Choosing a Passive Income Vehicles:

Most passive income options that exist out there can be daunting for someone just starting out with their rat race escape. affiliate marketing, network marketing, infopreneurship, and so on.

• Which residual income vehicle do I choose?
  

• What if I make the wrong choice, and burn time, energy and money without making residual income?
  

• How do I know what the best fit for my personality, strengths, and risk profile is?
  

  Here are a few suggestions:
  
  

  1. Effectiveness:

  Effectiveness Quote. “Efficiency is doing things right. Effectiveness is doing the right things.” -- Peter Drucker

  
  

  How effective will it be at getting you from where you are now, to your next milestone? How effective is the vehicle at crossing the current terrain that you're trying to maneuver?
  For example, if you are just getting started with setting your goals & milestones, you may want a vehicle that will take you from square one, to... say... saving yourself an emergency fund.
  

  If we use the example of "taking a vacation to Disney World in Orlando, FL":
  

  • Walking: If you are currently sitting in your living room, you'll want to use your feet to walk out to the driveway. Or use your feet to walk all the way to Orlando. (Wouldn't advise the latter.)

  • Driving: If you are in your driveway, you'll want to drive your car to the airport. Or drive your car all the way to Orlando. (If you don't live in the United States, the latter again, is not advisable.)

  • Flying: If you're at the airport, you'll want to catch a plane to Orlando. You wouldn't want to catch a bus at this point. Or try to hitchhike.

  • Shuttle Bus: If you've arrived at the Orlando airport, you'll want to take a shuttle bus to the hotel you've booked. (If you drove into town from home, then you'd skip this step.)

  And so on, and so forth. The idea is - you don't try to use a vehicle just because someone you know has successfully used it... it may have worked for their current milestones, but may not work for yours.
  
  

  2. Speed versus Cost:

  Speed versus Cost. “Quality. Speed. Cost." You can have any two of the three you wish." -- Anonymous

  
  How quickly will it get you from where you are now, to your next milestone? And how much will it cost you?
  Continuing the Disney World trip analogy... let's assume that you live in New York, NY, USA.
  • Walking: Walking would be your cheapest alternative. But to walk from New York to Orlando would take weeks. Talk about penny wise and pound foolish! And by the way, consider the opportunity cost of your time.
    
    

    Those several weeks you spend walking, could have been spent doing many other things that would be beneficial to you! Oh and by the way, this "cheap" alternative" may end up being the most expensive, when you consider the wear and tear on your poor feet!

  • Driving: Driving from New York to Orlando would take over half a day. The cost would arguably be less than flying - assuming there was more than one person traveling. (If only one person is traveling, it is arguable as to whether driving is cheaper.

  • Flying: Flying from New York to Orlando would take about 2.5 hours. It could be the most expensive alternative. But would get you there the quickest.

  Does this mean flying is always best, and walking is always worst? Well, not exactly. Flying may be overkill, if you live in Fort Lauderdale, Florida (a 2-hour drive from Orlando). Walking may be reasonable if you live in ... Orlando. :)
  
  

  There are no absolute bests here - just what's best for you in your situation.
  
  

  Consider that even from New York, if flying is best but you can't afford a plane ticket... driving may be the slower (but more suitable) option you choose.
  
  

  This analogy applies directly to how you choose your passive income vehicle.
  
  

  3. Passive Income versus Active Income:

  Where does this vehicle lie on the passive income versus active income scale? For example:
  
  • When walking, you can multi-task to a limited extent. Things like daydreaming, talking, and chewing gum are encouraged.

  • When driving, daydreaming is not a good idea. Your focus is critical. Talking is okay, although not encouraged. And chewing gum while driving is the height of recklessness. Just don't do it.

  • When taking a plane, unless you're the pilot, you can relax! Read a book, work on your computer, watch a movie... you're a lot more of a passive participant here. Same thing when riding a bus. Someone else does most of the work, but you get the same benefits as if you were the one driving!
  
  
  

  Here's the personal formula I've created, on evaluating how passive/active a given income stream is.

  
  
  
  Robert Kiyosaki on Passive Income:
  
  
  
  

  4. Pre-Requisites:

  What is required to even use each vehicle?
  • To walk, all you need are you feet. Very low barrier to entry!
  • To drive, you do need a valid driver's license.
  • To take a plane, you need a valid form of identification - typically a driver's license, but could also be a passport.

  Figuring out the pre-reqs of each vehicle is key. Even with the effectiveness, cost and speed working out in your favor - if you can't meet the pre-requisites, you can't use the vehicle.
  
  

  Passive income streams to consider:

  With this 5-point lens in mind, let's now evaluate some passive income opportunities with a cool little framework I developed.
  

  Speed versus Cost. regular 9-to-5 investing in stocks and bonds real estate network marketing affiliate marketing franchising Vending (bulk candy vending business) Create informational products (eBooks, instructional videos, etc.) Stock photography royalties Merchandising (cafepress + [a strong brand and/or user-generated designs])

  
  

  
  

  Back to "Rat Race Escape Artists" home page.
  
  
  
  
  Search Rat-Race-Escape-Artists.com: