Hey everyone, this is Stefan from projectlifemastery.com. In this video, I’m
going to talk to you about active income versus passive income. What are
the differences, which one is better and which one should you focus on acquiring
more of. You're probably already familiar with active and passive income,
you've probably already make one form of income whether it's active or passive or both.
Active income is essentially when you get paid for your time. You're exchanging your
time for money. That could be at your job, you spend an hour at your
job, you get paid for that hour. It could be coaching consulting or public
speaking, a service that you might provide. Maybe in you're business you are a
coach or a consultant, you get paid to speak at different events, you're going to get paid for
that. It could be based on a service that you might provide. Maybe you'll have a
carpet cleaning agency and you get work and jobs that way, and for every house
that you clean the carpet of you get paid a direct fee for that. It could also be
if you're a freelancer, maybe as an online freelancer. A graphics designer, a web designer,
you get paid for your creation. Essentially you're exchanging your time
for money. It's active because in order to make the money, it requires your work, your
time and your energy. What happens is when you stop working, you stop
providing that service or putting in the hours or time, then that income
basically stops. That's a number one form of income that most people make.
Most people they have a job,
most people the have a service, a business that could be a service as well, because you
can definitely make active income on your job or in a business. I have
forms of active income that I make. In my business, I do coaching, consulting and
some public speaking as well, so basically I'm getting paid for my
time. The other form of income that's more superior and more significant than
active income that I believe everybody needs to strive for
because this type of income is going to create freedom for yourself, it's going to
allow you to leverage yourself and make more money, and that is passive income.
You probably already know about passive income, maybe you've heard of it. I
first heard about it from
the book The 4-Hour Workweek by Tim Ferriss. Just the whole idea and the concept that you can quit
your job,
escape the nine to five, travel the world, make money while you're sleeping, that was really
attractive to me. When I discovered that I decided, "You know what, I've gotta find a way to
make this happen. I need to find a way to make passive income" because I was tired
of being a slave. My very first business that I had when I was 21 years old was a
coaching business. It was a dating coaching business in Vancouver, Canada called
Lifestyle Transformations. I started it with two different business partners and
we had a few people working with us. I struggled with shyness and confidence
in meeting people and meeting girls, so I wanted to help people. I wanted to
coach and I was very good at it. It made a lot of changes in my life. Our whole
business model was an active based business because what we had to do was we had to put
together seminars, we did three seminars every two weeks, and then we
would coach people and put on events and everything. In one month we'd
make maybe some pretty decent money, maybe a couple
of thousand bucks. We get paid. The problem with it was it was based on
active income so when we stopped working, when we stopped coaching and putting on events,
the income was stopped. With active income you can make good money, you can
make really good money through active income. There's a lot of doctors and lawyers that make a lot
of money, active income. There's business people,
they can make couple hundred thousand dollars, active income. The problem with it is that
you have to work a lot, you have to hustle a lot. Oftentimes there's a lot of stress, you don't
have much freedom involved with it as well. Once you start earning a certain
amount of money you always need to sustain it. For example, you could work
your ass off, 80 hours a week and you can make $100,000 in your business
hustling and grinding, but what happens is next month or next year you want to
make that same amount, you still have to spend 80 hours a month. It's not
very sustainable long term because it always requires that amount of time.
When I started making passive income I made that transitional ... I'll share the story.
When I did,
I remember I met someone who's very successful and he was making way more money than
I was. I was only making like $5,000 a month, passive income at the time. He was making
hundreds of thousands of dollars, and he said, "You know what Stefan, I would
trade your position ... Trade positions with you in a heart beat, because even though I'm making
way more money that you are, you're making passive income, you have a better
lifestyle. You have more freedom than I have." He actually saw more value in
less money having it passive than the more money that he had
that was active income because he's always stressed, he didn't have much time to spend with his
family, he didn't get to travel much. What good is your quality of
life having all these money if you don really get to enjoy it? For me,
in that business that I had, the dating coaching business, I learned about passive income. I
learned that one of the best ways to build passive income, and there are many ways
I'll share with you, but one of the best ways is through an online business
the Internet is allowing us to automate so many things. In person at
seminars you got to go out there, you got to sell, people one on one or in
groups. The Internet, I can publish a YouTube video, I can just put up the work one
time, have a video published online is up there for years, forever, that's
continuously attracting people and I don't physically have to be there to
sell someone, to talk to them, to influence them in some way. Right
now, as you're watching this video, there are thousands of other people
watching the hundreds of other videos that they have right now in my YouTube channel.
There are thousand of other people that are are going to my blog right now consuming
content from me, and I don't physically have to be there. I'm here in Puerto Rico
right now in San Juan recording a video or whatever, and I'm
reaching thousands of people because of leverage. That's how you have to
think if you want to be successful.
Not to say you can't be successful with active income, you can, but in order
to scale up and make significant money, I'm talking about millions of dollars,
and have more importantly the freedom, the lifestyle you want, then you need passive
income. What is passive income? Passive income is basically some
system of automation
that you create, whether it's a product or even a service you can automate, or
even real estate. There's many different models of passive income, but
it doesn't require your time, your active time, your energy to be there to make money
from it. For example, creating products. A product is great way to create passive
income and selling it online because if I have a website and I sell the product
through that website, I don't have to be there to sell the product, the website is
available 24 hours a day, unlike maybe a local that's only open from
morning until night, or they're closed on weekends or whatever it is. My website is
available 24 hours a day, it's reaching people all over the world. Unlike a
business on the street,
my only reach is the people in the neighborhood, I'm able to reach the entire world with
my products and services because of the Internet. My website is selling for
me, and people are coming to my website and they're buying. I don't have to
do the transaction, I don't have to deliver the
product, I don't have to take their money and swipe
their credit cards and stuff in person.
The internet technology, Paypal or whatever different technology there is that are
available, is doing everything for me. As a result of that, I'm able to make
money on autopilot without having to exchange my time or energy to do that.
With passive income, it requires your time, energy and money and all that sort of stuff
upfront to create that. You're investing your time at the beginning, but
the benefit is down the road, is you don't have to spend time to sustain and
make the money down the road. For example, right now for me, I'm creating
this YouTube video. I'm going to publish this on YouTube. This YouTube video is going to be up
there forever.
It's probably going to have a couple of thousand of people that are going to watch it.
I'm going to reach thousands of people without having to individually interact with you, and
this video is going to continue being up there,
reaching people while I sleep, while I'm traveling for years to come
just because of the 20 minutes of whatever it's going to take me to record
this video. One time is going to have this leverage impact, the scale effect,
that you would never be able to have through active income. Passive income, there's many
different ways. They're selling products online, even services.
You set it up one time, continuous making you money on autopilot while your sleeping, 24 hours
a day, continues making you money.
It could also even be something like real estate. With real estate you can buy an investment
property and you can rent it out, and then the rent that you collect from that investment
property will cover the expenses, and anything in excess, that's passive income
because you didn't have to spend any time or money to earn that money, it's all
automatic, all automated. Even investing in different stocks that pay a dividend.
There are certain stocks or investments that you can make, they'll pay you a monthly dividend
or a quarterly dividend, or a yearly dividend, and it doesn't require your time or
energy or effort to manage it. It consistently you're earning a certain
amount of money,
month after month, day after day, year after year on autopilot. Ultimately
what passive income is, is a way for you to leverage yourself and scale up and
create freedom for yourself.
The model that I had, I'm doing coaching consulting and doing events, we'd make money
in certain months, but again it wasn't sustainable because we had to
always hustle and grind every month to make the same amount of money.
Transition to creating products, a product you have to create one time.
An eBook you create one time. A digital product you create one time, you put it
up there, and it's basically now making you money for as long
as you want, forever potentially. Passive income guys, that's really
the ultimate way, the best way of making money.
There's many different opportunities for passive income as I said. Even if you
have a business, let's take the carpet cleaning company or whatever, you could
automate that. You can make that into a passive income by hiring people to run the
business for you, having employees that handle everything for you, and now you're
making money without having to physically do the work. I remember
hearing a one fantastic story from someone, I think it might have been Tony Robins or someone like that. Tony Robins he went skiing
with this guy, very successful guy, one of the richest man in Canada, and they're going
up this chair lift. He says to Tony, he said, "You know what, here we are
we're going up this chair lift, and right at the top of the mountain, and in the last 20
minutes that going up this chair lift, I've earned an additional ... I
don't know how much money, but I've made an extra $100,000 in the last 20
minutes while I'm here skiing." Tony Robins was like, "Wow, that's amazing. That's really awesome.
I mean you're making money while you're skiing? That's
amazing." He said to Tony, "But you know what, you are losing money."
Right here we're skiing but you're losing money because your only stream of income is active
income, so when you're not working you're not making any money, you're actually losing
money. He said, "You know what, you got to find a way to make passive income. You
need to find a way to leverage yourself, scale yourself." That was actually
what transitioned Tony Robins from doing seminars, he still does them because he
loves them, it's very fulfilling. Nothing wrong with having some active income in your portfolio, but to selling
because products is what gives you the ability to reach more people, make money while
you're sleeping.
That's the ultimate guys, passive income. You need to find a way to make passive
income. The active income is good, I love active income because I can make a lot of of
money in a short period of time, I can make money and I do things that I enjoy
like coaching and working with people, and speaking. That's fine if you enjoy it,
but you want to think about how you can have your money work for you. The money
that you're making, take that money and invest it in a business that can make passive
income. Invest it into real estate stocks, things that can make money for you so
that when you stop working you're still making money. For me, when I retire one day
which I'll probably never will because I love so much what I do, but one day when I retire, I
don't need a pension or anything like that because that's peanuts to what my
my business will continue paying me. The content, the products, the
investments that I have, they'll continue paying me money forever. Forever, beyond
my time on this planet. That's working smarter, developing passive
income streams. For me if I want to be lazy for the next month and
travel the world, do nothing. If something happened to me I'd go to the
hospital or something like that, my business is still running, my business is still
making money, I still have passive income coming in. I can take a year off
in my business and I'm still going to make at least six figures if not seven figures from my
business. That's the power of passive income, is that it gives you the
ability to have freedom. That's the ultimate form of income, and there are many ways.
I specialized specifically on building an online business, and if you
haven't yet been to my free training on the seven ways that I've become an Internet
millionaire, the seven business models that I teach, then make sure that you take
advantage of that. You can access that at projectlifemastery.com/
freecourse, projectlifemastery.com/freecourse, I have a link below in the
description. That's my specialty, I love Internet businesses because the Internet is
changing the world. A lot easier at least for everybody, and it's providing opportunities
that never existed before. My message in this video is find a way to make passive income.
Do active,
that's where you're at right now, but you want to get to a point where
95% of your income is passive income, and only 5% is active income.
Most people right now it's 100% active, or if not, 95%
active income, 5% passive, you got to reverse that. I specialize in helping people with
that, again, check out my free trainings, subscribe here through the YouTube channel. I
love to hear from you. Make sure to leave a comment below. Let me know how you're below let let me know how you're
doing or where you're at. Are you making active income, passive income? What's
the ratio? What are you going to do to start making passive income? I've got
different training programs that can help you that's why I created them, K
Money Mastery is one, link's below in the description. What are you going to do?
Maybe finding a new business opportunity or investing your money in different
ways.
Get started on it now. Even though you don't make initial money from the
return on the time you're spending to build your business, the passive income
you generate after that will support you for years to come. That's it for this
video,
thanks for watching. See you in the next video. Hey, this is Stefan and thank you so much
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