| One way to think of passive income is investing your time up front to develop a product for which you do not receive all of your compensation right away. At my day job, I put in 40 hours of work and then get paid in full for those 40 hours shortly afterward. In contrast, as an author of science-themed gift books, I invest a lot of time up front to research and write the books and a moderate amount of time to market them. And then the books have the potential to bring in recurring income over some indeterminate time horizon. In one sense, getting royalty checks every six months for a book I wrote years ago feels passive. On the other hand, if you have the choice between getting paid in full right away or getting paid over the course of many years, wouldn't you rather get paid quicker? Ask lottery winners. Most choose the immediate lump-sum payment, even if the 30-year annuity is considerably larger. So if you're looking for passive-income opportunities, please remember to take into account opportunity cost. Could you be doing something that gets you paid in full right away? |