If you search the net 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 tons of great opportunities out there. But before you start out spending money, let’s discuss what free shares is and, most importantly, what it isn’t.
Webster’s dictionary defines passive income as “of, in relation to, or being business activity where the investor lacks immediate control of income”. I don’t feel that tells the complete story. Passive income is money that you receive again and again without needing to do much work (notice I didn’t say “any work”). It is different than earned income in that you will be not receiving money for your time (like you would probably work). But depending on the residual income stream which you choose, you may in reality have immediate control over your income. But I’ll get to that later.
Why can you want passive income? Well, like Robert Kiyosaki explains in the book Rich Dad Poor Dad, this is the main distinction between the rich as well as the middle-class. The rich invest their money in different passive income streams. When their residual income exceeds their expenses, chances are they are financially free. “Financially free” means that you do not have to get a day job to pay your expenses. And you also are “free” to then do whatever you want!
What Residual Income Isn’t. Before I enter into suggesting what passive income is, let me first inform you need it isn’t. Passive income is not really the same as “residual income”. Recurring income is money that you receive regularly after you have done work once. The best example would be TV sitcoms. Some actors get “residuals”. Actors earn money from filming the show. Afterwards, some actors get paid each and every time the show repeats. Sales people that sell services, subscriptions, or renewable products (like insurance) sell that item once and, providing the customer renews, will receive a commission from each renewal. Royalties through the sale of books and music are also residual.
Many state that multi-level-marketing or multilevel marketing sales present you with residual income. Do you know what? That’s residual too.
In case 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. In the event you obtain a salary from your business, which is Kinds of online businesses. There is a way to turn this into residual income, however – so stay tuned.
You know, We have to express that starting your very own website can not be passive income. Whether you are selling a product or service (like an eBook, seminar or any other information) or a service, you still have to promote your site. You will need to do that regardless of whether you are selling your personal products or have the rights to market other’s products. Marketing your website is work, simple as that. But it’s not really a job. And once your marketing efforts begin to take off, you can make a lot of money with little additional effort. But that is residual in my book, not passive.
What Residual Income IS – Passive income is a lot of things. The first thing that involves mind, and also, I believe, the most famous example is property. In the event you own investment property and are getting a positive income from the house, commercial property, or apartment, which is passive income. If you rent rooms in your own home, that’s residual income too. You only have to set this up once, and then the income is available 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. In case you have a web site with banner ads or Google AdSense ads, that can be called passive as well.
Should you invest in any company, but don’t manage it, your profits are considered passive income, precisely what Webster was considering when he wrote the definition.
How about business? Well, that will depend about how you set it up. Rich people create businesses and set up a system the business follows. That way, in the event the owner goes on vacation for any month to Fiji, the employees follow the system as well as the owner still gets the profits. Any organization will needless to say start off with many different work, however, if you take time to set up a company so it gets reproducible results (exactly like a franchise), those profits become passive. And, based on the IRS, any salary you receive from your company is considered “earned” but profits are thought “passive”. It is important when starting an organization to check with the accountant and an attorney to set increase your business that financially benefits you the best.
What else can be considered passive income? What about self-storage facilities, parking garages/lots and dry cleaners! They all require serious amounts of start-up, but once these are set up, you collect money over and over again.
Residual vs Passive Income – Residual and residual income are like siblings. These are both very similar and many people really consider them synonyms. What does it matter, anyway? They may be both excellent ways to get money in your hands every month after month without trading your time and energy or maybe your freedom. How can it get better than that?
Reality Check – Beware of anyone that informs you that there is absolutely no work associated with Chase Credit score. Passive income will not mean no work! If you are going to invest in a business, a stock, or perhaps a real estate property, you will need to do your homework (this is called “research”). Scientific studies are work! Additionally, you will be required to manage your investments, to check high on their xwmpuf to make changes as necessary. That’s work too!
The good news is that research and management is just a part-time endeavor. And more often than not, 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 some of you reading this article who like, even love their jobs (if you still have one). A few of you might have your own business – and congrats to you! But most of us will be in jobs just because we have to feed our families and pay for the bills. Looking into residual income streams and investing your time and expense can bring you many, many returns. Researching for and implementing your residual income plans so that you can live your dreams is FUN. Getting money each month, week, or even every day is FUN. And attempting out new strategies and managing your hard earned money – when you have some to manage – is FUN.