that are learnable, rather than the product of unique and incommunicable mental powers.”— Benjamin Graham

To Scale Or Not To Scale

You have reached your goal, and have now a good source of passive income. Some investors on this level will choose to scale by cloning their passive income asset several times, replicating their passive income stream. Although this is a common strategy, and half the work is done, sometimes a steady and regular income is a better option.

Final Thoughts about The Mindset of an Investor

Let’s recap the strategies to achieve the perfect mindset for investment:

• The right path and finding your way to financial freedom is to take action.

• The appropriate mentality to obtain and maintain a passive income is the delayed gratification mentality.

• The idea is to create or buy a system that generates a recipe with little effort. There is a spectrum of passive income opportunities, and they all require different energy in time to create or maintain.

• Take a personal inventory and get to know your real motivations, goals, strengths, and weaknesses a little better.

• When setting your goals, it may be a good idea to research similar projects and see the risks and success rate stories that you can find about this passive income asset.

• Instead of looking for the fast return investment to start, look for the investment that you are willing to stick to, regardless of the surrounding circumstances. Investing has its inherent risks, evaluate well all details, and always D.Y.O.R.

• Break objectives into sub-goals, follow your commitments, and have fun in the process.

• Keep Track Of Your Assets. Set reminders and notes so that when you need to check in again, you know where you left off. Don’t dwell too often on results. Balance is the key!

• Measure The Success Of Your Investments. Evaluate the returns and optimize them.

• Decide whether to scale or try a different investment.

Now that you have the tools for the appropriate investor mindset, it’s all a matter of dedication and training your neurocircuits to obtain that precious source of passive income flowing steadily to your pockets. Always remember that most projects fail due to a tendency to be superficial about the core knowledge of the self and its purpose.

Arcanu aka Amber Lee for BREAKING DOWN VALUE