Which Passive Income Stream Is Right for You?

by MSE Staff | Published 13 Jul 2021 (Updated 5 Nov 2021)

You’re well into your career and finding success with your investments. Now you’re ready to start creating streams of passive income, but you’re not sure what you want to do. Passive income is something that happens when the assets you own generate positive cash flow for you. If you’re looking for ideas of what to do, check out 7 Inspirational Ways to Create Passive Income. Here, I’m going to cover some tips you can use to decide what you want to do.

Understand What Your Goals Are

Your goals are your compass in life. You get to decide where you’re heading and set your own milestones. This is important because you’ll want to be able to answer this basic question:

Does this passive income opportunity align with my goals?

Your passive income stream can be used to fulfill your short-term goals, long-term goals, or both. Are you keeping track of your goals in all the different aspects of your life? Sometimes our focus can be too narrow or too broad when it comes to goals. Request of copy of my Daily Life Balance Dashboard to make sure that you’re covering all of your bases. If you’re already using the Daily Life Balance Dashboard, you can quickly see whether or not a passive income opportunity aligns with your goals.

What Are You Passionate About?

There are things that we know we are passionate about and things we have yet to discover in life. Draw a box on a sheet of paper and write a list of all the things that you know you’re passionate about in that box. Next, write down all of the things you’re aware of yet unsure about outside that box. Take a moment to examine your findings.

You are the CEO of your life. You decide what new experiences to seek out and what new passions you want to discover. The same is true about passive income opportunities. Take a moment to repeat the exercise but replace the passions you identified with passive income opportunities. If you find it difficult to list out passive income opportunities, that is a sign to start searching and learning more.

How Passionate Are You About It?

How much effort are you willing to put into the passive income opportunity? Are you willing to play at a level ten with the passive income opportunities you’ve identified. In this context, playing at a level ten means doing your due diligence. I describe this as four easy-to-remember steps.

First, learn as much as you can about your passive income opportunity. Learn how it works. Learn from multiple experts how to make it work for you.

 Second, make sure that your level of understanding is sufficient so that you are capable of making the right decisions. Your mentors are there to help. Don’t be afraid to ask!

Third, practice what you’ve learned. When you practice what you’ve learned, your understanding increases and you develop skills. Demonstrating financial capability is a skillset; the same is true about creating passive income streams. If you’re unaware of what skills are necessary, ask your mentor.

Finally, have multiple mentors that are willing to show you how to succeed. A mentor is someone who is successful at what you want to achieve, knowledgeable, and willing to show you how to find success. If you’re playing at a level ten, you’re willing to commit to these four steps on your good days and your bad days!

Make a list with two columns. In the left column, you’ll write down your passive income opportunities. In the right column, you’ll write down a number between 1 (low) and ten (high). Reflect on each of your selected passive income opportunities and decide what level you’re willing to play at.

Putting It All Together

If you’ve read this far, you now have a few solid tools to help you navigate which passive income opportunity is right for you. First, make sure that your passive income opportunity is in alignment with your goals. Second, make sure that you’re passionate about your passive income opportunity. It helps in the long-run and you’ll fell good about it. Third, determine how willing you are to learn, understand, and practice; follow through and play at a level ten. Fourth, make sure that you have mentors who are willing to guide you. If you can check off all four of these items, then you’ve found strong candidates for passive income opportunities.