If you search the internet for “residual income”, you may find a definition or two, but mostly, what you find are websites selling 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. With that being said, there are a lot of good opportunities out there. But before you begin spending money, let’s discuss what online jobs is and, most significantly, what it isn’t.
Webster’s dictionary defines residual income as “of, associated with, or being business activity where the investor does not have immediate control over income”. I don’t feel that tells the complete story. Residual income is money that you receive repeatedly while not having to do much work (notice I didn’t say “any work”). It is actually distinct from earned income in that you are currently not receiving money to your time (like you would a job). But depending on the residual income stream which you choose, you may in fact have immediate control over your income. But I’ll get to that later.
Why could you want residual income? Well, like Robert Kiyosaki explains in the book Rich Dad Poor Dad, this is the main difference between the rich and the middle-class. The rich invest their funds in different passive income streams. When their passive income exceeds their expenses, then they are financially free. “Financially free” basically means that you do not have to have a day job to pay your expenses. And you also are “free” to then do whatever you desire!
What Passive Income Isn’t. Before I get into letting you know what residual income is, let me first let you know want it isn’t. Passive income is not exactly the same thing as “residual income”. Residual income is money that you get on a regular basis after you have done work once. The most effective example would be TV sitcoms. Some actors get “residuals”. Actors earn money from filming the show. Afterwards, some actors get compensated every time the show repeats. Sales people that sell services, subscriptions, or renewable products (like insurance) sell that item once and, offering the customer renews, will get a commission from each renewal. Royalties from the sale of books and music can also be residual.
Many claim that multi-level-marketing or network marketing sales offer you passive income. Do you know what? That’s residual too.
If you have a small business or are self-employed, even in case you are making a lot of money, this may not be residual income. If you obtain a salary out of your business, that is certainly make money from home. There is a way to turn this into residual income, however – so stay tuned.
You know, I have to express that starting your own website should not be passive income. Whether you are selling a product or service (including an eBook, seminar or some other information) or perhaps a service, you still have to market your internet site. You should accomplish this no matter whether you happen to be selling your OWN products or possess the rights to promote other’s products. Marketing your internet site is work, simple as that. But it’s not just a job. And as soon as your marketing efforts start taking off, you can make a lot of cash with little additional effort. But that is certainly residual in my book, not passive.
What Residual Income IS – Residual income is a lot of things. The very first thing comes to mind, and also, In my opinion, the most common example is real estate property. Should you own investment property and they are obtaining a positive income from a house, commercial property, or apartment, which is residual income. If you rent rooms in your house, that’s passive income too. You only need to set this up once, and then the income is available in month after month. Interest income from savings accounts, CDs, and money-market accounts are passive – the bank pays you for keeping your cash in those accounts. In case you have an internet site with banner ads or Google AdSense ads, that can be called passive as well.
Should you spend money on any organization, but don’t manage it, your profits are viewed residual income, just what Webster was thinking about as he wrote the definition.
What about business? Well, that will depend regarding how you set it. Rich people create businesses and set up a process the business follows. That way, when the owner continues on vacation for any month to Fiji, the workers stick to the system and also the owner still receives the profits. Any business will needless to say start out with plenty of work, but when you take the time to set up a company to ensure that it gets reproducible results (exactly like a franchise), those profits become passive. And, based on the IRS, any salary you get from your company is considered “earned” but profits are considered “passive”. It is important when starting a company to check with the accountant and an attorney to set up your business that financially benefits you the best.
What else can be looked at residual income? Think about self-storage facilities, parking garages/lots and dry cleaners! Each of them require some time to start up, but once these are set up, you collect money again and again.
Residual vs Residual Income – Residual and residual income are like siblings. These are both very similar and most people really consider them synonyms. Precisely what does it matter, anyway? They may be both excellent methods for getting money in your hands every month after month without trading your time and effort or perhaps your freedom. How can it improve than that?
Reality Check – Avoid anybody that tells you that there is NO work associated with online jobs. Residual income fails to mean no work! If you are intending to spend in a business, a stock, or a real estate property property, you should do your research (this is known as “due diligence”). Research is work! You will additionally be required to manage your investments, to check up on their xwmpuf making changes as necessary. That’s work too!
The good thing is that research and management is simply a part time endeavor. And more often than not, that work can be performed from almost anywhere, including on a beach in Fiji.
Let us keep in mind the FUN factor. I’m sure there are several of you looking over this who like, even love their jobs (if you still need one). A number of you may have your personal business – and congrats for you! But many of us will be in jobs just because we have to feed our families and pay the bills. Considering passive income streams and investing your time and expense can provide you with many, many returns. Researching for and implementing your residual income plans so that you can live your dreams is FUN. Getting money on a monthly basis, week, or even every day is FUN. And attempting out new strategies and managing your money – once you have some to control – is FUN.