Understanding Residual Income
You hear the words residual, passive and recurring income all the time but, do you understand what they are or what they mean? I have heard different definitions that tend to confuse people, for example:
1) Residuals are wages earned
2) Passive is payment from a loan
3) Payment made to a performer for each repeat showing on television or playing of music, this is what I would call recurring.. (The American Heritage Dictionary)
4) Investment portfolio income
5) Rental income.
6) Royalties etc.
7) Affiliate links from your blog or website.
Most of these are vague and misleading explanations of what residual, passive and recurring income are. So let's focus on what is residual income? Which is what the Wealthy Affiliate program is.
Residual income gives you the opportunity to get paid monthly and possibly for years, per sale, as long as each sale remains active.
Advantages to residual income:
1) You have the potential to be financially independent
2) Having residual income allows you to pursue other income or endeavours
3) Constant cash-flow relieves the worry of lost income if you can't work because of injury or illness
4) No matter where you are in the world, the money keeps rolling in
5) Make money by doing things you enjoy
6) Improve your standard of living
7) Saving for education, a rainy day, vacations, investing and being debt free
8) The list goes on and on
Disadvantages to residual income;
1) There is no guarantee of success, and it is generally not advisable to base an entire income on residual income until it proves to be profitable
2) There are scams that promise a quick rich scheme
3) Taxes. You are personally responsible to report your income to the IRS
In conclusion, through my experience as a former independent insurance agent for 25 years, I have experienced the power and benefit of residual income. If you are willing to put the time and effort to complete the work and training required, you have a better chance to succeed.
If you have any questions leave a comment on my website.
Thank you.
Lee
"What you do today, reflects what happens tomorrow." (Gandhi)
Recent Comments
2
Interesting insight. I enjoyed reading this.
Thanks Graham90 I hope this helped understanding how residual income can really be a factor.