Residual or Leveraged Passive Income – How Many Streams Do You Have?
- Filed under: Passive Income
- Date: Oct 25,2008
It does not matter where you are in life. Young or old, if you have savings or are deep in credit debt. It is never too late to assimilate knowledge, apply the principles learnt and start acquiring self-sustaining income streams to retire.
The three types of income are:
Active Income - Income for which services have been performed. This includes wages, tips, salaries, commissions and income from businesses in which there is material participation.
Portfolio Income - Income from investments, including dividends, interest, royalties and capital gains.
Passive income - Income received on a regular basis from a rental property, limited partnership or other enterprise with little effort required to maintain it.
Passive Income can be broken down into two types - residual income and leveraged income.
Residual Income
Income derived from sources which require your once-off direct involvement to set up but then pay out on a regular basis there after. Examples include:
- A marketing consultant who creates a workbook and sells it as an eBook online
- An insurance agent who gets commission every year when a customer renews his policy
- Royalties from publishing a book or from licensing a patent or other form of intellectual property. ie: A photographer who sells their photos photos through a stock photography clearinghouse and gets paid a royalty whenever someone buys one of his images
- An aerobics instructor who produces a video and sells it at the gyms where she teaches
- A network marketing or direct sales rep's income from her direct customers when they reorder product every month
- A restaurant or retail owner who has grown to the point of hiring a trustworthy manager
Leveraged Income
Leveraged income leverages the work of other people to create income for you. Some examples of leveraged income include:
- A network marketer who receives commission from each sale in their downline
- A eBook you wrote sold by marketers in your affiliate program
- A contractor who makes a profit by work done by sub-contractors
- Taking your business model and franchising it to other entrepreneurs
To read more about online sources of passive income check out my article at Blog Monies.
Other sources of passive income are:
- Pension
- Rental from investment property;
- Often portfolio income is labelled passive income
In order to sit on that beach sipping your mango shake without a care in the world you need to acquire passive income streams. The more the better. Yes, they take time to set up but seriously - Why work to make some other guy rich? Just remember, keep learning and apply these principles over time consistently and your bound to succeed.
Good luck and please comment below as to which passive income streams you have. 
LifeMonies
