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:
1. 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 fundamental flaw in this logic.
2. 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.
3. 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 down-line. All of these, so-called “passive-income” vehicles require maintenance and upkeep. Tenants cause dramas, web-sites consistently need updating and down-lines require constant encouragement.
4. 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?…
Building your Empire.
Building an empire is the fail-safe way to wealth, power, influence and fulfillment.
Building an empire requires you to commit fully to something that you will never turn your back on. It requires you to take a stand for something, to have a vision, to enroll others in your world-view and to keep pushing the boundaries of what’s possible.
When you build an empire, there will be things that happen within it that happen without you being in the room – sales get made, rent comes in, fees are paid, royalties are collected – however it isn’t “passive”. You can never turn your back on your empire, it will always be something that you are building and protecting.
It will be the source of joy, frustration, passion, fury, boredom and exhilaration. It will be an extension of your authentic self, a piece of living art in the world that is never quite finished.
All the examples who get pointed out as beneficiaries of “passive income” are actually empire builders. Richard Branson doesn’t have passive income, he has the Virgin Empire. Donald Trump didn’t create a big “passive income” machine, he built a property empire. Warren Buffet goes into his offices at Berkshire Hathaway each day and builds his empire, he doesn’t sit back thinking about how great it is to have his “passive income” sorted.
The quest for passive income brings out the juvenile desire to shirk financial responsibilities. It’s a desire to “get money sorted once and for all so I can get on with life” and of course that never happens.
The quest for building an empire requires you to run head-on at the challenges of money, business and work in the knowledge that it will be like this until the very end. The empire builder must chose to play an inspiring game, because the game will never quite be over as long at they have air in their lungs.
It might sound pedantic, it might sound like a slight of words however there is a chasm between the inspired person who goes out to build their empire each day and the sad group of people who are delaying life while they get their “passive income” strategy in place.
The quest for passive income ends in disappointment, building an empire is an inspired journey that brings you closer to the work you were born to do.