Some Residual Income Opportunities
By Steve Gillman
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
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
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
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.