Examples of Residual Income
By Steve Gillman
What is meant by residual? It means the income continues after
the intial activity or effort. Some people would say that it
is easy money, and it can be eventually, but it may require quite
a bit of effort up front to create streams of residual income.
The important point is that this is income which continues to
come in long after your work has ended. There are a number of
ways to make that happen.
Here is an example from my own experience. A couple years
ago I decided to make a web site about carpet stains. I bought
lunch for the owner of a carpet cleaning company, in exchange
for some tips on how to remove various stains, and how to care
for carpet in general. I took notes, and later made them into
a fifteen-page website
on removing carpet stains.
I spent a week building the site initially (I was slow then),
and twice over the last couple years I have spent a few hours
updating the site. I might have put as much as 50 hours into
the site now, but I have left it untouched for as much as nine
months at a time. In fact, as I write this, I can't remember
the last time I even looked at it online. The result? It generates
about $200 most months from automated advertising and affiliate
programs that don't require my attention. (Update; the site produced
at least $700 per month for a couple years, then dropped back
to $150 per month as of 2013.)
That is residual income, and you can see the advantages. I
put the effort in up front, but I'm still getting paid now. If
my wife and I are visiting family in Ecuador, we are still making
money. We have web sites that do much better than this one, but
I like this as an example, because it requires virtually no attention.
How would you like to have a couple dozen web sites like that?
Other Sources of Residual Income
Here are some of the ways that other people generate residual
income. Some of these might require some attention, but if there
is enough income, you can pay for someone to manage it for you,
as in the first example.
Income Producing Real Estate - Buy an apartment building,
put management in place, and have the cash flow deposited into
your account. This is a classic form of residual income. Just
be sure there is going to be enough income to cover the management
fees too. This is getting harder to find in many areas, but it
is crucial. Otherwise, you lose money or manage it yourself,
in which case, instead of investment income, you just bought
yourself another job.
Invent Things - Not an easy field to get into, but
this could be a fun one. Inventors often license their inventions
to companies, which means that as long as they keep selling,
the originator has a stream of royalty fees coming in.
Write a Book - Traditionally, authors get about 5%
of the retail price of a book. Some authors are still collecting
checks from books they wrote 50 years ago. Set up a web site
and sell e-books, and you can keep 90% of each sale. Nothing
to ship, and if you have a processor handle the orders (that's
where most of that other 10% goes), you won't have to do much
more than answer an occasional e-mail.
Make Music - Musicians get royalties as long as people
still want to hear their songs. Song writers do as well.
Insurance Sales - Sell a policy once, and you normally
get a commission every year that the person renews. Some insurance
agents retire young with a healthy stream of residual income.
Other Investments - Dividends can be considered residual
income. So can income-producing stock and bond funds. If the
value of the underlying investment rises, the dividend may rise
too, meaning you may eventually be getting very high returns
for your initial investment.
Related page: Create
Wealth From Home.
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