The Cons of Earning Passive Income: A Balanced Perspective

Earning passively seems to be on top of everyone's wish list and that’s understandable. The financial gain and Freedom that comes with passive income could be liberating. An extra income without the need to invest much time in it seems inviting for everyone but really not everyone can pass the criteria for earning passively. Most times, earning passively requires paying your dues forward and earning the reward at a later just. People still however find it hard to grasp this concept.

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Do a search on your YouTube on how to earn passively while you sleep, you will be surprised at how many authors and content creators have published something about it. Regardless of that fact, earning passively remains one of the most capital-intensive projects to start and maintain, Earning passively is not earning as painted however, it is rewarding especially when you go big. The higher the capital, the more the expected passive income one will make. To me capital goes beyond the money, it could be the dedicated time and effort put into the development of a brand which could earn some cash while you sleep.

A great example of this is YouTubers and Authors whose content on YouTube and books continue to earn them some funds years after the publication of their content. For YouTubers, the more people watch their videos on the internet and engage, the more they earn in dollars. The challenging aspect of it is that your brand has to be top-notch and unique to serve quality and relatable contents which viewers want to see. The content has to provide some value for these people and through that one’s valuation could rise as the video keeps ranking up some views. For Authors, being a great writer takes time, focus, precision and determination. Once this has been accomplished and an author's brand has been known, one could leverage that to earn by putting a book out there which the public continues to buy and make payment for.

The advancement in technology has further aided with earning passively as one could also earn through the use of blockchain technology. Some years ago, this was not possible, however, the introduction of DeFi tokens changed the whole outlook of things and now people can earn by stacking their tokens on an exchange or centralized exchanges with the expectation of getting paid dividend in the form of other cryptocurrencies or the same token staked. It is such an exciting time really as people have gone through the traditional means of earning passively. Also, technological advancement has played a huge role in actually this process.

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Before now, earning passively options were limited and most involved putting one cash in a fixed deposit account in a financial institution. Most times, banks offer these options and they pay a certain amount on the money saved. The APR offered by banks on this deposit are usually small and the reward which one might get on that saved money might not really make sense in the end as inflation and other economic conditions might have affected the gains which one hopes to have made.

Some go as far as investing in Government bonds which are the most secure investment choice for any low-risk taker. This bonds yields very minute interest and the best way to optimize the earning is to invest heavily in it Afterall it is the safest of all investment options in the world with which there is a 100% guarantee that you will not lose your money regardless of the macro-economic conditions of that country.

FinTech has further provided other numerous ways of earning passively. They roll out options they offer for mouthwatering rates between 10 to 15% interest rate as an extra incentive to invest and earn passively. The most common choice of earning passively is by buying into an agricultural business option offered through this Fintech platform. You get to earn within 15 to 20% on the fund invested. For saving your fund, most times, it is a 10% flat rate.

It is safe to say that Passive income is actually a great route towards ensuring financial freedom, however, it has some cons of its own which could burn out an individual for trying or being trying to achieve it. Kindly note that these cons are why the rich are richer and the poor get poorer as humans will naturally go for the easier route as the passive income route is not easy to build overnight.

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Based on the cons points I have pointed out above. In addition to them and also to clarify what might have been excluded, the following pointers are highlighted to provide an overall balanced perspective of the cons of passive income:

Initial Time and Effort: As we have pointed out in the scenario above. Passive income is not an overnight success and earning mechanism. It requires resilience, discipline, focus and also putting work to get everything set up. Some aspects of earning passively might be easier for the crazily rich people but for the average person, earning passively entrails a lot, you could ask the YouTubers and Authors

Lack of Control and Dependence: Regardless of which form an individual earns passively from, they are always never in control of the source. Youtubers rely on YouTube which they are not the owner of. Authors upload books on Amazon which they are not in control of. Investors invest in a stock or shares, and they can only receive a dividend, but he has no say in the ultimate power over the firm. A very rich investor might be involved in the decision management process, but if he is not involved in the daily operation of the business which we all know anything could go wrong at anytime

Income Inconsistency and Uncertainty: Taking the dividend and money paid to investors and YouTubers as an example, it is not fixed, and it varies according to the market condition and the views generated. Earning passively could become a tough task in instances wherein a particular month, no money was realized or made. They are months you make crazy money and they are months where the opposite is the case. So it is advisable to get a stable income and do it along with your passive income model.

Market Volatility and Risk: This applies to investors and also cryptocurrency enthusiast who has invested a certain amount in stocks and also on some coins. Let's say the market condition was not favourable in a particular month, it could lead to reduced or no dividend especially if a loss happens. For staked coins, if the coin losses value, then it results in a loss in investments. So they are risks attached to it, hence why it is great to diversify

In conclusion, passive income can be a path to financial freedom, but it is not without its challenges. It demands hard work, resilience, and an understanding of the inherent risks. While passive income offers potential rewards, it's important to maintain stable income sources and diversify investments to mitigate volatility. By considering both the pros and cons, individuals can make informed decisions and build a sustainable passive income strategy.