What is a passive income stream and what does it mean to you, Well a passive income stream is when you provide something once and then reap the rewards in the form of an income from that product for an extended period of time. Ideally it would provide you an income for the rest of your life.
Examples of things that are not a passive income stream.
You work for someone else, in a traditional job such as a bank. You have to go in every day to get paid.
You sell a product that you have produced and make some money, but you have to sell another to make more money.
A sales person that sells a one off product, for example windows. They have to go out and sell windows every day to get paid.
Examples of a passive income stream.
A singer that produces a song, once recorded they earn royalties every time someone plays it or buys it. They don’t sell it themselves.
Money in a savings account or other investment. The interest accrues over a period of time. Well hopefully anyway.
An author produces a book and earns an income every time someone buys it.
An ebook you create and place online. Make it automatically mailed to the purchaser and you should never have to touch it.
A business owner that reaches the point where they can employ someone to manage it for them. Most entrepreneurs have multiple businesses, but they don’t run them all personally themselves.
A salesman, who sells a reoccurring product, for example car insurance. They would earn commission every time that person renews the insurance.
A network marketer that sells a product and gets paid a commission every time the buyer reorders the product.
Network marketing or Multi Level Marketing is in my opinion one of the more powerful forms of a passive income stream. Once you start to build your team, then you start to earn from all their sales as well as your own. And despite people’s suspicion of Multi Level Marketing, this is the way that most businesses operate. They employ people to sell their products and the owners receive a commission, or profit from every sale. The only difference is the sales person has no opportunity to build their own business. A truly passive income stream also continues long after you give up work. So once you retire, whatever you worked on in your employment continues to pay you a salary. Sadly most of our pensions will not always live up to this expectation.