“[T]he stream of continuing payments that are earned by Brad and/or Karen from the commissions (current and future) earned by the brokers within a book of business. Residual income arises from all sources of income relating to or derived from an identified book of business, including commissions earned by the brokers within that identified book of business from any source whatsoever.”
Did any of these ideas interest you in building passive income? Want a clearer picture of how different income streams might fit into your overall wealth-building strategy? If so, connect with a financial professional through our SmartVestor program and create a game plan to start building wealth that lasts. A financial pro will look at all your income streams and help you develop a financial plan that meets your individual needs. Find a SmartVestor Pro today!
* Freelance writing: Quality freelance writing takes tremendous effort. Ironically, the better the quality of your writing, the more you don’t want to freelance and just keep the articles for your own site. Freelancing is a great way to earn side income, however, it’s not really for me. I’ll probably take on one or two freelance jobs maximum per year and write no more than four articles a month elsewhere.
No one should turn down wind farming’s ultimate passive income for the next 30 or more years … even 60 years when there is a positive cash flow on the sum total of all base payments when computing inflation for the next 60 years based on the previous 60 years, as long as the next era’s energy resource is not perfected (at which time they would not renew the option for the second 30 years).
The authors found that those born to parents in the bottom 20 percent of earners (measured by permanent income, or the average labor market earnings over people’s working lives) had a 39 percent chance of remaining in the bottom 20 percent. Those born in the bottom 20 percent of the wealth distribution had a 27 percent chance of staying there. On the other end of the spectrum, those born in the top 20 percent of permanent income and wealth distributions had a 41 and 47 percent chance of staying there, respectively. (Figures showing these transitions are available in The Regional Economist article “Which Persists More from Generation to Generation—Income or Wealth?”)
Dividend stocks tend to be more mature companies that are past their high growth stage. Utilities, telecoms, and financial sectors tend to make up the majority of dividend paying companies. Tech, Internet, and biotech, on the other hand, tend not to pay any dividends because they are reinvesting most of their retained earnings back into their company for growth.
In addition to an extra income stream, residual income allows you to diversify your revenue sources. Instead of relying on your standard paycheck, you’re earning money through the royalties of an eBook or the sales of an online course. Diversity of income gives your overall financial portfolio more security and depth. Similar to passive income, residual income gives you more financial stability, flexibility with your lifestyle, additional retirement savings, and a more robust financial standing.
Ebooks are one of my favorite sources of passive income. Now, you can do this the simple way and just publish it on Amazon's KDP. Or, you can go all out and build yourself a book funnel. Book funnels are powerful, but they won't be fully passive. For example, if you do a free-plus-shipping offer for your ebook (converting it into a physical book), you'll need to create some one-time offers (i.e. extra training) and up-sells (i.e. an audiobook). But, a book funnel can be very powerful.
As an extreme adventurer, he’s also climbed Mount Kilimanjaro, HALO-skydived above Mount Everest’s summit, broken the sound barrier in a MIG-25 jet and deep-sea dived to the shipwrecked Titanic to have lunch. He even became a certified Russian-trained cosmonaut, rocketed to the edge of space and served as a backup for the “Soyuz TMA-13” NASA flight to the International Space Station.
I have not. While I am intrigued with the possibility of making online income, it seems to be less passive then how I want to spend my time. Regarding your blog / site, you have done quite well for yourself. However, you have to keep pumping out content or your site would eventually go out of business. That sounds like more of a commitment then I would want. Regarding your book sales, it is probably relatively passive now, but certainly was not when you were writing the book. Now if you love it, great. Just not for me.
* I use Personal Capital to track all my finances in one place. It’s much easier to use their free software to follow 28 accounts on one platform than to log into various accounts to check my balances. They’ve also got great tools for x-raying your portfolio for excessive fees, recommending a more optimized asset allocation, and planning for retirement with their Retirement Planner.
I own several rental properties in the mid west and I live in CA. I have never even seen them in person. With good property management in place (not easy to find but possible) it is definitely possible to own cash flowing properties across the country. Not for everyone and not without it’s drawbacks, but it seems to be working for me so far. I’m happy to answer any questions about my experience with this type of investing.
Who doesn’t like some down and dirty affiliate fees?! Especially if you realize it can be even easier to make money this way than with an ebook. After all, you simply need to concentrate on pumping out some content for your own site and getting the traffic in, often via Google or social media. Unsurprisingly, most people can enjoy their first affiliate sale within 30 days of starting a blog. Continue reading >
I am still working on my passive income, however I like multiple income streams even more. My favorite is capital gains because it is one of the lowest rates. One of the best passive income streams is a pension/Social Security. As I near retirement, I like the concept of it supporting my needs and my 401k supporting my wants. In addition, my brokerage accounts are all at capital gains rates. Don’t misunderstand, I am still working on adding more because I like multiple income streams!
2. Focus on income-producing assets. Internet growth stocks may be sexy, but they provide no income. To build a large enough passive-income stream to survive, you must invest in dividend-generating stocks, certificates of deposit, municipal bonds, government Treasury bonds, corporate bonds, and real estate. You're free to invest in non-income-producing assets for capital appreciation too. You just want to earn reliable income when the day comes to leave your job.
*All Lending Club loans made by WebBank, Member FDIC. Your actual rate depends upon credit score, loan amount, loan term, and credit usage & history. The APR ranges from 6.16% to 35.89%. For example, you could receive a loan of $6,000 with an interest rate of 7.99% and a 5.00% origination fee of $300 for an APR of 11.51%. In this example, you will receive $5,700 and will make 36 monthly payments of $187.99. The total amount repayable will be $6,767.64. Your APR will be determined based on your credit at the time of application. The origination fee ranges from 1% to 6% and the average origination fee is 5.49% as of Q1 2017. There is no down payment and there is never a prepayment penalty. The closing of your loan is contingent upon your agreement of all the required agreements and disclosures on the www.lendingclub.com website. All loans via LendingClub have a minimum repayment term of 36 months or longer.
As an economic concept, residual income has a long history, dating back to Alfred Marshall in the late 1800s.1 As far back as the 1920s, General Motors used the concept in evaluating business segments.2 More recently, residual income has received renewed attention and interest, sometimes under names such as economic profit, abnormal earnings, or economic value added. Although residual income concepts have been used in a variety of contexts, including the measurement of internal corporate performance, this reading will focus on the residual income model for estimating the intrinsic value of common stock. Among the questions we will study to help us apply residual income models are the following:
Teachable and Udemy are two of many, but these are the most prevalent, and they’re both intuitive and user-friendly. With Teachable, you have more control over your pricing and the look and feel of your course, but you don’t get a built-in audience. Instead you have to do all the marketing yourself. Udemy has a built-in base of students, but you don’t have as much control and they take more of your revenue.
Book sales ($36,000 a year): Sales of How to Engineer Your Layoff" continue to be steady. I expect book sales to rise once the economy starts to soften and people get more nervous about their jobs. It's always best to be ahead of the curve when it comes to a layoff by negotiating first. Further, if you are planning to quit your job, then there is no downside in trying to engineer your layoff so you can get WARN Act pay for several months, a severance check, deferred compensation, and healthcare.
You don't have to be Paul McCartney to rack up residuals. You might own properties that you rent out even though you're not a Realtor. Maybe a blog you started took off, and while you no longer work there, you still collect part of the profits. Or perhaps you're a serial entrepreneur who creates companies and moves on. You, too, are earning residual income.
That income is considered residual income because as long as the apartment is rented and the rent is collected, the income is earned without additional effort. The effort came when the property was purchased and a tenant was found. Each month after that, the money automatically is paid without buying the apartment again or finding the same tenant each month.
Let’s say a company earns $1 a share and pays out 75 cents in the form of a dividend. That’s a 75% dividend payout ratio. Let’s say the next year the company earns $2 a share and pays out $1 in the form of dividends. Although the dividend payout ratio declines to 50%, due the company wanting to spend more CAPEX on expansion, at least the absolute dividend amount increases.
When I purchase an existing online business, I look for cash flow over the past year and where the money comes from. I want the sources to be more passive so that it does not take a lot of my time. Also, typically I will make an offer that is 18 – 24 months of profit so that I know that I will get my money back within the next two years. I hope that helps!
Dividends made sense 40 years ago as a relatively simple rule of thumb, but after all the work done by John Bogle with index investing, and academics with Monte Carlo sims and the 4% rule, dividend investing just isn’t the simplest, cleanest way to invest or receive passive income anymore. It’s actually significantly more risky compared to index investing, because dividend companies are a much smaller share of the total global economy compared to the broader indices.
If you’d prefer to skip the startup phase, you might want to buy a blog that’s already built and earning revenue. This is actually pretty easy to do as a lot of people start blogs, and then get bored with them. Getting a blog going is a labor-intensive process, and it’s not uncommon for people to give up before they’ve reached their full potential.
If retirement is a goal of yours (and who doesn’t want to retire someday?!?), it’s important to learn how to start investing. In fact, funding your retirement accounts should be at the top of your list. While these accounts won’t help your immediate situation, by stashing cash now, the residual income they create should help propel you through your golden years.