What is Residual income?
The money that continues to flow after an initial investment of time and resources has been completed is referred to as residual income.
The money that continues to flow after an initial investment of time and resources has been completed is referred to as residual income. Artist royalties, rental income, interest income, and dividend payments are all examples of the same.
Residual income can be used in the following contexts:
In personal finance, it can refer to an individual’s discretionary income or the total amount of money left over after all personal debts and obligations have been paid.
In corporate finance, it is a measure of corporate performance that reflects the total income generated after all relevant capital costs have been paid.
Following is the way to Generate Residual Income
Most sources necessitate an initial financial or sweat equity investment, or both. Here are some examples:
- Purchase bonds. Once the bonds are purchased, the owner will have a steady stream of cash until the bonds mature.
- Purchase a rental property. Renting out a second home or investment property is a good way to supplement your income after the initial investment. If you don’t have enough startup capital, consider renting out a spare bedroom.
- Invest in index funds: Even if you don’t actively manage your investment, your profits can grow over time.
- Peer-to-peer lending: The internet has enabled new forms of residual income, such as peer-to-peer lending. There are several platforms available to facilitate personal unsecured loans between individuals at competitive interest rates.
- Sell your items: In the broadest sense, residual income can refer to any side hustle that supplements your income outside of your regular job. eBay is great for cleaning out your closet while also making money. Etsy is ideal for creative people looking to monetize a hobby.