Beginner Passive Income | Passive Income Examples

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The Passive Income Guilt Trap

I’m sure you’ve seen many videos where 23-, 24-, or 25-year-old content creators tell you how they’ve created three or four passive income streams for themselves. This saves them from a 9-to-5 job and doesn’t require any active work. And they automatically earn 4.5 million rupees a month. They can enjoy their free time and go on vacation with friends and family. Watching these videos makes each of us feel guilty, wondering what we’re doing with our lives. We question our life choices. That’s why, in this article, I want to delve deeper into the truth about this passive income industry. Are there truly legitimate passive income streams, or is it just an industry that exploits you by trapping you in guilt and creating passive income streams? Let’s find out the full truth today. This is Pranjal Kamra.

You’re watching Phenology. Before making this article, I watched many such videos. Dozens of them. They all share some common elements. They’ll tell you that these are all good ways to earn passive income. You can write books. You can create content on YouTube or Instagram. You can launch a digital product. You can write blogs. You can buy high-dividend stocks or properties with high rental yields. These six are very common methods. There are others that are discussed. Let’s dissect them one by one.

Myth #1: Writing Books

First, let’s take on books. Perhaps millions of books are written in India every year. 99% of them sell fewer than 1,000 copies a year. 99% of them. A book that costs roughly $1.08-1.44 earns an 8-10% royalty. This means that if your book costs $1.08, you still earn a 10% royalty, and you’re among the top 1% of Indian authors. If you sell 1,000 books, do you know how much your annual income is? $1.80 a month. Now, one more question: when 99% of authors can’t sell even 1,000 copies of their books, how will you sell them? You won’t be able to, will you? Four of your family members, four of your distant relatives, and six of your friends will buy them. What after that? So, it’s clear that a book isn’t an isolated passive income business. To sell books, you need a community or a large group of followers to support them. Basically, to sell books, you need to become a content creator.

That’s why when that content creator tells you, “Look how smart I am! I’ve created four passive income streams,” we have to ask him, “These aren’t just four streams. They’re all different funnels that emerge from your content creation model. So, basically, the backbone of all of this is content. So, let’s explore that: if books are dependent on content creation, then perhaps content creation generates passive income. Let’s find out.

Myth #2: Content Creation

Look, I’ve been creating content for eight years. So, I think I have the authority to honestly tell you the truth about this industry. And when I started, there was very little competition. It took me a year. I made 65 videos. No one was watching. I created, edited, optimized, and uploaded those 65 videos because I wasn’t working a full-time job at the time. Otherwise, I wouldn’t have been able to optimize, edit, and upload those 65 videos on YouTube alone.” And they tell you you can do this while also working on your job. I was doing this full-time for a year. Eight years ago, the competition was much lower. It took me a year and 65 videos.

Only then did my channel pick up. And even once it did, is it passive? It’s definitely not passive. I don’t do all that recording or podcasting in a studio, with a large content creation team, with extreme optimization. I do whatever I want in my office, honestly, without a long script. Even then, it requires a lot of resources. So, if you want to do content creation as a business, you’ll need two or three customer support people, an SEO person, a graphics person, and someone to help you create videos. You’ll need a team of 10 people. Because these days, this game is a very high-stakes game. Everyone is creating content.

Big companies, podcasters, your competition is with them. I’m not saying that someone can’t go viral by creating content from home on their phone. They can’t become a big creator. They absolutely can. But selling it as if it’s passive is not passive at all. You can do it alone on your phone. I even recorded with my phone today. Still, it’s a full-time job. It’s not passive. It’s completely active. Even big, established creators have to work hard every day. Algorithms change daily. You have to deal with optimization, new tactics, and competition every day. Even being a big, established creator, it’s not passive at all. It’s a full-time job. So, I’m against the way it’s projected.

Myth #3: Digital Products

Now, thirdly, digital products, which you sell by running ads on Instagram or Google, don’t require becoming a content creator. You’re right. No, no, no. What kind of products are there? This could be any Excel sheet templates. HR Compliance It could be a bundle of taxation-related documents. It could be e-books. It could be any creative product. Various digital products. Since these are digital products, you don’t have to worry about physical logistics, inventory, storage, warehousing, defects, etc. This makes it an asset-light business, as they say. You’re not building a community, you’re not creating organic content for YouTube or Instagram. You need ad revenue from day one. So, your business is dependent on ads. You have to run a lot of ads. You have to optimize them daily and track their performance. Furthermore, as those ads perform well, your customer acquisition costs will drop.

So, two people will buy your product from you. If it’s a digital product, they’ll tweet a little bit. They’ll brand themselves,and competition will increase. Now, your own customers are selling similar products under their own brand names for the same keywords. Within 10 days, you’ll see 10 more people doing the same thing. So, the keywords that were generating results for you will start increasing in price. Your customer acquisition costs will rise. Customers will sometimes ask for refunds, and sometimes they’ll be scammed. What will you do then? You’ll research new keywords to avoid competition. But your competitors are also tracking you. Wherever you go, because they too aren’t getting results in the same old categories, they’ll follow you. Again, I’m not saying this business can’t be built. People have built businesses worth crores. I have a problem with saying it’s passive.

When Your Income Is Low: Protect, Don’t Gamble

If your income is low, no passive income method will work. First, keep this golden rule in mind: instead of trying to substitute this income, remember that my salary is low, my household expenses are high, and I need to earn more. People turn to gambling or gambling-like methods, such as aggressive intraday trading, FAO trading, forex trading, and gambling. If your resources are already limited, your job is to conserve them. Don’t spend them further. Don’t squander them on risky activities. Your primary job, when your active income is low, is to protect yourself against unexpected expenses. For example, when your income is low, even a small health insurance claim—if someone in the family gets sick and has to go to the hospital—can derail your goals.

So, when your resources are limited, ensure you don’t face expense shocks. Unexpected expenses don’t make your life more difficult. As the difficulties increase, you’ll gamble even more to compensate. Keep in mind that if you fall into the trap of unexpected expenses, you’ll be tempted to resort to more risky behavior. Be cautious and protect yourself from such shocks. Get health insurance. Ditto can help you compare and choose the right health insurance for you, free of cost. The best thing about Ditto Insurance, and the reason I’ve collaborated with them for so many years, is that they won’t spam you like other platforms. They won’t make unnecessary calls. Get insurance. There are no pushy salespeople here. The advice is unbiased and truly beneficial. When it comes to purchasing a policy, they’ll be your friend, helping you with all the documentation and even filing a claim. You’ll find the link to Ditto Insurance in the description of this video and in the comments below. Their full consultation is free. So, if someone pitches these ideas as business ideas, I have no problem with it at all. I have a real problem pitching passive income streams.

What’s Actually Passive: Dividends, Fixed Income, Rental Income

Now let’s move on to the next category, which is a little different and truly passive. Like dividends, fixed income schemes, and rental income from real estate. This is passive. Truly passive. But can an average person in their 20s or 30s do this? Look, on average, the dividend yield is 1-1.5%, which means if you buy stocks worth $36047.33, you’ll get a dividend of $360.47 per year. Well, that’s an average, isn’t it? I’ll focus specifically on high-dividend stocks. Okay? So, your dividend yield will increase to 34% at the most. There are some stocks that even yield 5% or 6%. But you won’t put all your money into one stock. As soon as you diversify, your dividend yield will reach around 34%.

At the most, if you buy stocks worth even ₹1 crore, you’ll earn ₹3 to ₹4 lakh a year, or $108.14 a month. That’s the minimum you need, isn’t it? $00 a month. To earn that, you’ll have to invest $36047.33 in stocks. How many people in their 20s and 30s can invest $36047.33 in stocks today to earn $0,000 in dividend income? So, who is this affordable for? Those in their late 40s, 50s, nearing retirement, with a $180236.65 corpus, if they do this, they’ll start earning a couple of lakhs a month. I agree it’s passive. But these Instagram users who are creating content don’t pitch to audiences in their 40s and 50s. They pitch as if you can start earning dividend income tomorrow. Second, it’s the same with monthly income schemes. You can check the yield on any decent, safe monthly income scheme where your money will be safe. At best, it’s 7%, with a maximum of 7.8%.

Not more than that. Then the risk starts. Even in such schemes, you’ll have to invest at least ₹10 million to generate meaningful returns. So how do we invest? And how can we leave our jobs relying on it? Where do we have that much capital? Same thing with real estate. They’ll show off exorbitant rental income. I earn $144.19 a month. I earn $0.36 a month in rental income. Brother, how much is your investment behind that? Sometimes the rental income comes in at 6%, 7%, or even 8%. I bought a studio apartment in a good location for $18023.67 and I’m earning $0.13 – 1.44 a month. But is that passive? Don’t you have to hire a caretaker? You don’t have to maintain that flat every day. You don’t have to pay property tax every year. You don’t have to replace furniture, TV, or AC every three years. You don’t have to respond to customer complaints or bad reviews. Is it really passive?

The Real Business Model Behind This Industry

Now I’m telling you what works and for whom. All this content isn’t for you. It’s for the content creator. This entire industry is about luring you with the dream of passive income and then getting you hooked on their e-books and courses. Keep getting views. Their passive income stream will keep growing. At the cost of your time, your money, and your guilt for not being able to do all that. This is a business model designed to cheat you. Don’t get caught in it.

The Real, Boring Way to Increase Your Income

Now, I’ll tell you simple, boring ways to truly increase your income if you really want to increase it. There are legitimate ways to increase your income in the long run. And this is very basic. I’m not going to tell you any hacks. If you become more valuable to your clients, your customers, and your employers, you will earn more income. So, you have to continuously enhance your skills. What happens is we think we’ve completed post-graduation, got a degree, and landed a job. Now it’s the employer’s responsibility to provide growth. No. It’s your responsibility to make yourself indispensable, invaluable, so that you’re in demand everywhere. Your salary, like all other things in life, is influenced by demand and supply. So, if the skills you possess are in high demand, your income will grow with supply. So, continue learning. Then come the third step. So far, there have been two steps: protecting what you have.

Second, keeping yourself in demand, and third, investing a portion of whatever you’re earning, if possible, in a way you’re comfortable with. Ideally, invest in a mix of all three: gold, real estate, and equities, either directly through stocks or mutual funds, so that by your 50s, you’ll actually be earning real, passive income. If you’re looking to invest in stocks for the long term, Phenology 30 could be a good option. Here, we provide two or three new stock recommendations every month, completely unbiased and deeply researched, so that over the course of a year, you can build a diversified basket of 30 stocks. Our goal is to select stocks that compound your wealth in the long term. You’ll find the link to Phenology 30 in the description of this video and in the card above.

Closing

If you’re also frustrated by the get-rich-quick schemes circulating online, then you should Follow This Website. You won’t find any shortcuts here; you’ll only get real wealth-building advice that actually works. If you liked this article and see someone around you falling for shortcuts, be sure to share it with them. And in fact, let me know in the comments what the weirdest, most bizarre way to earn passive income you’ve heard or seen on the internet.

I am sure we are going to get some strange and funny incidents in the comments. So tell me by commenting. And in these comments, you will get the link of Ditto Insurance in the first comment. Trust me. They will work like a reliable financial partner for you. So, go to their website for your health insurance. Ask them any query or doubt you have regarding health insurance and also mention your preferred language. Mention the language you want in Hindi or English and you will get help in that language only. This is Pranjalal Kamra signing off. Bye Bye.