Residual income, in a few words, is the income that you continue to earn after the work has been completed. This is contrasted with a linear income, which is earned as the work is being done.
Example 1: Investing in the stock market will generate residual income in the form of dividends. It does not require regular work.
Example 2: A worker’s hourly or monthly wage is linear income, because they get paid a certain amount per hour/month. It’s proportional to their work.
It’s not hard to see why residual income is preferable; who wouldn’t want to keep earning money without having to do any work?
The catch, though, is that residual income usually takes a lot of work to build up, and it’s pretty difficult to get. (Note: Residual income is also known as passive income, so we’ll use those two interchangeably.)
Residual income translates to financial freedom, which just means you have the freedom to do whatever you want, within your income limit. It’s a great goal to have, because it reduces work stress, fear of being unemployed, and it lets you explore your hobbies and leisure full-time.
In this guide, you’ll learn about how to build up a residual income. I’ll also give you 7 residual income ideas that you can use to make money. These are simple ideas, but they work. You can pick any of them, based on what interests you, and start exploring it to make money.
But before you start making a passive income, you’ll need to properly set yourself up for success.
Earning Residual Income Requires An Investment Of Your Money And Time
Before you start working towards a passive income, you should have enough money saved up, that you can use for investments and costs. You’ll also need some money to fall back on. Residual income ideas sometimes don’t work, so you should keep spare money in case an idea doesn’t work out. You can eventually earn a passive income if you keep working hard at one or more ideas.
Also: be prepared to work hard. Initially, you’ll have to work persistently on your business or website and not see any returns. Once you’ve built up your business or product to a complete level, and established connections, then you can expect to start earning money from it. (Note that not all of these ideas are businesses; some of them can be done without needing to open up a business).
And finally, here are the ideas:
7 Passive Income Ideas You Can Try Now
1. Write A Book
This idea is the first one on the list, because I want to get it out of the way. It’s a good idea for earning passive income, but most people will not succeed at this. You should only attempt to do this if you’re very interested in writing, and you’re an aspiring writer. I only recommend this as residual income for people who are very talented or established writers, or who already have an audience that would buy their book.
You can publish a book in two forms: paperback and e-book. E-books are much easier to get published, and they’re wildly popular these days. They’re also convenient for the reader. After writing an e-book, all you have to do is set up an account on a seller, like Amazon or Nookpress, and start promoting your book! Here is a simple guide on getting your e-book published. As I mentioned before, if you already have an audience, such as on a website, that’s the best place to promote your e-book. This article will also explain how to set up a website.
2. Rent Out Your Property
Renting out your property is one of the easiest ways to earn a passive income. You can do this if you have a spare apartment, house, or even a spare room in your apartment. It might feel weird to have a stranger living in the room next to you, but often we have extra rooms in the house that we don’t need.
Depending on your location and room size, you can earn anywhere from $300 to $700 just by renting out a room. It’s even better if you have a whole apartment to rent. If you’re going away on a vacation for a few months, you can also rent out your apartment in that time to earn some extra money.
If you’re thinking of renting out your property, then Airbnb is the best platform for it.
Bonus: If you own land and the rights to the minerals below it, then you can let an oil company drill on your property and earn a share of their revenue. Read this full guide on renting out your property for fracking. Landowners who live on mineral-rich property have made thousands of dollars from this method. In order to learn more about your rights as an owner of natural resources, visit the National Association Of Royalty Owners.
3. Create An AdSense Website
Setting up a Google AdSense website is a simple and effective way to earn a passive income stream. The way it works is that you first have to find low competition keywords in a niche. Use Long Tail Pro to find keywords with low competition that get at least 1,000 – 2,000 searches per month. Then, write long, useful, and SEO-optimized articles around those keywords. Lastly, promote your website on social media and build backlinks to it.
Ranking a website isn’t easy, and it takes at least 3-4 months, but it is rewarding as it brings in passive income every month. With decent traffic to your website, you can earn at least $100 – $200 per month. Those numbers can go much higher as you get more traffic and have keywords with a lot of revenue-per-click. You can also earn some money by selling affiliate products on your website, which is the next idea on this list.
As mentioned before, if you have a website audience, then you can write an e-book and promote it on your website. E-books can bring in more money than Google ads. This is why having a website is so good for residual income; you can get multiple streams of income from it.
4. Become An Affiliate/Sponsor
This is another way to earn passive money from a website: sell affiliate products. Affiliate marketing is convenient and effective, because you don’t have to create or retail any products; you just need to get people to buy a product through your link, and you automatically earn a (small) share of the revenue. The most popular affiliate programs are Amazon Associates and Clickbank.
Clickbank is particularly noteworthy because in many cases you can even earn 50% to 75% of the product revenue. However, most affiliate programs will offer commissions between 5% and 10%. In order to maximize your income, promote products that have are expensive. For example, a $1,000 product with a 5% commission will earn you a decent $50 commission.
Similarly, you can also become a sponsor for a company. This is a lot more difficult to do. If you have a popular blog/website, then you can directly contact companies that sell products relevant to your niche. You can set up a sponsorship deal, where you promote their products on your website. In return, you receive either a flat-fee or a commission-based fee like with affiliate marketing.
5. Invest In The Stock Market
Investing in the stock market is a classic form of passive income. As you might know, with stock markets, there is some risk involved. But then again, virtually all residual income methods involve a level of risk, and you won’t find any idea that’s risk-free. In fact, stock marketing can be one of the least risky ways to earn money, if you invest smartly. The basic rules apply: Create a diverse portfolio, start with around $1,000, learn about the stock market, and create a back-up fund.
Here are some killer tips on investing in the stock market for beginners.
If you have money to invest, but you’re not sure if you should, then consider this. What will you be doing with the money anyway? Unless you’re buying something, the money will either be in liquid form or you’ll deposit it in the bank. It will earn a fraction of the return it could earn through stocks. Investing in stocks is a better way to save and grow your income.
6. Create A Digital Product
This one is for the creative-minded people who have a unique idea or talent to offer. A digital product can be anything, including an e-book. If you create a successful digital product, then it can earn you endless residual income for a long time. Some ideas for digital products are: online courses, tools, softwares, services, artwork, and comics.
It may sound like a daunting task, but it can be explained in a simple way. You have to satisfy a need that people have. Do people want a website that connects them to others with a similar interest? Do they want cheaper air fares? Do they want a personalized career path finder? You don’t have to create something new or ground-breaking; you can simply take existing services, and improve them in some way. Or you can create your own.
This is an especially good method for residual income if you already have an audience that you can show your product to. This again shows how powerful it can be to have a website that receives traffic.
7. Start Your Own Business
This is one of the general ways in which you can build a passive income. Starting a business is something that anyone can do, but few succeed at it.
You should only do this if you have the drive and the resources to be in it for the long term. Business owners and entrepreneurs deal with a lot of uncertainty. They have to be risk-takers.
This is the ultimate way to build a residual income, and it covers nearly all the other methods on this list.
Author Bio :
Jatin works in market research during the day and does freelance content writing on the side. If you want to see one of his articles, go to Best Product Review