Income is defined as money earned from providing a service or from investing. Income can be passive or residual. Although passive and residual are often used interchangeably, they are distinct. While passive income is often residual, it is not always.
Passive income is earned from a business with little or no ongoing effort. Residual income is a measure that determines how much money an individual or entity has left over after paying bills and obligations.
This review will go over Residual Income to see if it really is the best passive income opportunity out there.
Now I do want to be totally up front here, so…
This Residual Income review has been thoroughly researched with information and testimonials that are available online to anyone in the public. Any conclusions drawn by myself are opinions.
Table of Contents
You’ll learn whether passive income ideas is the right online business for you.
And at the end, you’ll find answers to some of the most frequently asked questions regarding Residual Income and Passive income ideas in general.
But most importantly, you’ll see the exact system many others have used to build their own internet marketing business to over $40,000 a month in mostly passive income.
This system made them swear off other passive income ideas for good, because it uses some of the same skills but in a much more powerful and profitable way!
What is Residual Income?
Residual income is earned after the income-producing work is completed. This includes royalties, rental/real estate income, interest, dividends, and income from ongoing sales of consumer goods (like music, digital art, or books). In corporate finance, residual income is calculated after all capital costs have been paid.
In personal finance, residual income is the money that remains after all debts and obligations have been spent.
How Residual Income Works
Residual income is a measure of net income that includes all capital expenditures necessary to produce that income. Economic value-added, economic profit, and abnormal earnings are other terms for residual income.
Types of Residual Income
In equity valuation, residual income is an economic earnings stream used to estimate a company’s intrinsic value. The residual income valuation model adds up a company’s book value and expected future residual income. Residual income measures the remaining profit after deducting opportunity costs for all capital sources.
Net income less a cost of capital charge equals residual income. The equity charge is calculated by multiplying the value of equity capital by the equity price or the required return on equity. Owing to the opportunity cost of equity, a company can have a positive net income but a zero.
Managerial accounting defines residual income as the remaining operating profit after paying all capital costs used to generate revenues. It is also referred to as the company’s net operating income or gain over the required rate of return. To evaluate a capital investment, team, department, or business unit.
The residual income formula is Operating income – (minimum required return x operating assets).
In personal finance, residual income is called disposable income. The residual income is calculated monthly after all debts are paid. As a result, residual income is often required to secure a loan.
A lender assesses the residual income left after paying other debts each month. The lender is more likely to approve a loan with more residual income. A borrower’s residual income must be sufficient to cover the monthly loan payment.
What Is Passive Income?
Passive income is earned by individuals or businesses through investments or peer-to-peer lending with little or no effort. The IRS defines it as money earned from an entity with which you have no direct involvement.
Passive income can free up time to do other things besides work. While creating a passive income stream can be risky, it also offers increased financial security. Because it is not linked to your time, generating passive income can provide significant security. If you can’t quit your day job, it’s nice to have a side hustle to supplement your income. If you have a bunch of debt or a family member is ill, moving more of your annual income to a passive source may actually improve your quality of life.
Investing in a rental property is an example of passive income because investors are not actively involved in managing it. A stock that pays a yearly percentage as a dividend is another illustration. To reap the benefits of passive income, an investor must first buy the stock.
What are the 7 Streams of Income?
The seven income streams listed below can help you build wealth. Most millionaires have money coming from various sources, and you should know as well.
1. Earned income
The most common kind of income is earned income. This income comes primarily from your job.
Most people will rely on this income to stay afloat. While this is undeniably a powerful income stream, it is prudent to grow other income streams concurrently.
Your active income has a ceiling, and the more money you make, the harder it is to reach it. Unless you can become a CEO of a large corporation, your lifetime earnings are likely to be below $7,000.
You can supplement your active income with a passive income stream and reach seven figures with the proper strategy and discipline.
2. Rental Income
Rental income is generated by renting out items. It could be a whole house or a lawnmower.
Rental income, like other passive income streams, can help you earn money without having to work hard for it.
Each month, renters pay you to use your property or equipment.
Rental income and real estate investments can be lucrative for many.
3. Dividend Income
Profit from dividend-paying stocks. This is one of the most passive income streams because you won’t have to work for it.
Dividend stocks pay regular dividends that can be reinvested into stocks or spent as you wish. Dividends are deposited directly into your bank account, making management simple.
Many dividend-paying stock funds can help you diversify and maximize your returns. Creating wealth with dividends is simple.
4. Royalty Income
Investing in royalties can be a great idea to make more money.
Royalty income, also known as licensing income, is earned from the use of your property. Consider music, books, and even a business you founded.
Unlike active income streams, licensing revenue is entirely passive. Each sold product will generate a royalty payment.
For example, you might get $5 per book sold as royalty. If you sell 100 books per day, you earn $500.
To get to seven streams of income, royalty income must be considered.
5. Business Income
You can’t ignore business income to grow 7 income streams. Businesses are among the riskiest investments you can make, but they also have the greatest profit potential.
Starting a business requires a small sum of money, but it can grow exponentially as you grow your business.
Profit income is another name for business income. Profit income is earned by selling a product and making a profit.
6. Interest Income
Lending money generates interest income. Peer-to-peer lending or other lending activities may be used.
Interest income is a great way to supplement your primary income.
Interest rates will dictate how much you can earn from this source. Savings accounts, for example, may only pay.4% annual interest.
Some examples of interest income are:
- Interest from a savings account or bank account
- Certificate of Deposits
- Peer to peer lending
- Money market accounts
7. Capital Gains
You earn capital gains when you sell an investment like a stock or other property. Financial and investing basics include selling appreciated assets. Selling stocks from your brokerage account, for example, is a capital gain.
Selling appreciated assets can generate enough income on their own, but combining multiple income streams can be very lucrative.
Capital gains tax is anticipated when you sell assets and earn short-term or long-term capital gains.
What It Takes To Generate Passive Income Stream
Before we get into the ideas for passive income, I think it’s a good idea to clear up a few misconceptions. Although “passive income” implies that you have to do nothing to generate income, this is not the case. All passive income streams will necessitate at least one of the two upfront investment components listed below:
- An upfront monetary investment, or
- An upfront time investment
You cannot earn residual income unless you are willing to provide at least one of these two items. Because it’s critical to understand what passive income isn’t. Passive income is not your job, nor freelancing or online work. Passive income is achieved by doing something once and reaping the benefits in the future.
10 Passive Income Ideas
These forms of passive income require you to make an initial investment to generate passive income later. However, do not be alarmed – some of these ideas can be started with as little as $5, making them accessible to everyone.
1. Dividend Stocks
Dividend stocks are a tested and proper way to earn passive income. To get extensive dividend checks, you’ll need to do a lot of research and invest a lot of money. But by consistently investing in dividend stocks, you can build up an excellent residual income.
Open an account at the finest online brokerage to take advantage of these investment opportunities and earn rewards.
2. Rental Properties
A monthly income from a rental property is fantastic. To make this truly passive, hire a property management company.
It used to be a difficult task, but now the internet has made it a Depending on your goals and interests, there are numerous ways to invest in rental properties. You can invest in large residential or commercial properties or buy homes and rent them out online!
Invest In Single Family Homes
Roofstock is a more traditional real estate investment option. Buy cash-flow positive single-family rentals online with this company! Sign up now and start searching properties.
Invest In Larger Developments
Do you prefer to invest in real estate but not be a landlord? And then there’s the option of a limited partnership. They allow you to buy multi-family or commercial properties. You get the same income and tax benefits as regular property owners but without any of the work!
Invest In Farmland
Farmland isn’t charming, but it has a lot going on in real estate investing. It’s steady, pays rent, and everyone needs food. Plus, it’s less volatile than other types of real estate.
3. High Yield Savings Accounts And Money Market Funds
A high yield savings account or money market fund is an excellent place to put your money if you don’t want to think about it.
The account type and location differ. Most high yield savings accounts are FDIC insured and located at banks. Money market funds are available at banks and investment firms, and rarely FDIC insured.
Savings rates are rising, so putting more money in savings can generate a steady passive income.
4. CD Ladders
Building a CD ladder involves buying CDs (certificates of deposit) from banks in increments to maximize your return. Banks offer CDs, which are low-risk investments with low returns. This is a safe option.
For a five-year CD ladder, for example, do the following. See how the rates rise over time (estimated):
- 1 Year CD – 2.50%
- 2 year CD 2.90 %
- 3 Year CD 3.05 %
- 4 Year CD 3.10 %
- 5 Year CD 3.15 %
If constructing a CD ladder seems complicated, you can opt for a high yield savings account or money market fund. But it’s better than nothing, and it’s genuinely a decent passive income!
Annuities are a kind of insurance that you buy and then receive monthly payments for the rest of your life. Because annuity terms vary and are not always favorable, it is best to consult a trusted financial advisor before purchasing one.
These investments aren’t for everyone, and the fees can be high. But if you are looking for a passive income stream and have zero risk tolerance, this could be a good choice for your portfolio.
6. Invest Automatically In The Stock Market
If you don’t want to pick dividend-paying stocks (which I understand), there are still ways to passively invest in the stock market. A Robo-advisor allows you to invest automatically in a variety of ways.
A Robo-advisor is just what it sounds like: an automated financial advisor. You spend about ten minutes answering a few questions and creating your account, and the system handles the rest.
7. You Can Invest In A REIT (Real Estate Investment Trust)
It’s OK if you’re hesitant to invest directly in real estate or if you’re not yet an accredited investor. Real estate can still be used in your investments through REITs – Real Estate Investment Trusts.
These are investment vehicles that hold property. You benefit from the property’s gains, refinances sales, and income (or loss) as the owner.
8. Invest In A Business
Investing in a business as a silent partner can also generate passive income. A high degree of risk comes with a high degree of reward. For example, Lyft and Uber sought private investors for their businesses several years ago. Their current value is in the billions, but you will only benefit as an investor if they go public through an IPO or are acquired. So, this is a risky endeavor.
However, there are methods to lessen your chances. If you lend a small amount of money to many companies, you can invest in their stock in small amounts.
Thanks to new tools available, you can now lend money to a business and get paid handsomely for it.
9. Invest In Student Income-Share Agreements
An alternative to student loans is an Income-Share Agreement (ISA). A student’s tuition is paid for in exchange for a portion of their future earnings if they use an Individual Retirement Account (IRA).
How are these ISAs being funded? They are financed by private investors and universities. This is an investment in someone’s future.
Coding schools and trade schools are the most common places to find these, but they are becoming more widespread.
10. Refinance Your Mortgage
Refinancing your mortgage can free up a significant amount of cash and save you big bucks over the life of your loan. This may sound odd in a residual income article. If you ask me, that’s a pretty good gain.
If you haven’t compared your mortgage rates recently, now is a great time to do so because interest rates are always close to historic lows. You can save tens of thousands of dollars if you reduce your interest rate by half a percentage point or more. That is one of the best investments you can make.
What Is Our #1 Recommended Way For Making Passive Income In 2022?
Our review team has come across a program in the real estate industry that is next level!
Although it’s not real estate in the traditional sense, it’s all digital.
Where some of the examples fall short is in scalability.
You can’t realistically expect to be able to trade stocks all day everyday.
It just takes too many resources (money included) for any regular person to bootstrap, not to mention some clients can be real headaches!
But what if you could make even more money off of little local websites without having to spend all your day monitoring different campaigns?
With this digital real estate program, you can profit off LOCAL traffic to your website every single day!
Sound too good to be true?
Of course it does!
But it isn’t…in fact, business owners wish they had this skill!
All you have to do is build and rank a LOCAL website and forward the jobs off to a business owner in town, you could even email it to them!
This works for literally any service based business, tree service, plumbing, towing, etc.
How Much Money Can You Actually Make?
Simple, after you forward the jobs off to a business owner and he makes some money off of them, you simply ask to make the deal beneficial for each other.
A fair price to charge per lead, depending on the industry is 10-20%…let’s just use the tree service industry for example and go by worst case scenario.
Let’s say you build and rank the site and only 10 jobs a month come in. The average tree service job is anywhere from $500-$2000!
That means at bare minimum you have an asset worth $500 a month!
See why they call it digital real estate now?
That’s a rent payment.
Because It’s YOUR ASSET
The great thing is how easy it is to scale. You don’t have to worry about clients that are headaches because you own the website.
Back to Residual Income, why land a small $500 SEO client that is treating you like an employee, when you can own your own asset with leverage?
This model actually allows you to collect HUGE FLAT RATE DEALS.
Truly passive income!
The training program takes making money online to a whole other level. The owner of the program walks you through how to build and rank a site hand in hand, with the occasional voice over when he is sharing his screen.
You will learn the importance of keywords, website name, how to send call notifications via email, backlinking, etc.
Once the training program is completed you will also have access to a Facebook group much better than the Residual Income group in our opinion. This group is much more active.
Unlike Residual Income, where you’re getting maybe $250 per month, you could be getting 10-20X THAT.
A business will always want more leads and another job. In fact it doesn’t even matter that the job isn’t coming from their website name…they see it as it is…expanding digital real estate.
Unlike Residual Income, more people have been able to walk away from their 9-5 job as well.
Now, I know you probably have tons of questions…