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Some Residual Income Opportunities


Before I list some of the residual income possibilities that are out there, let's take a quick look at what residual income is. Essentially it is a stream of money that continues to come in after you do the initial work. An obvious, but poor example, is a savings account. Put the money in and from that point on you get paid interest every month.

There are two essentially different types of these opportunities. First, there are those that require an investment of money. Then there are those that require an investment of effort and time. Let's look at some examples of both types.

Residual Income Through Investment

The simplest way to develop a stream of income is to have some money to start with. Then you can spend a few hours investigating the options and put your money to work for you. These opportunities include the following:

Bonds - United States treasury bonds are considered the safest, although they pay only around 4% at the moment (2009). At that rate an investment of $100,000 would only get you $4,000 annually. A high-yield bond fund might yield almost double that, although it can be riskier.

Dividend Paying Stocks - The advantage of putting your money into stocks that pay a dividend is that you get both income and an opportunity to make a profit on price increases as well. The share prices certainly can go down, but if you have a selection of quality companies paying 5% at the time you buy, you'll likely get that 5% and even more as those dividends are raised over the years.

Loans - Most people don't think about loaning money on real estate, preferring to leave that to the banks. But there are safe ways to do this. For example, you can invest that $100,000 in five lots at $20,000 each, and then sell them for $24,000 each with a small down payment from each buyer, and an interest rate that beats any bank CDs or bonds. Keep rolling your returns back into similar deals and you can generate 10% or higher annual returns.

Rental Real Estate - Buy an apartment building at the right price so you'll have positive cash flow, hire management, and you can have income for life.

Residual Income Through Business

There are a number of businesses where you can find residual income opportunities. These generally require time, effort and money to get going, although there are some that require more time and effort, and very little investment. Here are some examples.

Insurance Sales - Although considered a job, many people sell insurance as independent agents. Long after they quit actively selling they get commissions on renewals of policies.

Car Sales - The residual income in car sales comes from the financing arrangements that some used car dealer use. There are finance companies that loan to high-risk buyers and forward only half of the money to the dealer. The rest comes in over the years as the buyers pay off the loans. There is more about this on the page Used Car Finance.

Writing - Authors get residual income for as long as their books are selling. I currently have a book that was just published in Japanese and several listed in Amazon.com, each making me some money each month.

Songs - Songwriters too can develop residual income with their music. There are people out there that have been collecting a bit of income for forty years or more each time a song is played. The other way to tap into this kind of income stream is to buy the rights to a song to collect those royalty checks.

Patent Royalties - Invent something and license your invention to one or more companies and you can have an income stream that lasts for many years. You also avoid the risk and difficulty of marketing the product yourself.

Franchises - If you develop a unique and successful business process and trademarks, like McDonald's did, you can franchise it and collect franchise fees for the rest of you life.

Best Home Business Opportunity? - That link is to a page about my favorite residual income plans - those that involve the internet. A quick example: I spent $10 and thirty hours building a website about how to remove carpet stains. That was over four years ago, and even though I have gone months without looking at the site it still pumps out hundreds of dollars per month in revenue, all automatically.

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