Residual income is becoming highly popular nowadays. Millions of people around the world are adding residual income streams to their portfolios to increase their earnings. It starts from an upfront investment and requires a lot of patience before it can bring consistent revenues. The primary benefits of residual income are elimination of debts and acceleration of financial goals.
If you want to start earning this type of income, here’s what you need to know first.
What is residual income?
It is a significant measure that banks and lenders consider before granting loans. The level of residual income helps institutions determine whether a person has the financial capability to manage their expenses and acquire additional loans or not.
How can I make residual income?
– Dividend stocks
– Affiliate marketing
– Real estate investment
– Build an app
– Do stuff online
– Sell stuff online
– Display ads
– Invest in stock market
The best part about some of these ideas is that you can start from as low as $5. By the time you’re done reading these ideas, we guarantee that you’ll be a pro at making your own RI.
Investing in dividend stocks is a proven way to earn residual income. Although you have to do extensive research to find good stocks, once they’re found, you can collect a good profit over time.
To capitalize on this opportunity, make sure to register with a reliable brokerage. Most of the dividend stock brokerages reward new users for getting registered. Thus, in addition to making profits, you’ll also earn attractive rewards!
Another reason dividend stocks are on this list is that once you invest in them, the profits will keep on coming for an extended period.
Affiliate marketing is a relatively new way of residual income. This method requires you to have a blog or some other online platform to promote other brands. When someone buys a product through your affiliate link, you receive a fixed commission. Read in details about affiliate marketing
You can take your residual income to another level by building relationships with top brands, corporations, banks, etc.
The best thing about affiliate marketing is that you can promote all types of products and services that work in your niche. Also, lengthy blog posts aren’t the only way to advertise products. A lot of people are killing it on YouTube and social media through simple descriptions.
The number of people viewing your content matters more than the length of the content.
Real Estate Investment
Real estate is a serious way to become extremely rich over time. Real estate investment isn’t for faint-hearted, but you can earn massive returns if you dive into it.
For example, if you buy a few rental properties today, the renters’ money will cover their costs over time. You can save that money to buy more properties and grow your wealth before reaching the retirement age.
You can easily earn a few thousand dollars every month from this approach.
Apart from rentals, you can also invest in real estate trusts or REITs. This is an indirect way of real estate investments and lets you earn residual income quickly.
The best part about investing in REITs is that they’re like bonds that you can sell any time you want.
Build an App
Building an app is another excellent way to earn residual income. Even if you aren’t a savvy developer, you can learn app development via online tutorials. If this option isn’t viable, you can also hire an experienced developer to build an app for you.
However, the app must use a unique idea to make good profits. This is because if you copy someone else’s idea, there’s a chance that a lot of similar apps are already in the market. As a result, your app will be just another name lost in the ocean of applications.
On the other hand, a unique idea based app will stand out in the market and create a smooth stream of residual income. Read more about how to make money with applications
Do Stuff Online
Believe it or not, you can earn a lot of money by doing silly things online. Several websites pay their users for doing trivial things such as watching videos, playing games, and taking surveys. Some platforms will also pay you for simply surfing the web.
If you regularly use these sites, you can amass a good residual income over time.
This approach works best for those who spend a lot of time on the internet daily.
Sell Stuff Online
For example, if you are a cooking expert, you may create a series of tutorials about different recipes and sell them online. A lot of people use the internet to learn about new dishes. By tapping into their market, you can earn massive amount of residual money in a short period.
Another way to earn residual income is by displaying ads on your blog or social media. The beauty of having an online presence is that you can monetize it in various ways.
You can use your blog to display ads like billboards, or you can use social media to promote products like television. It’s unbelievable the amount of money you can earn through your online properties.
However, your blog or social media sites must have a large number of visitors to receive ads. Advertisers like to work with individuals that can help them reach a wider audience.
Invest in Stock Market
If you aren’t interested in any of the above methods, then try investing in the stock market. You can invest in various ways to earn residual income from the stock exchange.
To get started, you will need a Robo-advisor such as Betterment for financial guidance. You can set up the advisor to automatically make investments and to take care of the rest.
The best feature of Betterment is that it is the cheapest yet one of the most intelligent Robo-advisor out there. Besides, it makes the stock market investment a lot easier due to which a lot of people around the world use it to make residual money.
FREQUENTLY ASKED QUESTIONS
What is negative residual income?
The biggest downside of negative RI is that it can drive investors or stakeholders away by giving them the expression that the company is not producing any profits. If the RI of a company does not improve over a specified period, then the investors will look to replace the management.
It’s common for big corporations to have a department or departments with negative RI. To fix the situation, the stakeholders often outsource required factors.
What is the difference between residual income and passive?
Wages, salaries, and commissions are some common examples of passive income.
Residual Income (RI): Residual income may have different meanings depending on the context. In terms of personal finances, RI is the income that someone has left after paying all their debts and expenses in personal finance. The level of a person’s RI helps lenders figure out their creditworthiness. For example, banks use a potential borrower’s RI level to determine whether they can afford a mortgage or not.
How to calculate residual income?
Residual income can be calculated by using the residual income formula. In the formula, Equity Charge is subtracted from the net income, and the resultant is considered RI. The formula looks like this:
RI = Net Income – Equity Charge (EC)
In simple words, residual income is the net profit after paying the cost of equity. The equity charge is calculated by multiplying the corporation’s equity capital and the EC.
In case you didn’t know, the cost of equity includes mortgage payments, taxes, property insurance, credit cards, and other monthly payments. The costs of foods and utilities are excluded.