What Is Residual Income?

Residual income (also called passive, or recurring income) is income that continues to be generated after the initial effort has been expended. Compare this to what most people focus on earning: linear income, which is “one-shot” compensation or payment in the form of a fee, wage, commission or salary.

Linear income is directly proportional to the number of hours invested in it (40 hrs. of pay for 40 hrs. of work), but one of the great advantages of residual income is that once things are set in motion, you continue making money from your initial efforts, while gaining time to devote to other things… such as generating more streams of residual income!

There are a variety of ways residual income can be earned. The following are some examples.

  • Royalties from intellectual property, such as books and patents
  • Subscriptions, advertisements, donations or affiliate links from your blog or website
  • Transferring the rights to a song you recorded, a book you wrote, a software program you created or a gadget you invented to a company agreeing to pay you a percentage of each copy of your work sold
  • Purchasing an office or apartment building and leasing or renting out the properties
  • E-book sales
  • Stock photography royalties
  • Join a network marketing company

Advantages to Residual Income

  • You do have the potential to be financially independent if your residual income produces enough money.
  • Having residual income allows you to do more important things with your time. Whether that’s a hobby or another job, making money from your residual income stream won’t be the primary focus of your life.
  • No matter what, you will have a constant flow of income (however large or small it may be). This is critical if you get injured or sick, can’t work because of another emergency, or if you just want to take an extended vacation.

How to Achieve Residual Income

Before the money starts rolling in you will probably have to put a lot of time, effort and money into your business or project. You’ll need a lot of patience and determination to see the residual income in the future. Instant gratification is not possible when it comes to residual income.

Most people aren’t authors or real estate investors, they must find an alternate method to earn a residual income stream. Network Marketing or  Multi-Level Marketing (MLM) is much more realistic for the average person.

In Network Marketing you have the ability to earn not only a residual income but also a passive income.  Residual income is income you get long after you already done the work for it. Passive Income is income you earn by doing little or nothing at all.

If your network marketing product is sold with an Autoship option, that means you get paid long into the future for one sale. This is residual income because you do the work once and you keep getting paid long into the future. Passive income can be found in your network marketing team building. Presumably your team is doing work; bringing in customers and building their own team. You will be getting paid on their efforts.

Passive and residual income can be far superior to ‘paid by the hour’ income. When you are paid by the hour, you are simply trading time for money. And time is something that there never seems to be enough of. Often when you are working a low paying job, money is also in short supply. Trading time for money and not making enough money – that doesn’t sound good does.

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