7. Royalties: the creation of music, books, inventions, machines, patents. A royalty is something you have sold or created and put it on a platform that you do not run and then receive compensation based on when the item is purchased or used. Most of us do not have the potential to quickly create royalty streams. Not to say you couldn’t specialize in something and write an ebook or if you are musically inclined you couldn’t write a song, but to create true residual income, that is going to take a lot of effort and skill. This is the purest form of passive residual income, if you can achieve it.
It’s obvious that stocks outperform real estate in terms of capital gains, but I would like to see S&P compare to Real Estate in SF, Manhattan, LA. Our house in NC was $80,000 20 years ago. It’s only $150,000 now. Same house in Santa Monica went from $200,000 to $1.8 million. People who happen to bought real estate in major metropolitan would have a natural positive association with real estate investment.
The second form of residual income, passive income, is often a vital part of wealth creation. There are only so many hours in each day, and when a person trades hours for dollars, there is a maximum amount of income that person can earn. For instance, if a person earns a specific amount each hour, there is a limit to how many hours are available to work. Once they reach that maximum amount of time, they cannot earn more money.
Speaking from our own experience, you can’t be a passive McDonald’s franchisee. Every McDonald’s potential franchisee will need to complete at least thousands of hours of training before he/she would be approved to acquire a franchise and only if he/she has the financial resources to acquire a franchise. It could take years before one would get a single store franchise. Until the franchisee eventually has acquired multiple stores and established his/her own management team, the franchisee would have to put his/her nose to the grindstone and work his/her ass off every day. I won’t call it a passive investment by any stretch of imagination.
If you’ve got a book you’re itching to write, you can still go with the traditional publishing route. (We published our first book using a traditional publisher.) Whether your book is fiction or non-fiction, a publisher can help get your book into print and onto shelves in both online and traditional book stores. This is still a good route, although it may take more work and be more expensive than some other options.
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On August 4, 2003, Brad and Karen Murray’s marriage ended. They continued arguing over their assets for another four years. Brad worked as an independent broker for Ameriplan – a marketing company specializing in providing discounted rates on services related to healthcare. As part of his job, Brad sold monthly memberships to Ameriplan’s discounted health plans. He also recruited other brokers to do the same.
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Working as a nurse or a computer engineer for a salary are two examples of active income. In contrast, residual income is income from an investment that earns over the minimum rate of return. You get paid for work you completed once or are periodically overseeing. With residual income, you don’t have to be present or intricately involved to get paid.
This was a very inspirational article! I too spent 20+ years in a high-stress career selling a high-end product under a 100 percent commission plan; that is, no salary! I realized, after racking up millions of frequent flyer miles, that there had to be a better and less-stressful way of making a living. My goal was to design my own lifestyle free of corporate shackles, which required a pre-determined amount of passive income.
In his new book, “5 Day Weekend,” Halik shares how to live a life rich with purpose, while living a “5-Day Weekend” lifestyle. From an entrepreneur whose companies have impacted more than one million lives in more than 51 countries, here are five fundamental ways to game the grind, multiply your money, and set yourself financially free once and for all.
Case Schiller only tracks price appreciation of RE. RE as rental investment vehicle is measured primarily on rental yield or cap rate or some other measure. Price appreciation in that scenario is only a secondary means of growth, and arguably should be ignored as a predictor of returns when deciding on whether or not to invest in rentals. More important key performance indicators for rentals are net operating income and cash ROI. Appreciation, if it occurs, is a bonus.
Finally, we will be investing in stocks for dividend income. Dividend income is the distribution of earnings from companies’ stock that is paid out quarterly and sometimes monthly. We will be investing in around 10-15 stocks that have a high dividend yield. For more information on what stocks we are picking and how dividend income works, check out this (link).
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Pardon for being a bit of a newbie to true investing outside of a 401k. What about those of us who have 1) Just been laid off, and unable to find work due to lack of a degree (apparently 17 years in the industry with 5 certifications is just simply not enough – which is okay. It gave me the kick in the arse to get back to school finally) 2)Have three children to support (age 11 and under), and 3) Oh yeah – cannot find work. What do you recommend when the only source of positive revenue has ceased to come in and you now have less time than ever – due to responsibilities (i.e. doing well in university = academic scholarships means investment in time, plus spending 20 min breaks with kiddos) – to create positive sources of income ? I truly am wondering from an investor’s point of view how you would handle the pivot point of life if ever you had been faced with it. I realize this may be only imaginary, but at this point, I welcome your “what ifs” scenario on this one. You’ve truly done amazing work and I thank you for being so transparent.