Why to earn passive income

India has an education system which is a 200-year-old system. It was introduced by the British so that they could have people to manage their tasks and help them in their work. But even today, people are getting educated so that they can find a decent 9 to 5 job. Not many people try to get into entrepreneurship. India can never be a developed nation if this mentality is not changed and if wealth is not created. People blame the government, economy, private companies etc for not getting the right job. Many people in India do post-graduation because they didn't end up in a job after their graduation. But, I personally feel that getting a job is easier than setting up a successful business model. But things are slowly changing in India. I hope and I believe that the next facebook and google will be from India. Maybe I am over-optimistic.

Every business has immense and equal opportunity to make money. Some feel that there is huge and easy money in real estate, but there are also people who have lost huge money in real estate. There are some who believe that there is good money in hotels or food business but I have seen many hotels closing down. Some, in fact, many believe that there is easy money in the stock market. Frankly speaking there is no easy money anywhere. If that was the case then everyone would have done that. Before choosing a business, one has to identify his area of interest and his expertise where he can provide value-add and not just see the value that can be created.

Warren Buffet once told that you should never depend on one source of income. One should take risks early in life because it is OK to fail early when your personal responsibilities are low. I personally feel that one should take the risk when they are in their comfort zone. But, people usually take risks when their situation is critical.

Let me tell you a small story. I had a college friend. After college, I got a job in Bangalore but he got a job in the Netherlands. Within a year he got married to his girlfriend and both of them were working and earning well in the Netherlands. I was working in TCS and was also trading for a secondary income. At that time, I was also managing various other accounts as well and was looking for new clients. This friend of mine had come to India on a vacation. We met and I suggested him to trade/invest in stocks or start a business and I could help him in that, as that was my expertise. I still remember the words he told me. He said, "Why should I take the risk of investing in the stock market where returns are not guaranteed and I am happy with the current salary I am earning.". So I also did not force him into the stock market. In fact, I do not force anyone to this sector. If anyone is interested then I just help them. He had some money saved in the Netherlands and he bought 2 apartments in Bangalore in a loan. The total cost of both the apartments was 3cr. It has been 4-5 years now and trust me, the apartments market value has hardly appreciated. He had rented the apartment and the rent earned was negligible in front of the capital invested and the EMI's he was paying. Everything was fine but things changed one day. His wife had some health issues and she had to return to India. His visa expired and was not renewed so even he had to come back to India. Now his heart started beating faster because he had a hefty EMI to pay every month. So in his last days in Netherland, he decided to sell the apartment. But selling a used apartment is not that easy. He still had some money saved which could push a few more months. Then he approached me and explained his situation. He wanted me to manage his account where he had some money left so that I could add some value to his EMI. But I decided not to manage his account now not because he rejected my offer back then. I rejected because he had now become desperate and he was planning to totally depend on this income. So, the thing what I am trying to say is, start early and not be lazy when you are in your comfort zone. You never know when life is going to hit you hard. Most people try to find the answer to how and when life is going to hit them. But the question which you really need to ask is whether your life model is ready for such turbulences or not. If the answer is no then you must take action right away before it is too late.

Before starting anything, please make sure that you are clear about the following points

  1. ClARITY: Make sure you are clear in your vision. Never have confusion as to what your destination must be. If you yourself do not know where you want to go then no one including god cannot help you. But if you are aware of the things you want and the destination you want to reach then there are many including god who will show you the path. Make sure that your aim is high. People may laugh but do not worry. When people ask you how much do you want to earn in the stock market. Tell them that you are aiming for 100 crores.
  2. COACH: Having a good mentor who has dedicatedly spent money, time and effort in the sector, plays an important role in your success. Everyone needs a mentor to do anything in every field. Not many are successful without a mentor. Having a mentor helps you in not committing the same mistakes which he did in his early days. You need not reinvent the wheel. You need to build on the experience of the mentor. It is very much important to choose a mentor who has practical experience in the sector in which you are working. Your life can be disastrous if you fall trap with a fake mentor. There are many advisors, analysts in the stock market. But not many trade and make profits consistently. 
  3. CONFIDENCE: You can scale only if you have confidence. You should start small and as you grow, your confidence also increases and you can then scale up the business. You get confidence only when you have good knowledge of the subject. But confidence should not turn to overconfidence. Half knowledge makes you overconfident and half knowledge is more dangerous than having no knowledge. Recently, I met a person who came to meet me. He told me that he wanted to discuss trading. When I met him, he was overconfident, demanding, arrogant, not open to others. He told me that he was very old and a big player in the stock market. I casually asked him what was his turnover a month. He told his turnover is more than 5 to 6 lakh a month. By now I had decided that I will not argue with him because I know that he won't agree to what I say and I don't have any benefit for myself in explaining him things. Whenever I meet such people, I just nod to anything and everything they say and move on.
Having a passive income also gives you a lot of confidence in the current job you are in. You can have a good command over your manager, colleagues etc because you need not be scared of losing the job. This gives you an edge over other in growing in the current organization as well. I hope I have inspired at least some with this article to entrepreneurship. Please do leave a comment if you are one of them.