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What are Passive Income Generators?

By The 1-Hour Workweek 4 years ago2 Comments

If you’ve been looking for online investment opportunities that will help you leave your 9 to 5 and take control of your own finances and time, you’ve probably come across the term “passive income generators.”  Passive income generators are pretty much the same thing as passive income streams, only they refer to the actual process that is generating the stream.  Passive income generators include real estate investment, renting properties out, affiliate marketing, writing and selling eBooks, consulting, freelancing and much, much more.

Passive Income Generators Explained         

Passive Income GeneratorsTo go a little bit more in-depth on the matter, the points of income generation in a passive income stream are typically referred to as the passive income generators.  Unfortunately, due to the influx of newcomers to the field, the terminology has gotten fuzzier so you might hear that passive income streams and passive income generators are the same thing—for all intents and purposes, they might very well be.  But if you really want to nitpick, they are different.

A passive income stream is where they money is rolling in from the generator.  Passive income generators spit money out into a passive income stream.  It’s the difference between the mouth of the river and the river itself—in the end, it all amounts to where your money is coming from.  This is why the terms have become interchangeable.

But here’s where the definitions start to matter: when you are setting up multiple passive income streams, they can all come from the same passive income generator.  For example, if you are an affiliate marketer, you can have passive income streams coming from Amazon, Home Depot, Clickbank, etc.  This is a good idea.  But if you are promoting all of these affiliate marketers on your niche, authority or review website, you only have one passive income generator: your website.

While this might not seem like a big deal to people starting their passive income businesses up, to those passive income businesses that pull in thousands of dollars each day, keeping your terminology straight is vital to having efficient communications between any partners or members of the business.

What are Multiple Passive Income Generators?

With that said, it’s also important to keep in mind that you can have multiple passive income generators as well as multiple passive income streams.  For example, you can have multiple websites that each have multiple passive income streams coming from them.  Or, you can have your website up and running, but also invest in CD ladders or real estate, two more forms of passive income generators.

It’s always good to have multiple passive income generators in case one or more slow down or dry up altogether.  This will ensure that you don’t have to go back to your 9 to 5, crawling on your hands and knees, begging your boss for your old job back.  Instead, if one of your passive income generators stall, you can spend the time and money needed to get it back on track and creating income without having to worry about sustaining your lifestyle—that’s because your other passive income generators will all still be online and running.

It’s also important to have multiple passive income generators because it becomes simple to branch out your passive income businesses through them.  For instance, if you already have your website up and running, you might be approached by another website asking to buy some ad space on your site.  This then becomes another passive income stream, all coming from the same generator.  When you have multiple passive income generators up and running, the streams will start to build themselves.  Of course, it’s important to focus on the most lucrative streams of passive income before you go overboard with generators.

Build Multiple Passive Income Generators or Streams First?

To that extent, it is a very fine line to walk, especially when you are first starting up your passive income businesses.  Do you start up multiple passive income streams or multiple passive income generators first—in other words, do you put your eggs in more than one basket or do you put them in more than one hen house?

Keeping with the metaphor, if you put all of your eggs into different baskets, there is still the chance that the hen house itself that houses the baskets will get struck by lightening or wrecked by a storm.  That is to say, your passive income generator can completely shut down, sort of like the housing market crash did to real estate as passive generators.  Of course, this did up the market for rental properties, so those who were earning passive income through renting out property saw an uptick in clients and were likely able to raise their prices.

But the lesson still remains: your generator can dry up just as your streams can.  This is why it’s important to set up both streams and generators.  For starters, it’s a good practice to choose at least two passive income generators and create two or three passive income streams from each generator.  This will help you gauge the field, learning which generators create more money per stream and which stream is more steady over all.

Regular Expansion is Key

In time, you’ll likely see the need to regularly expand your streams more than your generators, but it’s a good idea to at least consider some of the more lucrative passive income generators each and every quarter.  Sometimes investors can get caught in a rut of failure just as easily as in a rut of success, but if you aren’t constantly expanding and keeping up with the changes in your industry, you’re creating a surefire recipe for financial disaster.

Looking for new passive income opportunities and seeing how they fit into your current business model and time frame is a great way to keep on top of your game.


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 The 1-Hour Workweek

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