An Overview of Residual Income

In order to survive the modern world, it is necessary for one to work for money to sustain his or her needs. For so many people, this would mean pouring some metaphorical gallons of sweat, blood, and tears. Some however earn cash in a rather easy manner. Such people earn residual income – income that is passive, meaning something that is earned without any sort of work involved.

Indeed, it is not always necessary to work so hard in order to earn the money you need. You don’t need to subject yourself to eight hours of labor away from home, as you have an option that allows you to sit back and relax in your home, getting paid doing nothing at all. Residual or passive income simply allows us to earn this way.

Residual Income Compared with Active Income

Active income is what we call the money we earn from work, the sort of pay that we are most familiar with. As we all know, this can be obtained from a job or from a business, and is paid regularly every month. This not only includes the standard pay from your job, but also all those you earn from your side activities, like tips if you work in a restaurant and the money you make from part time jobs.

This contrasts from passive income, wherein the money simply rolls in without you doing anything. This sort of income, besides being earned in a passive manner, you can earn it without any direct involvement at all. This however does not come without any cost. Most sources of this sort of income require people to make an investment, and this is in no way a small thing.

One source of passive income for instance is real estate. Renting a house or an apartment unit to someone can certainly earn you some lazy money, but this won’t be possible if you haven’t invested in constructing a residential building and paying all the subsequent maintenance fees. As such, you can say that passive income can only be earned by those ready to shell out a huge capital, something you’ll need to work for.

Both types of income can allow you to survive the modern money-based economy. You can say that both can provide financial stability. The only difference is that passive income is far more appealing – who won’t like something where they can earn without doing anything at all anyway?

Common Sources of Passive Income

There are many opportunities that can allow you to earn some passive income. Such are the following:

  • Real estate – Get the needed papers, buy some land and build a house or apartment that you can rent out to those who can’t afford to own a house.
  • Limited business partnerships – Simply provide capital to your partner who will do all the necessary work, and get your own cut every month.
  • Time rolling deposits – Make a large deposit in the bank and put it on time rolling deposit. It will serve as an investment you make on the bank, and will increase by a certain percentage every month.
  • Owning shares in a corporation – Shareholders in a corporation earn dividends, or a cut from the profits that is directly proportional to the size of their shares.

Residual income is a great alternative to the income you earn from work. As such, we recommend that you work and save up for an investment from which you can earn passively.

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