What is Recurring Passive Income?

I think everybody should have a recurring passive income and I only wish that I was aware of this concept when I was in my 20s.

However, when I was in my 20’s I hadn’t even heard the term.  So, what exactly is passive income and why is having one so desirable?

Possibly the simplest definition is “a recurring income that takes little or no effort to maintain”.

An example could be a winning a competition with a prize of £1000 per month for the rest of your life. That’s all very nice but the odds of winning such a competition are extremely low and in no way under your control.

Another example would be royalties from publishing a book or recording a CD*; both of which are not things that the majority of people have a talent for.

* As a side note, the ability of both of these to produce a recurring passive income has been severely affected by developments in technology. The downloading of books and music, both legal and illegal has severely impacted the industries. It’s why so many recording artists are up in arms and back out touring; their passive income has been reduced!

In short, recurring passive income is income that keeps coming regardless of your current activity.  That’s what makes it so desirable.

The alternative is “active” income. The majority of us are taught to get a job, career or trade where we exchange our time and talents for financial reward. Or we start a business and supply a product or service and for every sale we make a profit. However once that financial reward has been made we have to sell again or exchange more of our time and talent. If we are not actively working, we don’t get paid.

There is nothing wrong with this type of income; however, opportunity exists for everybody to generate a passive income alongside their main income producing activity… without having to risk that income.

Another well-known form of recurring passive income is that generated from rental property. However, huge sums of capital need to be tied up in property in order to generate a few hundred or maybe a few thousand pounds of monthly income.

Another form would be the interest earned on investments.  Again a substantial amount of money would need to be invested. As an example in order to generate £2000 a month you would have to invest £600,000 and get a return of 4%. In order to get such a return in the current economic climate you would have to invest in something with a high element of risk… and not many people have £600,000 lying around!

The good news is that opportunities exist for practically anybody to generate a recurring passive income without any special talents and without having to tie up capital. These are low-cost, low risk opportunities that can generate a few extra hundred pounds a month up to life changing amounts.

If this intrigues or interests you, and quite frankly in these challenging times it should, please contact me.