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At its core, passive income is often defined as earnings gained without active involvement. The objective is to establish a revenue stream where funds flow in regularly without continuous engagement. However, here lies the primary challenge: genuine passive income typically demands a significant initial investment of capital and often comes with strings attached.
For example, traditional investments like real estate or secure savings account yields are often highlighted as potential passive income sources, but the reality is starkly different. Simpson explains that if one were to invest a million dollars into a low-risk asset with a mere 5% annual return, the resulting income—$50,000 annually—might seem substantial until you consider the expenses of living or raising a family.