If you search the web for “passive income”, you may find a definition or two, but mostly, what you find are websites trying to sell 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 good opportunities out there. But before you start spending money, let’s discuss what how to pay off debt is and, most importantly, what it isn’t.
Webster’s dictionary defines passive income as “of, relating to, or being business activity in which the investor lacks immediate power over income”. I don’t feel that tells the complete story. Passive income is money that you get over and over again without having to do much work (notice I didn’t say “any work”). It really is diverse from earned income in that you are currently not receiving money to your time (like you would probably a job). But depending on the passive income stream which you choose, you may actually have immediate control over your earnings. But I’ll get to that later.
Why can you want residual income? Well, like Robert Kiyosaki explains within his book Rich Dad Poor Dad, that is the main distinction between the rich as well as the middle class. The rich invest their money in a variety of passive income streams. When their passive income exceeds their expenses, then they are financially free. “Financially free” simply means that you do not have to have a day job to pay your expenses. And you are “free” to then do whatever you want!
What Passive Income Isn’t. Before I get into telling you what passive income is, let me first tell you want to buy isn’t. Passive income will not be exactly the same thing as “residual income”. Recurring income is money that you get on a regular basis after having done work once. The very best example could be TV sitcoms. Some actors get “residuals”. Actors get paid for filming the show. Afterwards, some actors receive money each time the show repeats. Sales agents that sell services, subscriptions, or renewable products (like insurance) sell that item once and, offering the customer renews, will receive a commission off of each renewal. Royalties from the sale of books and music will also be residual.
Many say that multi-level-marketing or multilevel marketing sales present you with passive income. You know what? That’s residual too.
If you have a small company or are self-employed, even should you be making lots of money, this is simply not passive income. In the event you obtain a salary from the business, that is certainly side hustle. There is a way to turn this into residual income, however – so stay tuned.
You know, We have to state that starting your own website cannot be residual income. Regardless if you are selling a product (like an eBook, seminar or other information) or even a service, you still need to promote your internet site. You should do that whether or not you are selling your OWN products or have the rights to promote other’s products. Marketing your website is work, simple as that. But it’s not really a job. And once your marketing efforts begin taking off, you can make a lot of cash with little additional effort. But that is residual in my book, not passive.
What Residual Income IS – Passive income is a lot of things. The first thing that involves mind, and in addition, I believe, the most common example is property. Should you own investment property and are getting a positive income from a house, commercial property, or apartment, that is certainly passive income. Should you rent rooms in your own home, that’s passive income too. You simply have to set this up once, and then the income is available in month after month. Interest income from savings accounts, CDs, and funds-market accounts are passive – the bank pays you to keep your cash in those accounts. If you have a website with banner ads or Google AdSense ads, that can be called passive as well.
Should you put money into any organization, but don’t manage it, your profits are thought residual income, just what Webster was considering as he wrote the definition.
How about business? Well, that will depend about how you set it up. Rich people create businesses and set up a method the business follows. This way, when the owner continues vacation for any month to Fiji, the staff stick to the system and the owner still gets the profits. Any organization will obviously begin with plenty of work, however, if you take the time to set up a business so it gets reproducible results (exactly like a franchise), those profits become passive. And, based on the IRS, any salary you get from your business is considered “earned” but profits are viewed “passive”. It is essential when starting a business to check having an accountant and an attorney to set increase your business that financially benefits you the greatest.
What else can be looked at passive income? How about self-storage facilities, parking garages/lots and dry cleaners! All of them require some time to start-up, but once these are set up, you collect money again and again.
Residual vs Passive Income – Residual and passive income are like siblings. They are both very similar and many people really consider them synonyms. Precisely what does it matter, anyway? They may be both excellent techniques for getting money up to you every month after month without trading your time or maybe your freedom. How can it get better than that?
Reality Check – Watch out for anybody that lets you know that there is NO work involved with How To Repair Your Credit . Residual income will not mean no work! If you are planning to shell out in a business, a stock, or perhaps a property property, you will have to seek information (this is called “due diligence”). Scientific studies are work! You will also be required to manage your investments, to check high on their xwmpuf making changes as necessary. That’s work too!
The good thing is that research and management is simply a part time endeavor. And more often than not, that work can be performed from almost anywhere, including over a beach in Fiji.
Let us not forget the FUN factor. I’m sure there are a few individuals looking over this who like, even love their jobs (if you still have one). A number of you have your personal business – and congrats to you! But the majority of us have been in jobs just because we must feed our families and pay for the bills. Looking into passive income streams and investing your time and expense can give you many, many returns. Researching for and implementing your passive income plans so that you will can live your dreams is FUN. Getting money on a monthly basis, week, or even every day is FUN. And attempting out new strategies and managing your money – if you have some to control – is FUN.