Singapore is an expensive city to live in. Every now and then, we will come across a news report or article placing our island nation as one of the most expensive, if not the most expensive, places in the world to live in. In fact, the EIU (Economist Intelligence Unit) once again, for the third straight year, place Singapore as the world’s most expensive city.
Faced with this costly living environment, people here have to get creative on how to earn more money. The (big) problem however is that workers in Singapore are also regularly quoted as working some of the longest hours in the world. So how do we earn more money when we are already working such long hours.
The solution to this – passive income. Passive income basically means earning money even though you are not required to put in any material effort to the endeavour. And people love the idea. No one would choose to earn less money compared to more money given the same effort, more or less.
The problem is that so many people have been writing about it and trying to do it in ways that will only lead to mediocrity. And that’s due to the misconception of what passive income is and is not.
Also Read: 5 Ways To Earn Passive Income In Singapore
What Passive Income Is Not
If, like us, you had a resolve to do better yourself one day and proceeded to do some reading on this topic, you may have encountered people or websites giving advice that just takes up too much time. This, by the way, is the exact opposite of what passive income should be.
It Should Not Take Up Much Time
“Why not use your piano skills to earn passive income teaching children on the weekends!”
“Use your free time to walk dogs in the neighbourhood!”
These activities involve you being present and working on the task. By definition, this isn’t passive income. It’s a part-time job.
However, we’re not saying you should not do this, we’re just saying if you’re doing this, it’s income you’re earning by being physically present completing a task.
It Should Not Require Too Much Effort
These types of advice usually come in the form of selling your intellectual property (IP).
“Write a book and rake in passive income by publishing it on Kindle [or other platforms]!”
“Simply start your blog and earn money from Google advertisements!”
“Earn passive income by showcasing your music on YouTube [Spotify or other platforms]!”
While some people may consider this a grey area where you already have the talent for writing, singing and other interest, the majority of people have day jobs that do not require them to produce these works of art.
To actually earn this passive income, people would have to spend an extraordinary amount of time and effort to produce a piece of work that is of high quality and that other people would be willing to pay for. They would then have to publish these pieces, and possibly market it, respond to the platform operators, and loads of other things that come with being IP owners.
It Is Not Embarking On A Whole New Business
“Set up an online business by selling your products on eBay [or Carousell or Zalora or other platforms]!”
Sure, some of us can sell a few knick-knacks around the house that we don’t want anymore. But to continuously receive payments from these platforms, a lot of effort will be required to source for products, ensure inventory, delivery of products and dealing with customer feedback. This is similar to what small business owners have to face operationally on a day-to-day basis.
Be prepared to spend a lot of time and energy upkeeping your business. You have to think about ways to improve the products you are marketing, and to increase the number or types of products that you’re selling.
If you’re successful at generating income this way, it will definitely not remain passive in the longer term. And if you’re unsuccessful, it will also not generate any income, passive or otherwise.
Why These Passive Income Generating Idea Will Lead To Poor Outcomes
There are many reasons why you will not succeed in the long run even if you do stumble upon some initial successes. You may be great at piano or good with dogs, you may be a talented writer or singer and you may even be a shrewd business owner, but if you’re not doing something on a full-time basis and with maximium effort, chances are your source of “passive income” will not last very long.
Competition Works On A Full-Time Full Effort Basis
Once you start achieving even a small amount of success, your competition in the field will be looking at how to improve and take away your business. It does not mean you got worse, it just means everyone else around you got better.
If you’re walking dogs only on weekends, your full-time full effort competition will be there for your customers on weekdays and on weekends. If you’ve stumbled on a great concept writing a book, your competition will be able to write faster and more than you. If you’ve identified a product that people want but don’t currently have enough access to, you can bet your competition will be bringing this product to them much faster and at better prices.
You get the idea, by being full-time full effort, your competition would constantly be thinking about how to improve their services and how to win new customers. Whereas, you, are trying to get away from your customers as quickly as possible, because you’re doing this passively. Customers are smart, they will realise this.
There Is No Drive To Move Forward
Beyond just trying to earn a few bucks more each month, there is no real drive behind passive income ideas. There is no vision in trying to achieve anything and neither are there any process in place to continue improving the idea.
This lack of passion and leadership will ultimately render the idea obsolete as competition moves in or when you lose interest or are bogged down by other responsibilities in life, such as having children.
This lack of drive will also mean the idea never amounts to much as there will never be any scalability with the people running it never having any intention of ever working on it full time, or giving it the due attention it deserves.
At this juncture, we want to point you to the first link right at the start where we actually gave readers some ideas to embark on earning passive income. Still, they are not entirely passive, but a lot less attention needs to be put in than the ideas we’ve covered in the article.
What are some other bad ways of earning passive income which you have heard about in Singapore? Discuss your thoughts with us on Facebook.
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