If you search the net for “residual income”, you may find a definition or two, but mostly, what you find are websites trying to sell you on the passive-income-flavor-of-the-day. It’s frustrating, I know. I don’t know about you, but before I jump into any opportunity or even before I take a trip, I like to do my research. That being said, there are plenty of excellent opportunities out there. But before you start out spending money, let’s discuss what debt is and, most significantly, what it isn’t.
Webster’s dictionary defines passive income as “of, relating to, or being business activity in which the investor does not have immediate control of income”. I don’t think that tells the complete story. Residual income is money that you receive over and over again without needing to do much work (notice I didn’t say “any work”). It is distinct from earned income in that you are currently not receiving money for the time (like you would probably a job). But depending on the residual income stream which you choose, you may actually have immediate power over your earnings. But I’ll reach that later.
Why could you want passive income? Well, like Robert Kiyosaki explains within his book Rich Dad Poor Dad, this is the main difference between the rich and the middle-class. The rich invest their cash in various residual income streams. When their residual income exceeds their expenses, chances are they are financially free. “Financially free” basically means that there is no need to have a day job to pay for your expenses. And you also are “free” to then do whatever you desire!
What Residual Income Isn’t. Before I get into letting you know what residual income is, let me first inform you want to buy isn’t. Residual income is not really the same thing as “recurring income”. Recurring income is money that you get frequently after having done work once. The best example will be TV sitcoms. Some actors get “residuals”. Actors get paid for filming the show. Afterwards, some actors get paid every time the show repeats. Sales agents that sell services, subscriptions, or renewable products (like insurance) sell that item once and, offering the customer renews, will receive a commission away from each renewal. Royalties through the sale of books and music are also residual.
Many state that multi-level-marketing or multilevel marketing sales offer you residual income. Do you know what? That’s residual too.
In case you have your small business or are self-employed, even in case you are making a lot of cash, this may not be passive income. In the event you obtain a salary from your business, that is certainly freelance jobs. There is a way to turn this into residual income, however – so stay tuned.
You know, I have to state that starting your very own website can not be residual income. Whether you are selling an item (including an eBook, seminar or other information) or a service, you still need to advertise your site. You will have to accomplish this whether or not you happen to be selling your personal products or hold the rights to promote other’s products. Marketing your site is work, simple as that. But it’s not really a job. And when your marketing efforts start taking off, you can make a lot of money with little additional effort. But that is residual within my book, not passive.
What Passive Income IS – Passive income is a lot of things. First of all , concerns mind, and in addition, In my opinion, the most popular example is real estate property. If you own investment property and therefore are obtaining a positive cash flow coming from a house, commercial property, or apartment, that is passive income. If you rent rooms in your house, that’s residual income too. You only have to set this up once, and then the income comes in month after month. Interest income from savings accounts, CDs, and funds-market accounts are passive – the bank pays you to keep your cash in those accounts. If you have a website with banner ads or Google AdSense ads, that can be called passive as well.
Should you put money into any organization, but don’t manage it, your profits are considered residual income, just what Webster was thinking of when he wrote the definition.
Have you thought about business? Well, that will depend about how you set it up. Rich people create businesses and set up a process that this business follows. Like that, if the owner continues vacation to get a month to Fiji, the employees follow the system and the owner still will get the profits. Any business will obviously start out with plenty of work, but if you spend some time to set up a business so it gets reproducible results (exactly like a franchise), those profits become passive. And, according to the IRS, any salary you get from your enterprise is considered “earned” but profits are thought “passive”. It is vital when starting a company to check with an accountant plus an attorney to set your business that financially benefits you the greatest.
What else can be looked at residual income? What about self-storage facilities, parking garages/lots and dry cleaners! All of them require serious amounts of start up, but once these are set up, you collect money over and over again.
Residual vs Residual Income – Residual and residual income are like siblings. They are both very similar and many people really consider them synonyms. What does it matter, anyway? They may be both excellent techniques for getting money up to you every month after month without trading your time and effort or perhaps your freedom. How can it get better than that?
Reality Check – Avoid anybody that tells you that there is NO work associated with Credit Repair. Residual income will not mean no work! If you are intending to shell out in a business, a stock, or perhaps a property property, you will need to do your homework (this is known as “research”). Scientific studies are work! You will also be required to manage your investments, to check high on their xwmpuf to make changes as necessary. That’s work too!
The great thing is that research and management is only a part time endeavor. And usually, that work can be completed from almost anywhere, including on a beach in Fiji.
Let us keep in mind the enjoyment factor. I’m sure there are a few of you reading this who like, even love their jobs (if you still need one). A number of you might have your very own business – and congrats for you! But most of us are in jobs just because we need to feed our families and spend the money for bills. Considering residual income streams and investing your time and money can bring you many, many returns. Researching for and implementing your residual income plans so that you will can live your dreams is FUN. Getting money every month, week, or even every day is FUN. And seeking out new strategies and managing your cash – once you have some to control – is FUN.