Saturday, October 10, 2015

The Value of Passive Income

I just saw a post on a forum, stating that working a week on a project that was going to pay $2.00 per month is not a worthwhile use of time. Yes, that is true for your day job, I'll admit. However, passive income is much different than active income, and its value has to be figured differently.

With interest rates on investments near zero, and not likely to rise fast, the passive income value of a CD with a $25,000 deposit is $325 per year, or $27.08 per month. Most online writers who have been at it a while earn, on average, at least that much, so you can say that their online properties are worth $25,000 in terms of their passive income value.

Now, the question is not how long it would take you to earn $27.08. Most of us can do that pretty easily. The question is, how long would it take you to save $25,000? That's the real value of your online properties.

To put it another way, let's say you work an hour on some passive income-producing property (an article, a graphic, a photograph, &c.). If that article makes you ten cents per month, you feel as if your time has been wasted. But has it?

The first month you've been paid ten cents per hour. After five years you've been paid six dollars per hour. But after ten years, you've been paid twelve dollars per hour (a little better, right?). In addition, used correctly, each property you put online drives sales to your other properties, so in the long run, everything makes more. And that's time you wouldn't have spent on active income in any case, so it's quite likely that you wouldn't have produced any income whatsoever in that hour.

So don't be discouraged by pennies in earnings, especially at first. It takes a while for your work to catch on, and you have to keep at it steadily.