If you search the web for “passive income”, you may find a definition or two, but mostly, what you find are websites selling you on the passive-income-flavor-of-the-day. It’s frustrating, I know. I don’t know about you, but before I jump into any opportunity or even before I take a trip, I like to do my research. That being said, there are a lot of great opportunities out there. But before you begin spending money, let’s discuss what start a business is and, most importantly, what it isn’t.
Webster’s dictionary defines residual income as “of, relating to, or being business activity where the investor lacks immediate power over income”. I don’t feel that tells the entire story. Residual income is money that you get again and again without having to do much work (notice I didn’t say “any work”). It is different than earned income in that you are not receiving money for the time (like you would work). But depending on the passive income stream that you choose, you may in reality have immediate control over your revenue. But I’ll be able to that later.
Why could you want passive income? Well, like Robert Kiyosaki explains in the book Rich Dad Poor Dad, that is the main difference between the rich and also the middle-class. The rich invest their cash in a variety of residual income streams. When their residual income exceeds their expenses, chances are they are financially free. “Financially free” basically means that there is no need to possess a day job to pay your expenses. And also you are “free” to then do whatever you desire!
What Passive Income Isn’t. Before I go into suggesting what passive income is, let me first inform you want to buy isn’t. Passive income is not really the same as “residual income”. Residual income is money that you get frequently after you have done work once. The most effective example could be TV sitcoms. Some actors get “residuals”. Actors earn money from filming the show. Afterwards, some actors get compensated every time the show repeats. Sales representatives that sell services, subscriptions, or renewable products (like insurance) sell that item once and, supplying the customer renews, will receive a commission from each renewal. Royalties from the sale of books and music can also be residual.
Many claim that multi-level-marketing or network marketing sales provide you with passive income. Do you know what? That’s residual too.
For those who have a small company or are self-employed, even if you are making a lot of money, this is simply not residual income. Should you obtain a salary out of your business, that is certainly writing jobs. You will find a approach to turn this into passive income, however – so stay tuned.
You know, I actually have to state that starting your own website can not be residual income. Whether you are selling an item (such as an eBook, seminar or any other information) or a service, you still have to promote your internet site. You will need to do that whether or not you might be selling your personal products or have the rights to promote other’s products. Marketing your site is work, simple as that. But it’s not a job. And when your marketing efforts begin taking off, you can make a lot of money with little additional effort. But which is residual in my book, not passive.
What Residual Income IS – Passive income is a lot of things. The first thing that comes to mind, and in addition, I believe, the most popular example is real estate. In the event you own investment property and therefore are obtaining a positive income coming from a house, commercial property, or apartment, that is certainly passive income. In the event you rent rooms in your house, that’s passive income too. You only have to set this up once, and therefore the income will come in month after month. Interest income from savings accounts, CDs, and funds-market accounts are passive – the bank pays you to keep your hard earned money in those accounts. If you have a website with banner ads or Google AdSense ads, that can be called passive as well.
Should you spend money on any business, but don’t manage it, your profits are viewed passive income, exactly what Webster was thinking of when he wrote the definition.
Have you thought about business? Well, that depends about how you set it up. Rich people create businesses and set up a method that this business follows. This way, when the owner continues on vacation for any month to Fiji, the staff adhere to the system as well as the owner still gets the profits. Any company will obviously start out with a lot of work, but if you take time to set up an organization so it gets reproducible results (exactly like a franchise), those profits become passive. And, based on the IRS, any salary you obtain from your business is considered “earned” but profits are viewed “passive”. It is essential when starting a business to check with an accountant and an attorney to set increase your business that financially benefits you the best.
What else can be regarded as passive income? What about self-storage facilities, parking garages/lots and dry cleaners! They all require some time to launch, but when they may be set up, you collect money repeatedly.
Residual vs Residual Income – Residual and passive income are like siblings. They are both very similar and a lot people really consider them synonyms. Exactly what does it matter, anyway? They may be both excellent techniques for getting money with you month after month after month without trading your time or maybe your freedom. How can it improve than that?
Reality Check – Avoid anyone who informs you that there is not any work associated with Make money online . Passive income fails to mean no work! If you are going to spend in a business, a stock, or even a property property, you will have to seek information (this is known as “due diligence”). Research is work! Additionally, you will be asked to manage your investments, to check high on their xwmpuf to make changes as necessary. That’s work too!
The good news is that research and management is simply a part time endeavor. And more often than not, that work can be done from almost anywhere, including on the beach in Fiji.
Let us not forget the FUN factor. I’m sure there are a few individuals reading this who like, even love their jobs (if you still need one). Some of you have your own business – and congrats to you! But most of us are in jobs just because we need to feed our families and pay the bills. Looking into residual income streams and investing your time and money can provide you with many, many returns. Researching for and implementing your passive income plans so that you can live your dreams is FUN. Getting money on a monthly basis, week, or even every day is FUN. And seeking out new strategies and managing your cash – if you have some to handle – is FUN.