Is passive income a myth?

A possible theory - there are degrees of passivity. I'm not sure I buy the idea there is truly passive income that genuinely requires the owner of the income to literally nothing beyond creating the income stream.

For me the definition is used to describe something that has a life of income without needing to reinvent it. i.e. working for someone else on a freelance project can never be passive because 1 hour = $100 or whatever. Something that offers passive income should provide revenue over its lifetime.

How much maintenance that needs depends on various factors definitely including competition for that audience. Another word I think that is relevant is 'asset'. An asset provides a passive income where a contract does not.

The work done is not directly related to the income received.

Ok, so three possible ways of thinking about passive income. I think passive income is not a myth under these definitions but the idea that you can do nothing and earn money is a myth.

Yes, I have it.

I set up a company that I no longer run day to day and I get money as long as it is profitable.

True passive income is writing a book about "passive income streams" and selling it to people that constantly search passive income.

Jokes aside, I think many businesses can become passive income once they are setup and you let someone else run them.

It looks like passive income is "effective" to the degree that people are not familiar with the source of income. Once a lot of people know about the passive income stream, they all start doing it and you need to spend more time "maintaining" that passive income.

Like @richardesigns said, there are degrees of passivity.

The real estate comment earlier was good. I own some apartments. When I first bought them, I had to do everything myself, since I had no money to pay anyone to do anything, and everything was a wreck and constantly breaking. After owning them for a few years, and fixing everything right, there is much less work to do than when I bought the place. I still go over, and take care of the basic things, but I'm able to hire from a team of professionals to take care of things. If I wanted to totally extract myself, I could hire a rental property management company, and this would still be a (somewhat?) profitable venture (now, ten years later.) This would have been the route to financial ruin when I first bought the place.

The same with software development - we have monthly support customers, and those guys are NOT worth it, at first. This is because we fix a ton of broken stuff, and try and figure out a product roadmap and a development pace that fits their budget. After about two years, they become relatively passive. This only works for stable, steady, businesses that rely on their software for generating them income, and they're willing to budget realistically (and not go into break/fix mode.)

This is also the idea behind any product with a monthly subscription component. Rents have this built in.

I don't think most people are going to go through the initial pain to turn something into a passive income stream. It is not easy. When it is easy, then it's bundled up as a real estate investment trust (REIT) or dividend paying stock (like @neb519 said.)

Forget about passive income. I don't think that it truly exists, however, it is possible to create a business where the revenue is multiple times bigger than the amount of work you put in. You just have to design it like that from the start. I am working on a Entrepreneurs Coworking Space and the cool thing about this business is that the members are the most valuable asset, so it does not need me to provide value, therefore I can take vacations and time off knowing that it is still working :D

Lots of work. Lots of community building nowadays. It's never passive until you're making enough money to hire people to do things for you.

I think real estate investing can be kinda passive. There're many ways you can get in even without doing any maintenance and tenant management.

There was never passive income to begin with. Unless you get dividends on investment there's no passive income. Even then you had to be active to earn capital. Or inherit.

I agree with the other comments here - passivity is a spectrum.

Dividends are probably the closest thing to a "true answer". I consider passive income as, "I don't have to invest more after the initial investment." Something which makes money while I sleep. What my old boss called a "nickel machine".

By that definition, I've gotten pretty close with my SaaS. Once I build the initial automation to upgrade between versions, I'm done. While I might make tweaks, the upgrade path doesn't change. The service gets used for as long as devs want to automate the upgrade between those versions. Cha-ching.

I think passive income was always a myth for most people. People promote the idea because they make money from selling the dream.

Maybe, and much of what you say is true. Yet if you get virality going, this all changes. I believe your product must have a huge TAM and designed in virality. And virality requires "seeding", which is also a challenge.

I think most people confuse "passive" income with "infinite, lifetime income, without ever lifting a finger".

Every income, no matter where it comes from (even stock dividends IMHO), requires work / maintenance, much like @dare0505 mentioned.

That being said, yeah I think the days where you could easily rank a website and generate ad revenue or lead gen revenue with it are long gone, excluding some local markets or very small niches.

For example I have an idea for the French market. I recently discovered there's a niche "construction insurance" for individuals having work done in their house, costs anywhere between $1K and $5K per contract. All the websites are horrible, with very little content, old school lead gen flows... That's an opportunity, but it's very niche for sure.

From what i see, most passive income businesses are not really passive but the work and the success/outcome are separated from each other. You can make it your goal to reduce the variable of work to almost zero but that has become very hard to maintain.

Definitely a myth. You can earn "passively" only if you are some Ambani or Elon and have invested magically in some stripe/uber. Your shares can just sit there and make money. But from what you have described, it seems like a scammer pitching a ponzi scheme. It is not a healthy way to think about money.

of course it's not, if you don't have several of passive income resources you will never ever achieve the financial freedom, me too my goal is to get a lot of passive income resources so I can be wealthy, good luck to you all.

Yeah, it's like the Red Queen's race. You can never settle down.

"A passive income is building a site, ranking it and letting it "sit there" getting traffic from Google" - if you have relevant content, your website is fast enough and all the SEO tags are in place, with no black-hat techniques or messing up with content/links etc., those "passive income" websites sucessfully work. But you still need to make a new post/page every couple of months to show that your site's not dead for Google.
I have a non-english "how to" type website about computers, it now works for four years with only writing dozen new posts a year, and it brings some money (not millions - hundreds a month) from adsense still.

The same can be applied to any other niche tech blogs where things don't change much.

If you want to get tens of thousands a month just from passive income - it will not work as it probably never worked - there still needs to be some serious work involved at some point.

What do you think?

I think you haven't had much contact with DeFi the last 4 years!

I don't think it's a myth. I've got a mobile game and a web SaaS product that generate revenue for me passively. I think it's just not as easy as people think it is to create a product that generates passive income.