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Passive Income: What it is and How You Can Get Started

Updated: May 7, 2023

Passive Income

Passive income is a buzzword that has been thrown around in the world of finance and entrepreneurship for years. But what exactly is it? How does it work? And can you really make money from it? In this article, we’ll take a closer look at passive income, what it is and what it isn’t, and how you can get started.

What is Passive Income?

Passive income is money that you earn without actively working for it. Unlike active income, which requires you to trade your time for money, passive income is generated through investments, businesses, or other sources that require little to no ongoing effort. It’s the ultimate dream for many entrepreneurs and small business owners – the idea of making money while you sleep.

How Does Passive Income Work?

One of the biggest misconceptions about passive income is that it doesn't require any work at all. Many people believe that they can set up a passive income stream and then sit back and watch the money roll in without doing anything else. However, this is not entirely true.

While passive income does involve less active work than traditional forms of income, it still requires upfront effort and time investment. In order to generate passive income, you first need to set up the income stream, which can involve a significant amount of work.

For example, if you want to generate passive income through rental properties, you will need to first find and purchase a property, make any necessary repairs or upgrades, and then find tenants and manage the property. This requires time, effort, and expertise in real estate.

Similarly, if you want to generate passive income through creating an online course, you will need to first develop the course content, create marketing materials, and set up a sales funnel. This requires time, effort, and expertise in course creation and online marketing.

The point is that while passive income does allow you to earn money without actively trading your time for money, it does require an upfront investment of time and effort. It's not a "get rich quick" scheme, and it's not a way to make money without doing any work at all.

That being said, once you have set up your passive income stream and put in the initial work, it can continue to generate income for you with little ongoing effort. This is what makes passive income so appealing to many entrepreneurs and small business owners – the ability to earn money while freeing up time to pursue other ventures or enjoy life.

In conclusion, while passive income does allow you to earn money without actively trading your time for money, it does require an initial investment of time and effort to set up. By understanding this concept and putting in the work upfront, you can create passive income streams that continue to generate income for you over time, allowing you to achieve financial freedom and flexibility.

Some examples include of passive income.

Rental properties As a small business owner or solopreneur, investing in rental properties can be a smart way to generate passive income. When you own a rental property, you can earn a steady stream of passive income each month in the form of rent payments.

Rental properties are a popular form of passive income because once you have purchased and set up a property, you can earn regular rental income without having to actively work for it on a daily basis. While there is some initial effort involved in finding and purchasing a rental property, once it's set up and rented out, it can continue to generate income for you with little ongoing effort.

When you own rental properties, the rent you collect each month is considered passive income because you are earning money without actively working for it. However, it's important to note that rental properties do require some ongoing maintenance and management, so it's not entirely passive income

Dividend-paying stocks

Dividend-paying stocks can be a valuable addition to any small business owner or solopreneur's investment portfolio. As an owner of a dividend-paying stock, you are entitled to a portion of the company's earnings. These earnings are typically paid out to shareholders in the form of regular dividend payments.

Dividend-paying stocks offer a unique way to earn passive income. Unlike traditional stocks, where the only way to make money is by selling shares at a higher price than you bought them, dividend-paying stocks allow you to earn regular income without having to sell any shares.

The amount of dividend payments you receive can vary depending on the company's earnings and dividend policy. Some companies pay a high dividend yield, meaning that they pay a higher percentage of their earnings as dividends. Other companies may pay a lower dividend yield but may have greater potential for growth.

A great place to start as a beginner is with Easy Equity. Easy Equity is an online investment platform that offers affordable and accessible investing to individuals in South Africa. They have eliminated the barriers to entry by offering no minimum investment amounts and no monthly fees. They also offer super low commissions, which means that investors can keep more of their returns. Sign up with them today and start earning dividends globally.

Affiliate marketing

Affiliate marketing is a popular method of earning passive income for small business owners and solopreneurs. In this form of marketing, you promote other people's products or services on your website or social media accounts, and in return, you earn a commission on each sale made through your unique affiliate link.

Affiliate marketing is a flexible and low-cost way to generate passive income because you don't need to create a product or handle any customer service issues. Instead, you simply need to find products or services that align with your audience's interests and promote them to your followers.

One of the biggest advantages of affiliate marketing is that it can be a relatively hands-off source of income. Once you have set up your affiliate links and have established a regular flow of traffic to your website or social media accounts, you can sit back and watch as the commissions roll in.

It's important to note that affiliate marketing does require some effort upfront, such as building a following and developing relationships with potential partners. However, once you have established these relationships, affiliate marketing can become a passive income stream that requires minimal ongoing maintenance.

To get started with affiliate marketing, you'll need to identify products or services that align with your brand and audience. You can then sign up for affiliate programs with these companies and receive a unique affiliate link to share with your followers. When someone makes a purchase through your link, you'll earn a commission on the sale.


E-commerce is a business model that allows you to sell products or services online. With the advent of technology, the e-commerce industry has experienced tremendous growth in recent years, providing entrepreneurs with numerous opportunities to generate passive income. One such opportunity is through drop shipping or other fulfillment methods.

Drop shipping is a fulfillment method where the seller does not keep the products in stock but instead purchases the product from a third party and ships it directly to the customer. This means that you do not have to worry about inventory management or shipping logistics, making it an ideal way to generate passive income.

In addition to drop shipping, there are other fulfillment methods such as print-on-demand, where products are printed only when an order is received. This eliminates the need for upfront inventory costs and allows you to generate passive income from sales.

An e-commerce store can also be automated to generate passive income through the use of technology such as chatbots, automated email marketing, and social media advertising. These tools can help you to reach a wider audience, increase sales, and reduce the need for manual intervention.

Be aware that generating passive income through e-commerce requires effort and dedication. You need to create a high-quality website, develop effective marketing strategies, and provide excellent customer service. With the right approach and tools, you can create a successful e-commerce store that generates passive income for years to come.

What Passive Income is Not

It’s important to note that passive income is not a get-rich-quick scheme or a way to make money without any effort. While passive income requires less ongoing effort than active income, it still requires upfront work to set up the income stream. Additionally, some forms of passive income require ongoing maintenance and management to ensure they continue to generate income.

How To Get Started with Passive Income

If you’re interested in generating passive income, there are a few steps you can take to get started:

  1. Identify your skills and interests: What do you enjoy doing? What skills do you have that could be turned into a passive income stream?

  2. Research potential income streams: Once you have identified your skills and interests, research potential income streams that align with them. This could include rental properties, dividend-paying stocks, or creating an online course.

  3. Create a plan: Once you have identified a potential income stream, create a plan for how you will generate income from it. This may involve creating a product, investing in stocks or real estate, or building an e-commerce store.

  4. Take action: Once you have a plan, take action to set up your passive income stream. This may involve creating a website, marketing your product, or finding a rental property to invest in.

Passive income is a way to generate income without actively working for it. While it requires upfront work and ongoing management, it can be a great way for small business owners and solopreneurs to diversify their income streams and build wealth. By identifying your skills and interests, researching potential income streams, creating a plan, and taking action, you can start generating passive income and achieving financial freedom. So go ahead and make that money while you sleep!

If you need assistance, book a free 30 minute consultation with me. I would be happy to help you and answer any questions you may have. ☕

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