The Problem with Passive Income

The phrase 'passive income' is a little misleading, because it does take effort to build and maintain.Most assets that give you a passive income takes time to build and compound before you receive a substantial amount of income, and they are generally, out of your control.Let's take a stock's dividend, it would mean having to buy a lot of stocks in order to see a substantial dividend income and the stock's performance is out of your control. You can hedge against this risk by choosing  a good and stable company.Let's take a book that is selling on Amazon: if the Amazon algorithm were to change, then the sales of your book may drop.Likewise, look at a YouTube algorithm, if YouTube were to change it then your sales funnel would be in jeopardy.The problem people face with passive income is that they need to maintain it so to mitigate the damage from any changes that happens in the wider world, because you cannot control everything and your passive income is often at the whim of external factors that you do not control.The more control you have over your passive income, or the more streams of income you have from different sources, the less financial damage a change in the world will impact your income.See how this mistake, a few others, cost me dearlyhere.