Passive income is never passive
Life lessons. (And *that* part 2!)
We’ve all been sold that dream, haven’t we.
Easy money.
Whether it’s a lottery ticket, an accumulator bet, an ‘investment’, a training course, or indeed the goal we’ve set ourselves.
Yes, that’s right. The dream of passive income.
Earning a few quid without lifting a finger. Ever.
My subscribers will know that I recently shared a post about what I went through in late 2018, as I was preparing to retire from my business. This happened in early 2019, and I learned first hand that passive income is never passive.
I also found out in a dramatically different context earlier this week.
I’d recently set up a Stocks and Shares ISA and to test it out, the plan was to invest birthday and Christmas gifts for my youngest children, rather than giving them the cash to spend. If it goes up, they win, if it goes down, I top up. Seemed fairly simple to me, and whilst doing it I’d learn a little about how these platforms work.
Now, let me assure you, the amount I’d put aside wasn’t £32,000.
Why do I quote that number?
Because the provider I signed up with sent me an email, caught by my spam filter, and hidden at the bottom of it was a comment that they were introducing a flat fee on all balances below that amount. For context, it means someone with £1,000 in their account would likely only lose money.
Thankfully Reddit highlighted this, I found the email, and yes they were right.
What does this have to do with my previous article, and indeed the title of this post?
Well, to join the dots…
Passive income, however it is earned, is never passive.
I have a philosophy in life that if you stand still, you move backwards.
And with any sort of income, that also applies.
If you are a landlord and you don’t pay any attention to your tenants or the condition of the property, you’ll find the rental value deteriorates in comparison to the market. Similarly, if you don’t look at an investment portfolio, it might not be right for you.
Yes, you may not be hit by extra charges. But, can any of us say that our mindset and approach hasn’t shifted over say 10 years? We always need to re-evaluate, consider all options, and take a blank canvas approach to anything in life. And one of the most important things to do this on is how we earn our income.
Now I know that money doesn’t buy us happiness. It does however buy us food, warmth and shelter. Those things are pretty important in my opinion!
So, what connection does this have to my previous post?
In that post, I was talking about how I was preparing to embrace a new non-executive role, and take a step back from the business, which I did.
I had some crazy experiences afterwards, let me tell you!
I took over a National League South football club and experienced some amazing highs and lows. I was a voluntary steward separating Hungerford and Dartford fans whilst a plastic beer glass was thrown over my head, I cleaned birds mess off of seats, and I learned how to pull a pint. Badly.
But honestly, it was a wonderful life experience. And my name featured in the Football Manager game - boyhood dream unlocked!
I wrote BOSS IT, which became a WH Smith bestseller and is still stocked globally.
And I turned up to some meetings.
But you know what? The ‘passive’ - or at least semi-passive - income needed me more.
COVID hit, some bad decisions hit, a lack of focus hit, and I put my aspirations of being a ‘good leader’ above my aspirations of earning income.
I won’t go into the gory details here as I’ve already written far too much in this article compared to my usual posts and you as a reader are not my unpaid therapist, but let’s just say that personally, the knock on effect meant that I went without income for several months after finally doing what was needed - way beyond what would ordinarily be an ‘emergency fund’ - as I rolled up the sleeves, got stuck in, and had to pay back the lack of focus, pace and decisiveness that had ultimately caused this situation to happen.
Yes, I could have blamed COVID, other people, or whatever. But actually, I’d contend that it all boiled down to me. Having that dream of passive income, and not realising that passive income is never passive. So I worked harder than ever before, for less than I’ve ever earned. And I’m at peace with that. I owed it to myself, and to everyone else.
Thankfully, it isn’t all bad. I actually rediscovered my spark during that time. I rediscovered why I love being in business, and what I love about it. The almost child-like enthusiasm for opportunity and building stuff came back. It’s still there, and I’m still loving that rollercoaster that we call business ownership (please don’t use the ‘e’ word)! Not just back on track, but storming forwards.
Anyways, the biggest learning from this is that whatever you do and however you earn your income - whether employment, from investments, or from business - is that you should question everything.
Is the income safe for the short term?
Do I need to do anything to maintain or build it?
Is there a better income to be earned elsewhere?
What happens if x / y / z happens?
The last question is the big question.
Blind spots are exactly that. Things we can’t see and things we don’t know will happen. But they can, and invariably will. Things happen. And it’s unlikely that you’ll even identify ‘the thing’ - if you do, well done you - but this process of critically questioning your ‘passive’ (or earned) income and wargaming potential options will help you cope with it when the time arises for you to cope.
Don’t buy into the ‘no plan B’ hype.
We all know that a plant dies without water. We die without water.
You know what you need to water, and you need to know when to pull your finger out and water it, before the leaves turn brown.
Passive income is never truly passive.
Carl Reader is a WH Smith Bestselling Author and international keynote speaker with a real passion for helping people do better. There are two ways to learn more about Carl! You can either follow him on Social Media if you’re just curious (@carlreader on most platforms), or if you’d like to learn a little more about what he does on stage, through content and in the media from a commercial perspective, you can visit his website at www.carlreader.com
You can buy a copy of his last book BOSS IT online, wherever you are in the world. And of course, I’d love you to subscribe to this community to be the first to see everything I have to share - just click the button below. It’s free of charge!
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