Part 1: Passive income will send you broke

Written on 15 January, 2013 by Daniel Priestley
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Over the past few years the biggest buzz word for people in business or those seeking financial freedom is “passive income”.  As the name suggests, its an idea that you can earn income that you don’t have to work for.

In my experience it is also the most damaging “wealth creation” idea I’ve ever come across. It sucks the life out of people and causes them to do dreadful things that waste their time, money and energy. I view the idea as a modern day “pot of gold” at the end of the rainbow and I believe it’s just as mythical.

Let me explain:

The idea of passive income by definition means you are trying to make money from something that you don’t want to be doing.

I see people who fundamentally aren’t interested in property, going out buying property because they think it will be “set and forget”. I see people who loath technology, setting up web sites because they think their dull, average, uninspired creation will replace their wage. I see people who have never taken an interest in large publicly traded companies suddenly fixating on price charts so they won’t have to worry about money some day. There is a deep fundimental flaw in this logic.

The idea of passive income stimulates the most primitive part of the brain.

The reptilian limbic system of the brain is a sucker for “easy wins”. It’s the part of the brain that controls fear, fight and flight. It believes we live in a scarce world with an imminent drought around the corner. Passive income appeals to the parts of the brain that think Lotto is a good idea because it feels emotionally rewarding despite being a logical disaster. This primitive part of your mind isn’t built for complex thinking, it can’t figure out that spending 1000 hours and $5000 setting up a $87.60 per month surplus is hardly time well spent.  It just wants the emotional payoff of never having to worry about money some day. The worst thing is that when the limbic system is in control, the creative parts of the brain that do generate lots of opportunity can’t function.

It’s NOT passive.

What most people come to discover is that a property portfolio is hardly passive, nor is a web site, or an MLM downline. All of these, so-called “passive-income” vehicles require maintenance and upkeep. Tenants cause dramas, web sites consistently need updating and downlines require constant encouragement.

I don’t see examples of it working.

When was the last time you were on holiday and you bumped into the couple who proudly declared that they were traveling non-stop thanks to their passive income? Theoretically, every beach in the tropics should now be over-run with people who can’t even remember how they make their money.

So what does work? What is the alternative that does produce results? What has been the secret to wealth since the dawn of time?…

The opportunities will be explored in Part 2: Building your empire.  Stay tuned ...

Article written by Daniel Priestley.  Best-selling author of Become a Key Person of influence, Daniel has a multi-million dollar global business and advises startups, fast growth companies and charities on how powerfully position themselves in their industry.

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