Why I Prefer to Be Building Passive Income Online Above All Other Options

Building Passive IncomeThe following post was contributed by the blog My Money Design, a website that is all about looking for ways to make more money and find financial freedom.

One of the questions I often get on my blog MyMoneyDesign.com is why I prefer to focus on online income as my way of building passive income rather than use other methods.  Why not focus my energy on rental income, being a business owner, or going after different types of investment products?

While I have complete respect for those people who use their other opportunities and leverage them to build their fortune, I find myself more entranced with the prospects of making money online.  Even though there are probably a million different really good passive income ideas out there in the world, nothing seems to mesh as well with my regular day job schedule as working online according to my own schedule.

Here’s a little bit deeper dive into why that is:

Why I Like Building Passive Income Online:

1)      Always Seeing a Positive Increase:

This is my infatuation with online income: Every day I log into my Adsense account and see my balance go up.

That’s pretty incredible!

To see my balance always going upward is a lot different than when I check my stock portfolio.  Over the years even though I’ve grown and matured in my stock picking abilities, a sour market can still take down the value of an otherwise good investment.  As temporary as that drop in value may be, no one likes seeing their account balance go down.

2)      The Possibilities are Endless:

Right now I have a small handful of websites that make around $500 per month.  There is nothing in the rule-books that says I can’t duplicate this success over and over again and develop a larger pool of websites that generate $5,000 per month.

Yes, there would need to be some effort involved with setting things up and finding the right niches to target.  But the good news is that once you do something right, you can use a virtual assistant (VA) or freelancers to replicate your good work for you.  And they’re often ready and available to do it for a very low cost!

3)      The Risks are Low:

The thing that scares me more than anything about owning a rental property is the liability. What if you get bad tenants?  What if you get hit with a lot of repairs?  What if you have to go to court and the judge sympathizes with the low-life tenants?

These may all sound extreme, but each of these are exactly what happened to my father-in-law when he owned a rental property.  For him it was one problem after another.  Ultimately the place ended up burning down!

Now compare that to the barriers of entry for starting a website.  I’ve started almost all my websites for about $100 each.  That includes the name, hosting, writing, and promotion.

Let’s say the website is a complete flop?  If it is, so what!  So I’m out $100.  There are no legal problems.  No tenants to deal with.  No property to unload.

Though at some point I’m sure I’ll diversify my passive income streams more than I am now, for now I’m content to simply focus on one thing at a time and make sure I’m doing it right.

Focus is the Key:

Sure there are many other things I could be doing in addition to building my income in this manner.  But would that really be the best thing to do?

It’s been documented that one of the pivotal turnaround points for Apple in the late 1990’s was when Steve Jobs killed all other (insignificant) projects and focused solely on just developing the iPod.  As we all know, that was an invention that changed the world.

I don’t want my online efforts to be fleeting or forgettable.  Just like a normal investment, I’d much rather have them generate reliable, stable streams of passive income than to fizzle out quickly.

Though multi-tasking is an admirable task, I want to exercise the same sort of laser focus by developing a quality product that will yield long-lasting passive income prospects for a long time to come.  I believe that is the secret to putting out really good work and making something that is going to stand the test of time.

Readers – What do you focus on when it comes to building passive income?  Do you try to exploit your online business ventures or do you pay more attention to other ways of making a dollar into two?  What are some of your successes or failures?

Images courtesy of FreeDigitalPhotos.net

26 thoughts on “Why I Prefer to Be Building Passive Income Online Above All Other Options”

  1. I wouldn’t say that my online ventures are passive. All of them seem to take quite a lot of time to build up and haven’t generated a ton of money. I’ll have to dabble more in niche sites, I guess.

    1. @Anne @ Unique Gifter: 🙂 Perhaps I’m using passive too loosely. Yes it does take some work. But right now I do zero work on my first two niche sites and they still manage to bring in 3 figures each month. I think that’s where we’d all like to get with our online advances someday.

      1. @DW: This where I would like to get a few niche sites of my own…making a few hundred dollars each month without much work. At the moment I am still working on #1 and trying to get some traction with it.

  2. You are 100% right that rental income comes with risk. It’s a great way to generate income but the business is not for the faint of heart. There are many less barriers to entry with starting your own website and making money.

      1. @DW: Especially with the initial cost. A new website is $100 plus some small ongoing fees for VA’s and other services. With a rental, you need tens of thousands potentially for a down payment. And getting out of a poor website is a lot easier than with a poor house or tenant.

  3. Interesting perspective! I haven’t begun trying to earn anything from my blog, but I am spending quite a bit of time on writing and promotion. It’s hard to imagine that any online site could ever truly be passive. Perhaps as I become more efficient, this will be easier to see. Making money online does seem to create a sense of freedom that owning physical property could never offer. The barrier to entry is also attractive.

    1. @Addison @ Cashville Skyline: That’s one thing I like so much abut websites, the low entry barrier. You can get in and make mistakes without really costing yourself anything other than time. This is because even if you monetize a site right away, you won’t be making money since you don’t have any readers.

    1. @moneystepper: Agree 100%. This blog is my full time job! It takes a lot of work to keep the wheels spinning. But I think with a niche site, you can spin it so that you can make money off of it without the constant upkeep and maintenance. That isn’t to say it’s 100% effortless, but you don’t need to spend 8 hours a day on it.

  4. I have a mix of passive and not passive, I also love property and will continue to invest that way, as well as shares and things. I like to diversify.

    1. @Kylie Ofiu: I agree Kylie. I diversify as well. I have investments, a rental property and am now just getting starting with a niche site. The more income buckets I have, the better I feel since I don’t rely on one single income source.

  5. The interesting thing about most examples of “passive income” is that their not really passive. Having a rental home still requires management of the property. Having a website still requires providing content, working with affiliates and advertisers.

    That being said, I prefer to do my ventures online just because it seems easier and less stressful to deal mostly with people through email than having to deal with them “in real life” as in a rental property.

    1. @Brock @cleverdude: So true Brock. We seem to throw the word passive at any income source that is not our primary income or 9-5 job. In reality, passive income is income that comes from doing very little, if any work, like income from interest and dividends.

      1. @Jon Dulin:

        Residual income might be a better term to use than passive. People who enjoy interest and dividend income are enjoying the fruits of past labor. Yes, they don’t have to perform any ongoing work to earn this income, but at some point work had to be done.

        Publishing a blog is hard work like any income earning endeavor. The attraction for me is that my efforts today create a residual income stream that could last for years – with little further effort.

  6. I agree with you that building passive income online isn’t that risky compared to other methods.
    Even though, I haven’t made that much money like you, I still believe that I can achieve my blogging goals at some point, so wish me luck. 🙂

  7. The First Million is the Hardest

    Online business can be great sources of passive income if you have a great model to outsource all the work. Most of our blogs, however, are far from “passive” sources of income!

  8. It does seem like the risk vs. return for online sites is really out of whack! There is almost zero risk, and the sky is the limit in terms of returns. As you pointed out, this certainly isn’t the case for rental property.

    Any change that you could share the website addresses of some of your niche sites. It’d really like to get started with this, but I find running my own blog is about all I have time for. I’d be interested to see how much time it would take to create a niche site from scratch and get it to the $400/month level. Any details you could provide would be awesome!

  9. You’re so right about focus being key, this imy personal downfall. I find myself starting one project (always online), get to a certain point then leave it half done and forget about it when really I should see more through to the end. Great post by the way!

  10. Online income is by far my favorite source of income. I love that it has very little overhead cost, besides that of a computer and the internet connection. It’s also nice to make money for yourself rather than for a company. My online income isn’t passive, though. It’s work. I do invest here and there so that’s passive income, and most of my accounts are online.

    1. I like how easy it is to get started. But anyone reading this shouldn’t take that to mean it’s easy to start making money. It’s easy to start and a lot of work in order to start making money.

  11. Good overview here and a lot of interesting perspectives in the comments. I think it’s a fairly steep learning curve to understand online income, but then it becomes much easier. Definitely still takes time, so I think passive is just flat out misleading. Nonetheless, it can be profitable and enjoyable.

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