When people mention income, most of the time they think of salary, and they would not be wrong. Our life has become a cycle of working, earning and spending just enough so that we get by, and there is nothing wrong with that. Even before we were born, that cycle was already in place, and it was the cycle that we were introduced to and most likely are comfortable with. In the past few decades though, the term -residual income- has also come into the limelight, and people are curious about it, and rightly so. Residual income offers the possibility of earning more and ensuring the chances of retiring to a comfortable lifestyle.
Residual vs. Salary So what is residual income? It is earnings known also by a few other names such as recurring or passive income. It is the type of income that continues on earning even after you are done investing the time needed to complete the work. Let us say your work is project based, but it pays residual income, and you have three projects in succession. As you continue to work on the second project, the first will continue to earn money so your earnings increase and even compound over time. How is this different from a salary? A salary is a payment based on how much work you put in. Let us say you have a job that has you working eight hours a day. You will be paid on an hourly basis, and the options to increase your income would be limited. You would either have to earn a merit increase that would increase your hourly earnings, or get a promotion. You will also have the option of getting another job as well, but that would just take away more hours from your personal life. Debunking the Theories of Residual Income Because of the way it works, people believe that residual income is a magic formula that one can apply at any time in order to get rich quick without doing much work. Both ideas: getting rich quick and not working much are wrong and need to be corrected. However, the sheer POTENTIAL to earn a substantial amount of money – and for it to be repeating once the business is off the ground – is a very real possibility. When you wish to use the idea of residual income, you have to plan ahead in order to get your idea off the ground, and then work to make sure that the business will sustain itself. It will take a lot of time at the beginning, but well worth that initial effort and time.
Sources of Residual Income There are a lot of ways that one can earn residual income. The more common example would be writing a book, because royalties will continue to be earned as long as the copyright belongs to you. Then there are the investments such as the purchase of land and then renting it out. It will provide you with earnings, which you can further use to invest in stocks and bonds. Nowadays there is also the concept of multi-level marketing, which allows people to sell goods to others as well as convince others to sell the same goods. If one person recruits a few more people to sell the same goods, the recruiter gets a cut off the sales of his recruits. Some people think that the idea of residual income is too good to be true. But it really is an investment of time and money so that this would later on translate into security for yourself and your loved ones. The more time and effort you invest, the greater the returns you will have after the years of work, and you will get it with interest.