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If you search the internet 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 plenty of excellent opportunities out there. But before you start out spending money, let’s discuss what passive income ideasĀ  is and, most significantly, what it isn’t.

Webster’s dictionary defines residual income as “of, relating to, or being business activity in which the investor does not have immediate power over income”. I don’t believe that tells the complete story. Passive income is money that you receive over and over again without needing to do much work (notice I didn’t say “any work”). It is actually distinct from earned income in that you are not receiving money for the time (like you will work). But depending on the residual income stream that you choose, you may in fact have immediate control of your earnings. But I’ll be able to that later.

Why could you want residual income? Well, like Robert Kiyosaki explains within his book Rich Dad Poor Dad, this is the main difference between the rich and also the middle-class. The rich invest their funds in a variety of residual income streams. When their passive income exceeds their expenses, they are financially free. “Financially free” basically means that there is no need to possess a day job to cover your expenses. And also you are “free” to then do whatever you want!

What Passive Income Isn’t. Before I get into suggesting what residual income is, let me first inform you want it isn’t. Residual income is not really exactly the same thing as “recurring income”. Residual income is money that you receive regularly after you have done work once. The most effective example would be TV sitcoms. Some actors get “residuals”. Actors get paid for filming the show. Afterwards, some actors get paid each time the show repeats. Sales people that sell services, subscriptions, or renewable products (like insurance) sell that item once and, providing the customer renews, will receive a commission from each renewal. Royalties from the sale of books and music can also be residual.

Many say that multi-level-marketing or multi-level marketing sales offer you passive income. Do you know what? That’s residual too.

For those who have a small company or are self-employed, even in case you are making a lot of money, this is NOT passive income. In the event you get a salary from your business, that is make money with your car. There exists a method to turn this into passive income, however – so stay tuned.

You know, I actually have to express that starting your own website cannot be passive income. Regardless if you are selling a product (like an eBook, seminar or any other information) or even a service, you still have to advertise your site. You will have to accomplish this whether or not you are selling your OWN products or possess the rights to promote other’s products. Marketing your site is work, simple as that. But it’s not just a job. And as soon as your marketing efforts start taking off, you can make a lot of money with little additional effort. But that is residual in my book, not passive.

What Passive Income IS – Residual income quite a bit of things. The very first thing concerns mind, as well as, I think, the most famous example is real estate property. If you own investment property and they are obtaining a positive cashflow coming from a house, commercial property, or apartment, which is passive income. If you rent rooms in your own home, that’s residual income too. You only have to set this up once, and then the income comes in every 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. For those who have a web site with banner ads or Google AdSense ads, that can be called passive as well.

In the event you spend money on any business, but don’t manage it, your profits are viewed passive income, just what Webster was considering as he wrote the definition.

What about business? Well, that depends about how you set it up. Rich people create businesses and set up a system that the business follows. This way, in the event the owner continues vacation for a month to Fiji, the employees follow the system and also the owner still gets the profits. Any business will needless to say start out with many different work, however, if you take the time to set up a company to ensure that it gets reproducible results (exactly like a franchise), those profits become passive. And, according to the IRS, any salary you obtain from your company is considered “earned” but profits are considered “passive”. It is important when starting an organization to check with the accountant as well as 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! All of them require serious amounts of start up, but once they may be set up, you collect money over and over again.

Residual vs Residual Income – Residual and residual income are like siblings. These are both very similar and many people really consider them synonyms. What does it matter, anyway? These are both excellent techniques for getting money in your hands month after month after month without trading your time and energy or perhaps your freedom. How can it get better than that?

Reality Check – Avoid anyone who informs you that there is NO work involved in selflender. Residual income fails to mean no work! If you are planning to spend in a business, a stock, or a real estate property, you will have to seek information (this is known as “homework”). 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 news is that research and management is simply a part-time endeavor. And most of the time, that work can be performed from almost anywhere, including over a beach in Fiji.

Let us keep in mind the enjoyment factor. I’m sure there are a few individuals reading this article who like, even love their jobs (if you still need one). Some of you may have your very own business – and congrats for you! But many of us have been in jobs just because we need to feed our families and pay the bills. Looking into passive income streams and investing your money and time can provide you with many, many returns. Researching for and implementing your residual income plans so that you can live your dreams is FUN. Getting money every month, week, or even every day is FUN. And trying out new strategies and managing your hard earned money – once you have some to handle – is FUN.

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