When I was in college, a childhood friend contacted me out of the blue, wanting to chit chat about ‘an opportunity’. He said it would benefit my future. I thought it was weird because we weren’t even close as friends. However, what I learnt from that fateful day would have me searching many years later, on how to build a passive income online.
The Famous Cash Flow Quadrant
That day was the first time I heard about Robert Kiyosaki and saw the cash flow quadrant. In case you don’t know, this model is a popular reference to teach people about financial freedom. I was told that the world is divided into four groups of people – the employee, the self employed, the business minded and the visionary investor.
Thanks to the conventional upbringing and education, the majority of us are ‘conditioned’ to become employees or self-employed where we would commit a certain number of hours in exchange for a salary. This is considered a form of active income because constant work is necessary to bring in the money.
A smaller group comes from the business minded and the least percentage will be the investors. These people are considered to be the most successful because they leverage from time and manpower to generate multiple income streams. In other words, they are passively making money even when they are not at work.
In my conventional mind back then, the latter part of the quadrant sounded unreal. I was always taught that money is gained through hard work so how can one possibly earn without constant work engagement? I was curious and soon after that, the talk turned out to be an MLM business opportunity.
The Traditional Advocate of Passive Income
The quadrant is frequently used in most MLM talks, shifting people’s mindset from active to passive earners. I have attended a few, so I know the drill. According to them, the best way to do this is through networking using their inflation-proof system and award-winning products. As you gradually move up into the tiers, the power of passive income becomes bigger.
What entails after that would be a series of phone calls, product demonstration and invitation to more talks where you are expected to bring friends and families along. Sounds familiar? I am pretty sure you’ve been there and experienced the same wave of excitement, pressure and ultimate rejection.
Don’t get me wrong. Not all MLMs are bad and some of their products are really good too. In my parent’s era, this system worked very well because it was literally the next best thing that ever happened to them. However, in my era, people have more options and opinions, so it’s more challenging to recruit or to sell an expensive product to someone.
During my short stint with MLM, I finally understood what the quadrant was all about, but attaining passive income was something out of reach because networking is such a tedious process. I felt like a salesperson taking advantage of other people and it didn’t feel right. Maybe I am just not good at it so I moved on.
The Digital Advocate of Passive Income
Welcome to the internet. In the online space, money making opportunities are abundant and in most cases, the model is slightly reversed. Potential customers come to you instead of you going to search for them. This is possible if you have something that everybody wants and you can create a constant cash flow out of a hot market without the need to build an intricate network.
In the earlier days, there are many adverts that look something like this;
Although there’s no mentioned of ‘passive income’, the message from the dangling carrot is irresistible. Instant traffic, earn on autopilot, wake up to emails filled with cash – these offerings are just as good as any type of income you can imagine. Often times, it involves selling (and up-selling) a system or a ‘secret technique’ that can create an eternal stream of income.
This, my friend, is a delusion. They are notoriously known as online scams and they will suck your savings dry as long as you are hooked to it. I’ve fallen for them before using my father’s credit card and it got me into deep trouble. Basically, they don’t offer anything valuable and they prey on those who chase after the passive income dream. Fortunately, the search engines are getting better at weeding out these types of sites and we are seeing less of them nowadays.
Meanwhile, another type of opportunities is cropping up, disguising as professional training that will teach you how to achieve financial freedom. They create mastermind groups wrapped with exclusive perks to give you the impression that it is something valuable which isn’t offered elsewhere. And if you don’t sign up within a certain time period, you’ll miss the chance forever. Sounds familiar?
These are red flags to watch out for when you come across high ticket items and they are the ones that are replacing the scammy ads. Nevertheless, the tactic is the same. They sell you the dream (mansion, cars and all) and then make you pay a lot of money to join, but offer minimal or no practical values in return.
Some of these sites have been shut down by the FTC after receiving a large volume of complaints from people who lost their money, but many more are still operating and recruiting under broad daylight. So in case you come across these high ticket programs, make sure to proceed with caution;
The Smart Passive Income Earners
Perhaps, the most popular person that we can relate to when it comes to making passive income is Pat Flynn. A typical guy who got laid off from his job, turned to selling eBook for making some side cash and went on to become one of the most successful online entrepreneur in the 21st century. At least, that’s what I think.
Today, Pat is an author, a business coach and a frequent speaker at conferences. Of all that, he’s most likely known as the trailblazer for setting the passive income trend online. On his website, named after that very keyphrase, you can see his monthly earnings along with case studies to show what works and what doesn’t.
Unlike other advocates, I found him to be different. Firstly, he doesn’t sell you the million dollar dream. Instead, he talks practical sense and offer knowledge that can be applied in a variety of ways. Those who are inspired by his success have all set out to do their own things and build businesses that are not only profitable, but also sustainable.
At this point, I was certain that online marketing is the way to generate more income if you know how to do it properly. I look deeper at the quadrant again to see what type of idea best fit the “B” and the “I”.
Popular Online Passive Income Ideas
I know that real estate is a good investment. It’s an asset that appreciates over time and a good location can add more value. Despite my limited knowledge about property flipping, I do know that we need to pay a high rent whenever we travel to strategic locations.
That means, property owners can collect fees all year round, converting empty spaces into income streams. Even with just a room or a studio, many people have flocked to Airbnb doing just that. There’s a good market wanting to rent these kind of places, so why not have them listed to make some money?
Well, my only problem is that I don’t own a property (yet) so as much as I like the concept, I would have to give this idea a pass.
Then I looked into what everyone is doing nowadays, which is setting up an online business such as eCommerce or drop shipping. This market is huge because online shopping has become so common nowadays. I like this concept because it has something tangible to offer to people.
However, when I realized the amount of planning work involved, such as product sourcing and shipping, I knew it was too much to handle while juggling with a day job. I wanted something less complex, easier to start and still relevant to consumer trends. That’s when I encounter affiliate marketing.
It’s an income model that pays sales commissions for referring new customers to a merchant site. You don’t need to own a product or handle shipping. You just need to focus on getting constant referrals through blogging or videos.
The beauty of this system is that good content such as product reviews or engaging videos stay on the web for a long time. That means a content that was published a year or two ago can still passively generate income, so long as the information is relevant to the consumers.
Many companies are now leveraging from affiliate programs to spread their branding because personal recommendation is known to have a strong influence in the consumer’s purchasing decision online. In other words, a regular person who is always sharing positive and valuable things about a particular product or service, is more likely to relate and convert a group of audience into buyers.
In 2014, after being employed for several years, I felt I was ready to learn the real thing about generating online income. That was how this blog came to exist. From a non-techie, I was able to build a WordPress website within minutes. From someone who never scored A for English writing, I was churning out thousand words of articles on a weekly basis.
From a couple of visitors, my online traffic grew to hundreds per day. When I make my first $8 online, I knew there was no turning back. Months later, when I started earning commissions on a regular basis (as shown below), I could almost taste the ‘sweetness’ of having a passive income.
Finally, I found a system that works and soon realized that affiliate marketing can literally teach anyone the basics about running an online business. Someday, I could actually leverage from the skill to sell products online or even promote my property, if I want to. The fact that this is just the beginning, makes me feel excited about other untapped opportunities.
Busting The Myths About Passive Income
I started out as a skeptic when my childhood friend told me about the cash flow quadrants. But that didn’t stop me from experimenting different things that regretfully made me couple hundred dollars poorer. And when it hit me that time is the most valuable asset anyone can have, I was determined to take control of my life at every level.
Throughout the process, this is what I learned. Passive income is just another fancy name for financial stability. It doesn’t mean that you don’t have to work for it and it certainly doesn’t make you rich either. Anyone who offers a quick path or solution to success, simply just want to drain your money. And if you think that this type of money can provide a carefree lifestyle, then you are just being delusional.
For me, I am glad that the search is over because I’ve finally figured out how to build a passive income online through affiliate marketing. If you are still searching, I would recommend this robust community for you to find out what’s real and what’s not. Who knows – you could take a leaf out of their success stories and kick start your own journey.
Do you have any thoughts or experience to share about this topic? I look forward to reading them in the comment space below.