Smith 
Many people have heard about passive income, but what about residual income? Let’s dive into what it is and share some ideas on how you can earn money while you sleep—after you’ve put in some initial effort, of course!
What Is Residual Income?
Residual income is a type of passive income that keeps coming in even after you’ve done the initial work. Once you’ve put in the time or money, the income can continue for many years with little to no effort required.
A great example is book or music royalties. Authors and songwriters spend a lot of time creating their work, but once it hits the market, they can earn income from sales and royalties for years to come.
How To Make Residual Income (For Beginners)
If you’re new to residual income, start by finding something that fits your interests and skills. This might involve creating digital products—like eBooks or online courses—or investing in stocks or rental properties.
The key is to put in the initial effort to create something high-quality that meets a need in the market. Research your market, invest in professional services if needed, and make sure to promote your products effectively. Done right, this can lead to a steady income stream.
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Invest In the Stock Market
Investing in the stock market is a way to create residual income, though it requires upfront investment. You can use robo-advisors like M1 Finance for automated investing or online brokers like Charles Schwab and Robinhood for more hands-on control. Both options can help you earn through dividends and capital gains. -
Real Estate Investing
Real estate can be a long-term path to substantial income. Becoming a landlord involves work and investment upfront but paying off mortgages with rental income can lead to strong residual income over time. Alternatively, consider crowdfunded real estate or Real Estate Investment Trusts (REITs) for a hands-off approach. -
Peer-to-Peer (P2P) Lending
P2P lending platforms like Lending Club connect borrowers with investors. As an investor, you can earn returns through interest on loans you fund. While there’s some risk involved, it can be a good way to diversify your investments. -
Start a Blog
Blogging can generate significant residual income, though it requires substantial upfront effort. Consistently creating content and growing an audience allows you to monetize through ads, affiliate links, and product sales. -
Start a YouTube Channel
A YouTube channel can help you build credibility and earn money through ads as your videos gain views. The key is to produce engaging content and promote it on social media. Once you get the hang of it, this can be a profitable venture. -
Build an App
Even if you’re not tech-savvy, building an app is possible with the help of freelancer platforms like Fiverr or Upwork. A unique and helpful app can generate revenue over time with little ongoing effort. -
Sell Digital Products Online
Selling digital products like online courses, eBooks, or printables on platforms like Gumroad can be a great source of residual income. Once created, these products can continue to sell with minimal ongoing work. -
Build a Niche Website and Earn Affiliate Income
Creating a niche website allows you to earn through affiliate marketing by promoting products relevant to your site’s audience. As your traffic grows, so does the potential for income through these affiliate links. -
Start a Dropshipping Business
Dropshipping involves setting up an online storefront to sell products from third-party suppliers. You earn a commission on each sale, and the supplier handles the inventory and shipping. It’s a popular and scalable way to make money online. -
Rake In the Royalties
Royalties from books, music, and other intellectual property can be a significant source of residual income. Once your work is created and published, you can earn income with little ongoing effort.
How Residual Income Is Taxed
Residual income is taxed based on its source. Dividends might be taxed at a lower rate than regular income, while rental income is taxed as ordinary income but allows for certain deductions. Royalties are also generally taxed as ordinary income. Consulting a tax professional can provide personalized advice.
Bottom Line on Residual Income
Residual income is a dream for many, providing earnings without ongoing effort. By putting in the hard work upfront, you could eventually replace your regular job income. Choose an idea that matches your interests and skills, and start building your residual income today!
