If you search the internet 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 tons of great opportunities out there. But before you begin spending money, let’s discuss what craigslist is and, most significantly, what it isn’t.
Webster’s dictionary defines residual income as “of, in relation to, or being business activity in which the investor lacks immediate control of income”. I don’t believe that tells the complete story. Residual income is money that you get over and over again without needing to do much work (notice I didn’t say “any work”). It is actually diverse from earned income in that you are not receiving money for the time (like you would work). But depending on the residual income stream that you simply choose, you may in fact have immediate control over your income. But I’ll get to that later.
Why would you want residual income? Well, like Robert Kiyosaki explains in his book Rich Dad Poor Dad, which is the main distinction between the rich and also the middle class. The rich invest their money in different passive income streams. When their passive income exceeds their expenses, they are financially free. “Financially free” basically means that there is no need to possess a day job to pay for your expenses. And you also are “free” to then do whatever you want!
What Passive Income Isn’t. Before I go into telling you what passive income is, let me first inform you need it isn’t. Passive income is not the same thing as “residual income”. Residual income is money that you receive regularly after you have 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 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 receive a commission from each renewal. Royalties from the sale of books and music are also residual.
Many claim that multi-level-marketing or multi-level marketing sales provide you with residual income. You know what? That’s residual too.
If you have your small business or are self-employed, even should you be making a lot of money, this is NOT passive income. In the event you get a salary out of your business, that is certainly How to start an online business. You will find a way to turn this into passive income, however – so stay tuned.
You know, I have to express that starting your own website can not be residual income. Whether you are selling an item (such as an eBook, seminar or some other information) or a service, you still need to market your site. You will need to do this no matter whether you are selling your personal products or hold the rights to promote other’s products. Marketing your website is work, simple as that. But it’s not just a job. And as soon as your marketing efforts begin to take off, you can make lots of money with little additional effort. But which is residual within my book, not passive.
What Passive Income IS – Passive income quite a bit of things. The very first thing concerns mind, and also, In my opinion, the most famous example is real estate. If you own investment property and they are getting a positive cash flow from a house, commercial property, or apartment, that is certainly passive income. In the event you rent rooms within your house, that’s passive income too. You simply have to set this up once, and so the income will come in every month. Interest income from savings accounts, CDs, and cash-market accounts are passive – the bank pays you for keeping your hard earned money in those accounts. For those who have a web site with banner ads or Google AdSense ads, that can be called passive as well.
If you spend money on any business, but don’t manage it, your profits are thought passive income, just what Webster was thinking about as he wrote the definition.
Have you thought about business? Well, that depends regarding how you set it up. Rich people create businesses and set up a system that this business follows. That way, if the owner continues vacation for a month to Fiji, the employees stick to the system as well as the owner still receives the profits. Any business will of course begin with many different work, however, if you take time to set up a company so that it gets reproducible results (exactly like a franchise), those profits become passive. And, based on the IRS, any salary you obtain from your enterprise is considered “earned” but profits are thought “passive”. It is essential when starting an organization to check having an accountant plus an attorney to set your business that financially benefits you the best.
What else can be looked at passive income? How about self-storage facilities, parking garages/lots and dry cleaners! Each of them require some time to start-up, but when they may be set up, you collect money again and again.
Residual vs Passive Income – Residual and residual income are like siblings. They may be both very similar and a lot people really consider them synonyms. What does it matter, anyway? These are both excellent methods for getting money in your hands month after 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 who tells you that there is not any work involved in Is Credit Karma good. Passive income does not mean no work! If you are intending to shell out in a business, a stock, or perhaps a property property, you will have to do your homework (this is called “research”). Research is work! Additionally, you will be asked to manage your investments, to check up on their xwmpuf to make 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 over 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 have one). A number of you might have your own business – and congrats to you personally! But the majority of us are in jobs just because we have to feed our families and pay the bills. Looking at passive income streams and investing your time and money can give you many, many returns. Researching for and implementing your residual income plans so you can live your dreams is FUN. Getting money every month, week, or even every day is FUN. And trying out new strategies and managing your hard earned money – if you have some to control – is FUN.