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Passive Residual Income: Building Your Foundation

Ahhhhhhhhh, the wonderful world of passive income; or is it residual income; or is it passive residual income; or is multiple streams of income; or is it multiple streams of Internet income? So many definitions, so many people wanting to show you how, so many options to choose from but which ones are the best? Who can you trust and do you want to spend time researching something that may never work out?

I’m guessing these are questions that have come across your mind from time to time and I know that because, somehow you’ve found your way to this article and you’re actually reading it. Passive residual income is a very intriguing thing isn’t it? It’s something that I’m guessing you either have, or a working towards or are learning about. I know that you’re going through one of those processes right now because something intrigues you about it and my guess is that the intrigue you have comes from the possibilities that it would create in your life. In my experience I’ve never had one person tell me they didn’t want passive income. I’ve only had people tell me they didn’t believe it was possible for them. There is a myriad of excuses for this thought process. Some of them are good excuses, and some of them are bad, but they all agree on one thing – IT SOUNDS GOOD. The question is – is it really that GOOD? That’s for you to answer on your own. My intention with this article is to shed some light on the foundation and knowledge you should have to build on, as you move towards creating it for yourself.

Here’s a little exercise that will really help you determine exactly passive income can influence your life. Follow this diagram and then answer the questions below:

The theory behind this exercise is that you need to know where you’ve been, and where you are at this moment in your life, before you can determine what the right course of action is that you want to take.

So, for this example, I’m going to use 30 years of age as our starting point. You can replace that with your current age. Take as much time as you want with this exercise and it may even help to write some stuff down. The important thing is to get of it is to know what you want in your life. What type of lifestyle do you want? So just follow along, think about questions and answer appropriately for what fits into your life.

1. Take a snapshot of what your lifestyle is like right now. What does it include? What parts do you like and what parts don’t you like?
2. Now follow the red arrow back to 5 years ago in your life. What was your life like then? What did it include? What did you like about it and what did you want to change? And Most importantly, what did you want your life to like 5 years from that day 5 years ago (which of course is today – I know it’s a little confusing but this is a powerful exercise to go through)
3. Now follow the ocean blue arrow back to the present day ask yourself if your vision from 5 years ago is what you are living today? Then realize that regardless of what the answer is, it doesn’t matter, all you can do is take what you have and build on it.
4. Dark Blue Arrow – Start to project what you want your life to like in 5 years time. In an ideal world what would it include? Who is part of it and what are you doing? How much money do you make? What things are you experiencing? These are all important questions.
5. Green Arrow – Ask yourself the same questions from #4 only this time it’s 10 years into the future.
6. Purple Arrow – Ask yourself the same questions as in #4  again. This time it’s 20 years into the future
7. Orange Arrow – Depending on how old you are right now you can project yourself into the future 40 years and ask yourself the same questions as in #4.

The point of this exercise is to simply get you thinking about what you really, really want and ask yourself if earning passive income streams would make that lifestyle you envision easier to attain?

Now let me ask you this question: why do you do what you do right now? IS it for the money, is it because it gives a lifestyle you enjoy? The most common reason people work towards earning passive income streams is because they believe passive income will allow put them in a position to have more fun. They will be able to focus on the things they enjoy most, more often. Or, another way to put it would is the way Tony Robbins explains the reasons we do what we do. He says

“We do what we do because we want fulfillment.”

I’m am going to talk a lot about the importance of building a foundation throughout this article so let’s take some time to start building that knowledge foundation about passive income. The passive income definition is:

“Income derived from business investments, or indevours, in which the individual is not actively involved”

Think about that for a second………..doesn’t that sound great. Income derived from a business that you don’t have to be actively involved in. Just think about what you could do if you had more time available because you didn’t have to spend as much time making money. Now lets take a second to visualize that other wonderful phrase you always hear about – residual income. It’s definition is also very simple, it is:

“Recurring payments that you receive long after the initial sale is made, usually in specific amounts and at regular intervals.”

Take a second to think about that and what it would mean to your lifestyle……..Sounds pretty damn good too doesn’t it. Make one sale and get paid for it over and over again.

Here’s the challenge with both of those definitions in the context of what over 80% of the people who hear them don’t realize (or choose not to realize)…… IT TAKES WORK AND TIME TO MAKE THEM HAPPEN. Now, let me define that a bit more. Yes, it does take some work and yes, it does take some time but as long as you find yourself a good ‘tour guide’, it will pay much more than what the average person gets paid and it will be faster to succeed, simpler to learn and more affordable than what it took most people reading this to do what they do right now!!!

Take a look at what the average person goes through to get a decent job that has some benefits and is relatively secure.

People pay anywhere from $2,000 to $50,000 a year to get a secondary education that takes anywhere from 6-months to 5-years to achieve, just to have the skill set required to have a job. Yet, when it comes to earning passive income streams, especially online, people generally do one of three things. They either:

1. Don’t put in the work it takes to learn the strategies required to build the foundation required to earn passive income streams
2. They don’t give the work that they do, do, time to develop and build on itself
3. They spend soooooo much time learning and not enough time DOING, that they eventually get distracted on something that offers more immediate pleasure and then slowly fall back into the lifestyle that wanted to get away from in the first place.

I think the best way to describe passive income is to compare it to how a farmer grows a crop (I’m a farm-boy that ended up on the internet and very intrigued by ‘everything passive income’ so this analogy comes natural to me). When a farmer plants a seed he starts by placing the seed in the ground. “Not on the ground; in the ground.” This is where it starts to use the nutrients and moisture from the soil to develop its roots (or the foundation). Over time, those roots grow stronger and allow the plant to sprout through the top soil where it begins to experience a ‘whole new world’. Now it can feed off of not only the nutrients from the moisture in the soil but it can grow faster and stronger because of the nutrients provided by the sun. As the plant works to grow big and strong, the farmer nurtures it and does everything he/she can to make sure that it is put in a position to grow to it’s full potential. Then, before you know it, the plant is a vibrant picture of life and is ready for harvest (this is the point of the story where the similarities end because the farmer harvests the crop and sells it and then has to do the whole process over the next spring). Unlike the plant, if you plant the seed of ‘what passive income can do for you’, then ‘develop the foundation (roots) for passive income streams to build from’ and then ‘nurture that foundation on a consistent basis’ you’ll have a vibrant passive income business that affords you the time and money required to Live Your Perfect Lifestyle.

Picture it like this, whether you are totally knew to building passive income streams or you are a seasoned veteran, you are the seed/plant and the person(s) who is guiding you is the farmer. Whether you believe it or not, you will need some guidance to get yourself from A – B (‘A’ being the place where you are right now and ‘B’ being the place where you’re earning passive income streams and are financially independent). It may be from a book you buy or it may be from a coach you hire; that part is up to you but the point is that you will need to have help. If you ever thought that you could earn passive income without the help of anyone else then take a look back in your life and think about all things that you have learned throughout your lifetime.

You learned how to walk because your parents held your hands while you figured out how to use those things you now call legs. You learned how to do math and science because you had a teacher to show you how. You learned how to do your first job because the person that hired you spent time ‘nurturing you’ so you could eventually do the job on your own. Earning Passive Income Streams is no different, you will make it a lot easier on yourself if you have a teacher, or guide, to help you make it happen and avoid ‘major’ mistakes along the way. I personally learned this lesson the hard way and that’s why I believe it’s so important to your success.

Basically what I’m saying is that finding the Passive Income Generator that works for you and building that foundation that is required to make it all work within your skill set is going to take some time but as I stated earlier, the benefits you gain will be worth every single minute of it. All you need to do is look at what your life would like if you were able to live with the benefits of the ‘FAB 5’ every single day.

1. Flexibility – To work when you want and ‘play’ when you want
2. Mobility – To earn income (or manage income) from wherever you are in the world
3. Health – The healthier you are the more things you can enjoy
4. Wealth – Money is a means to survive and entertain ourselves and those around us AND is a avenue for us to positively impact more people.
5. Happiness – When you have the first 4, it gives us an environment to enjoy life a lot more

So with the ‘FAB 5’ being the goal, lets move on to making sure that you have a solid foundation to build your passive income streams on. This starts with having a crystal clear vision of exactly what your income options are and how they vary from passive residual incomes.

Here’s the deal; regardless of how many ways you ‘slice it’, there are only 4 ways that you, and I, and everyone else in the world can earn income on this planet. You have to do it by taking part in one of the following 4 quadrants (and yes, these are taken directly from Robert Kiyosaki’s incredible book, Rich Dad Poor Dad)

1 – Employment

• This is the quadrant is where the largest percentage of people earn their income. It is very seldom that you’ll find someone who is earning a passive residual income within this group of people. In most cases, these people earn an hourly wage or a salary in exchange for their services and skills. Most of the ‘Guru’s’ in the world refer to this as trading your time for your money, which is a fairly accurate statement. The challenge for you if you are an employee and want passive income is that it doesn’t give you any leverage. It gives your employer leverage but not you. As an employee, whether you like it or not, your employer controls a large percentage of your time, he/she controls what you do with that time and he/she controls your worth as it relates to dollar’s and cents. I’m not saying this to discourage you from being an employee because the reality is that there are probably jobs out there that you would love to do and get paid well to them BUT it doesn’t change the fact that you lose a lot of control when it comes to time and money.

2 – Self-Employment

• The self-employment scenario is the one quadrant that has really changed over the last few years and the internet/technology has played a huge role in this. It is defined as someone who works independently to earn his or her income. The traditional self-employment scenario is that of a plumber, or consultant, or a carpenter. If you are a self-employed person, you can charge as much as the market will allow and you can work as much, or as little, as you want to. This means you are basically in control of your time and money. The challenge with this traditional scenario is that it still doesn’t give you any leverage. If you quit working, the money stops coming in, it’s that simple.

BUT

There is a new style of self-employment that creates leverage and has the potential to allow for an income to become passive.  I’m not sure there is an official name for this scenario yet but I like to call it ‘self-employment on steroids. With the advancements of technology combined with the right business model and outsourcing, self-employed individuals have been able to find ways to reduce their personal workload and increase their amount of income. It’s for these reasons that Self-employment is now a very viable and attractive option to produce passive income streams.

3 – Big Business

• Big Business is defined by ‘Robert Kiyosaki – Author of Rich Dad Poor Dad’ as a business that employs 500 or more people. My definition of a big business, as it pertains to passive income streams, is a business that employees enough people, with enough efficiency, so that the owner of the business can be away from the it for an extended period of time and still enjoy a steady income from it. The most important thing to understand about ‘big business’, or any business for that matter, is to understand the importance of the business structure when it comes to leverage (we discuss this more below). When you own your own business you are responsible for your income and you can control the amount of time you work vs the amount of time you ‘play.’ Whether you run your business efficiently or not is up to you but at least you are in control.

4 – Investment

• This is the one quadrant that is usually the envy of the people in the other 3 quadrants. It is the position we would all like to be in because if you are an investor then it means you’ve got extra money to invest in profit producing, passive income opportunities. Or, at least that’s the theory right? The investor is basically the person who gives someone else their money, and in return, he/she expects to have that amount of money grow during the period of time they have their money invested. For example, if you own a stock or a mutual fund, you are investing in someone else’s business. The person who receives your money is leveraging you as an investor and you are leveraging their skills to make you more money. This is the ultimate passive income scenario.

Let’s put it into perspective as it relates to the traditional Job scenario. If you have a job, chances are that you are taking a little bit of money from every paycheck to invest it. As time goes on, the interest on that money begins to compound on itself. Eventually, over the course of 20-30 years, that little bit of income that you’ve been consistently putting away develops into a nice sized ‘nest-egg’ for you to retire (or at least that’s the theory of how this all works). It’s very similar to the farmer example. Every 2 weeks you plant a seed. Over time, those seeds add-up and you’ve built a nice foundation to start experiencing the wonderful world of compounding interest.

These are the only 4 ways that you can earn income. There are 1000’s of variations to them but when you look at the ‘income world’ in it’s simplest form, these are your only choices. Why is that important? It’s important because now you can take that knowledge and build on it. You now know that if you want passive income you need to have leverage so lets take a look at what leverage looks like within the business structure of the 4 ways to earn income.

This diagram is fairly self-explanatory. If you are an employee, you have very little leverage. If you are self-employed (at least in this example) you also have very little leverage. If you own a big business and run it efficiently, you have a lot of leverage and as we stated earlier, if you are at the point where you can earn a living by being an investor, then you’ve basically got it made. You pay some else to put in the work and in return, they grow your money for you.

Now, before we get too far ahead of ourselves I want you to take a look at the diagram below. I call this diagram ‘self-employment on steroids’. It displays the ability that a self-employed person now has to take advantage of business models and out-sourcing/joint venture opportunities if he/she feels the need to do so.

As you can see some of the arrows in the diagram are only pointing away from you where as some of the arrows are pointing to you and away from you. The arrows that are pointing away from you represent people that you have out-sourced a portion of your daily tasks to. An arrow that is pointing both to you, and away from you, represents a relationship with another party that benefits both of you. This diagram is what I believe most people are really looking for.

I think that people are looking for ways to be financially independent but not have people who are directly dependent on them for their well-being (AKA – employees). I think that most people would describe the ideal situation for their income producing activities to include the Self-Employment scenario on steroids. Where you can use business models that produce results on your own ‘clock’ (meaning – very little dependency), and work with other people who are also working within the ‘self-employment scenario on steroids’ to create win-win situations for all those involved.

Lets take a look at a couple of examples and how this might work to produce passive income

1 – Real Estate:

A lot of people are in love with real estate, or the idea of real estate, and there is good reason for it. It offers a lot of advantages that most people covet. It has the potential to produce both short, and long-term passive income streams and it offers an incredible amount of leverage for someone to take advantage of.  How can you set-up a ‘real estate empire’ and live the self-employment lifestyle on steroids you ask? Well, lets first look at all the people that you would be involved with if you owned a real estate investment business.

• • Mortgage broker
  • Lawyer
  • Home Inspection
  • Real Estate Agent
  • Property Management
  • Carpenter
  • Plumber
  • Electrician
  • Building Inspector
  • Tenants
  • Advertising Sources

There are probably more, but you get the picture. With each of the above you can leverage the knowledge and skills of these people who are benefiting from helping you. You can develop a working relationship with a Real Estate Agent who will look for the type investment property that you want every single day on your behalf. They can even automate that process. They can enter your ‘specs’ for a desired property into a system so both of you are automatically notified as soon as a property that meets your needs becomes available. You can inspect the property yourself or you can have property inspector do it, or you may even have a real estate agent who knows your criteria well enough who will do it for you. If you choose to buy the property, you can have your real estate agent draw up the contract the way you have previously agreed on and all you have to do is sign it. Your lawyer can take care of the ‘details’ and you can then plug-in to the necessary resources you have to either flip the house (carpenter, plumber, etc.) or rent it out (property manager). Sounds pretty simple doesn’t it. Well, it can be. People are living this scenario everyday BUT they did the work to build the foundation so they could have those types of relationships developed to the point where they could Leverage their business relationships to the fullest.

2 – Internet Marketing And Network Marketing:

I combine these 2 passive income producing business models into one because I know for a fact that they are far more productive together than they are apart. They are a little different than the real estate self-employment scenario on steroids because it involves more systems and less dependency on individual people, which I personally like. Not because I don’t like people but because I like the independence of these options. Look at the business model of network marketing. There are a few variations to this example but it is basically like owning a big business, except for the fact that the people within your organization are your business partners and not your employees. Some people would argue that this means that you would be very dependent on the people within your organization to succeed. This does have some truth to it (I’ll address this in a second) BUT the focus right now is to realize how much leverage potential the business model has. It can give you better results, with less investment than a traditional big business scenario with NO employees. Now, combine that with the use of the Internet and you suddenly lose the dependency on your ‘business partners’ that is traditionally been the down fall of network marketing.

How do you lose the dependency you ask? Well, look at it like this. If you are thinking that in order for you to be successful in network marketing, you need the people who join you to be successful, you are right, BUT there are a number of leverage sources you can use to drastically improve their chances for success, while dramatically reducing their dependency on you and your dependency on them. Here’s what I mean. Take a look at the diagram below

This diagram can be greatly expanded on but it gives you and idea of how you can interlock the different avenues and have them work together and all produce their own passive income streams. Rather than have your business partners in the network marketing business only attempt to produce an income with one business model, you help them learn how to use the internet to monetize a number of different avenues. This makes them happier because they are not dependent on only one passive income stream, and they are learning marketing skills that they can implement in any business venture that they choose.

Do you see now, just how powerful, understanding leverage can be?

Now that you understand your options you can really start to focus in on the actual benefits of passive income and how it applies to your lifestyle. From the start of this article, I’ve been adamant that passive income streams do not just happen. They don’t just magically appear for the odd lucky person. No, the people that live that incredible lifestyle that passive income streams provides, have developed the foundation for the income to build on. They’ve put in the necessary work to make it happen. Some have been able to streamline that work process and others have struggled along and ‘Finally’ made it work (this is the path I unknowingly took) but the point is they made it work. This next diagram clearly illustrates this process

What you see, is that employees get paid to work while entrepreneurs and people that want to earn passive income streams work to get paid. It’s a subtle difference in language but a major difference in strategy. A typical employee situation is where the employee will work a 40hr workweek for a couple of weeks and then receive a check in return for that work. In the passive income scenario, the income will typically start off lower than that of an employee scenario. This is because you are building your foundation. Once you’ve built the foundation (as long as you’ve done it right) you start to see the ‘fruits of your labor’. Your personal workload begins to reduce, while your income begins to feed off of itself. The more you nurture and develop your foundation, the better your passive income streams will look in your bank account.

That explains the difference of the 2 options in terms of time and growth but what about the difference between the two in terms of income and growth. Take a look at this diagram

The figure on the left is representative of what an employment income looks like. It clearly depicts what we refer to as a linear income. There are some definite aspects of employment that are appealing (less stressful risk, benefits, etc) but if your reading this then you have probably experienced some of the downsides of employment and believe that they far out weight the upside. When you look at the diagram of linear income you see one very BIG downfall of being employed – there is an income ceiling. If you are an employee, someone else will Always, Always, Always determine the level of your income. The owner of the company that you work for will basically tell you what you are worth. I know it sounds harsh but it is true. Along with having a ceiling you will also have plateau’s in your income growth as you go through your career. What that means, is that every time you get a promotion you will have to re-prove yourself in that position in order to get to the next level. And, as you know, with each promotion, your income will grow but so will your responsibility. I don’t know about you but that doesn’t sound like a recipe for a better lifestyle to me.

I speak on this topic first hand because; it was when I first experienced this scenario that I realized I needed to make a change. This lead me to a number of events that lead me understanding and building passive income streams. Without getting into too much detail here’s how my employment career played out.

• Hired out of University for $29,000/year to be a Junior Commodity Trader
• Over the first 2.5 year, my income grew from $29,000/year to $35,000/year to 42,000/year to 49,500/year
• Over the next 3 years, my employment income grew to $51,000/year – “I had obviously hit the dreaded plateau”

It was around the 2-year point that I started to realize that a plateau was inevitable. All I had to do was look around the office to see that the types of raises I was getting were not going to be given to me every single year. There were people in my department doing the same type of job as I was that were making $5000-$10,000 more than me (at best) and they had 10 more years of experience. My ‘immediate’ superior was only about 6 years older than me and wasn’t going anywhere anytime soon because his superior was probably only 5-6 years older than him. Not only had I hit a plateau, but the chance for promotion within my company was fairly small regardless of how well I performed. There were always going to be more experienced people than me in the pecking order.

When you look at the residual income diagram on the right you see that it depicts an exponential income. Basically, it is showing what we have discussed earlier. Your income will be a little slower to develop as you build your foundation but as you develop it more and more over time, your income will have the potential to grow exponentially and become passive. All of this, without a ceiling and anyone else controlling it making your potential income, completely up to you.

Of course, passive income growth probably won’t be a perfectly shaped curve as is displayed in the diagram but over time you can see what the potential is for it to grow exponentially. In order to really get a feel for how passive income streams work when they are developed properly you have to look no further than what 99% of all investment brokers tell you to do with any excess cash that you have. We’ve discussed this traditional scenario earlier where, as an employee, you put a bit of money away each paycheck and overtime it develops into a nice big ‘nest-egg’ for you to retire on. Pretty much like the scenario below

This figure shows the natural increase on a $10,000 investment over a 12-year period with a 10% return over that time span. The 10% return may be a little optimistic as an average growth rate but it made for easier math for me…and I like easyJ The point here is that over a 12-year period your investment value would have grown by $1000 in the first year and by the 12^th year, the dollar value for the growth you experienced would be $2353.00 all because of compounding interest (without investing anything more than the original $10,000 which is not what you would do in a real world scenario). Based on these numbers, and time-tested results, over a 25-year period you would have a nice little nest-egg built up. If you were to invest a little bit of your paycheck every month on-top of the original $10,000 you invested then your nice little nest-egg would be worth much, much more at the end of 25 years. The goal with explaining this to you is not to promote or discourage long-term investing but to make sure you understand the importance of planting the seeds of which passive income can be built on.

It is my personal belief that investing a little bit of money in the format discussed above may be good for some people but for those of you who really want to LIVE YOUR PERFECT LIFESTYLE, you need to find ways to compound your income a lot quicker.

This brings me to last and final point. We’ve talked extensively about what passive residual income is and how it pertains to your life and your lifestyle. Understanding what this article has explained is truly, the first step to building a foundation for you to build passive income streams with. The next step is to understand what we are going to explain right now.

What are your options for producing passive income?

As you now know, passive residual income can only be developed if you are in a position to utilize and capitalize on leverage. Taking the 4-business structure’s we reviewed earlier into account, we have determined that earning passive income streams, as an employee is virtually impossible. Therefore you need to focus on the other 3 options

1. Passive Income
2. Investments
3. Self-Employment on Steroids

When you take those 3 business structures into account and include the necessity for leverage to be available when using a business structure, you can narrow your list of options down to 6 unique passive income generators.

1. Stocks
2. Network Marketing
3. Big Business (Business with enough leverage to create long-term passive income)
4. Real Estate
5. Internet
6. Books/Movies/Speaking/Training/Etc

Of course there are a number of different scenarios that you can divide each of these passive income generators into but the above represents your basic 6. Here is a brief explanation of each with my opinion of what is good and what is challenging about each

1 – Stocks

• The great part about stocks (includes mutual funds, commodities, forex, etc – we use the word stocks because that is what most people are familiar with) is that it provides the ultimate leverage position for you and me to use. You can invest your money and even let someone else manage it and over time it has proven to be a great way to build some wealth. The challenge with it is that, unless you have a ‘big pot’ of money to ‘play’ with, it is very difficult to create a cash-flow to live off of.

2 – Network Marketing

• As you have probably guessed already, I am a big proponent of network marketing and here’s why; I believe that the first step to creating the PERFECT LIFESTYLE for yourself is to get yourself in a position to be independent of an employer so you can control your time and not have a ceiling on your income. Network marketing provides a platform for almost anyone to do that with because of its low investment requirements and the business structure it uses to provide leverage. The down side of network marketing is that it is also really cheap to get into. This should be a plus, but it allows people to let their guard down which means people jump into it without doing their due diligence. They see a wonderful lifestyle but they aren’t trained properly on the necessary steps it takes to ensure success. Then, when these people fail they view it as the systems fault rather than put blame where blame should be put – on themselves and/or the people who are guiding them.

3 – Big Business

• The great part of big business is that you are building (as long as it is profitable) a very valuable asset that is saleable at some point. This asset will be in addition to any of the savings/investments you have accumulated from the business’ cash flow over the years. The challenge with big business is that everything falls on your shoulders. You are responsible for developing the business model, creating a product, selling the product and managing the finance. This process is usually time consuming and will take some capital to get it off the ground BUT for those that are willing to put in the effort, the ownership and results can be very rewarding.

4 – Real Estate

• We’ve discussed a lot of the advantages that real estate has to offer but one of the things we haven’t discussed yet is what history has shown us. For as long as land prices have been recorded it has been a proven wealth generator because it consistently appreciates in value. The challenge with real estate is figuring out how to cash flow the property while it is appreciating. Real Estate is probably a more proven ‘winner’ than any of the other options but it is a bit of sweet science. Sure, you can purchase property’s for no money down like all the late night commercials say you can but based on how that is explained you can purchase or invest in any of these options for no money down, it’s just that the real estate industry has done a much better job of selling this fact. I call it a ‘sweet science’ because the people that learn all the ‘tricks of the trade’ are usually very well rewarded for their efforts.

5 – Internet

• We’ve discussed this avenue before too but what the internet really allows you to do is market to anyone in the world who has an internet connection. It is an inexpensive place to start and really gives anyone with a product, idea or service an opportunity to find their niche. The challenge is getting through all the ‘fluff’ and ‘BS’ you find on the Internet and finding your niche. The fact that it is very cheap to start online means that every ‘Tom, Dick and Harry’ can jump online and try something and jump off just as fast. As people get more and more used to the Internet, the quality of information continues to grow but the fact remains that it can be a very confusing and overwhelming avenue. Just like all the other options on this list, if you have guide who has been there before, it makes it a lot easier to succeed.

6 – Books/Movies/Speaking/Training/Etc.

• This option can be summed up in a single word – Royalties. If you produce a product that is timeless (at least to a certain extent), you can be paid for the product for years to come. Think about the people behind the movie series – “The Godfather” or the cast of the show “Jerry Sienfeld” or Napolean Hill, who wrote the book “Think and Grow Rich”,  these people, or their families, are still getting paid for work they did 10 – 15 – 20 – 50 years ago because they produced a product that was timeless. Wouldn’t that be great? The challenge for most of us is that people don’t believe they have the talent to create a timeless product. Meaning they can’t sing or play a musical instrument or act. The one place where we all have an opportunity to create a passive income stream through this option is to become an expert in something and create products that people want to buy from you because you are an expert in your niche. It may not be a timeless product but it may provide a passive income for 5 years, which wouldn’t be too bad would it?

There you have it, 6 options to choose from. Every one of them has their own good points and bad points but the common denominator is they all produce passive income. The other common denominator is that each of these options takes SOME TIME AND WORK TO BUILD THE FOUNDATION. Without the foundation, all you’ll have is a lot of frustration and angst.

It is my personal belief, that there are very few people in this world who are not capable of producing passive income streams. I believe this because most people in this world work, and if you can work then you’ve proven that you can learn and that’s exactly what earning passive income streams takes. Well that, and actually doing the actions that are required, which are actually pretty simple once you’ve got some guidance on what those steps are.

My personal experience has lead me to building passive income streams through the internet and using the network marketing business model. That is what works for me. I originally started down this path with a dream of building a real estate empire and spent a lot of money on courses and seminars that would help me do that. What I realized once I got into the real estate investment world was that it really wasn’t for me. I came across some things that I didn’t like, or wasn’t willing to do. Through a series of events I ended up getting out of real estate and taking advantage of the network marketing business model which has also lead me to the internet (as you can plainly see).

I have said from the beginning of my personal journey towards passive income that I believed that if other people could live the passive income lifestyle I wanted then there has got to be a way for me to do it to. It’s taking me a lot longer and it has been a lot more difficult a process than what I thought it would be BUT I believe it has been worth. My intention is to fulfill all aspects of the ‘self-employment scenario on steroids’ so I can always have the ‘FAB 5’ in my life.

One of things that was of utmost importance to me when I started this whole process was that I maintained the ability to live anywhere in the world and still make money and work on my own schedule. That was my criteria. What I’ve come to the conclusion of is that the simplest way to achieve that lifestyle is to start with simplest place to make it happen quickly – for me – that was a combination of network marketing and the internet. With that in mind I came up with the following plan:

1. Create a substantial amount of passive residual income through the internet and network marketing (this is the most inexpensive and low risk option in my opinion)
2. Take the skills that I’ve learned and help others do the same (this is as much fun for me as it is about passive income BUT it can be a very lucrative avenue to have in the passive income portfolio)
3. Take the excess cash-flow and build further cash-flow streams through passive income generators like the trading the Forex and/or Credit Spreads (these are things that I have been learning about but not actively doing at the time of writing this)
4. Take the excess cash flow from the above scenario and invest in longer term passive income wealth generators such as real estate and mutual funds. (I’m not sure I have a lot of interest in being a hands on manager of these myself but the part of the long-term aspect I like the most is that helps me to ‘leave my legacy’ – which is a topic for another article but it’s basically a statement that says I want to touch other people’s lives in positive ways)

That’s what works for me. Here is a visual illustration of that process. We’ve got a real fancy name for it; we call it “Getting From Point A to Point B”

That may not be what works for everybody but it’s what I am intending to accomplish and implement. The thing I like about it most is that even if you were to get to step 2 and stop, you would still have a better lifestyle than you had previously because it would include passive income streams that replace your current income. That means your life will include the 5 greatest words you can hear your lifestyle be described as

1. Flexible
2. Mobile
3. Healthy
4. Wealthy
5. Happy

As I stated earlier, I truly enjoy helping people find ways to Live Their Perfect Lifestyle and I would be more than happy to discuss your passive income options with you.

Until Next Time, CHEERS To Your Success

Donny Watson