What's The Difference Between Active Income and Passive or Residual Income?

Successful entrepreneurs should always be looking for ways to create passive/residual income so I thought I would explain the difference between Active Income and Passive or Residual Income.

 

Passive/Residual Income is doing the work once and getting paid for it over and over again.

Active Income is getting paid for the work you continue to perform.

I have found that many people view Passive Income and Residual Income as the same and in many instances they are.  In fact, I have seen articles that said another name for passive income is residual income.

Just as a reference, investopedia refers to residual income as “the amount of income that an individual has after all personal debts, including the mortgage, have been paid.” 

I have not found that definition used by many others so, for the purpose of this article,  I will be using passive/residual income aspect. 

There are many ways to create passive/residual income and if you are on the internet to make money, passive/residual income should be your number one goal.

With passive/residual income not only do you receive continuous money from your work (for instance, if I never touch this website again, it will continue to make money for me) but you also are receiving your freedom.

 

Now, let’s distinguish the difference Passive/Residual Income and Active Income.

 

 ACTIVE INCOME

 

Active Income, according to investopedia, “it is income for which services have been performed. This includes wages,tips, salaries, commissions and income from businesses in which there is material participation.”

It is any type of income stream that is generated in exchange for your time or effort.  The moment you stop putting in time or effort, the income comes to a halt.  

Active income comes as a direct result of our efforts.

This is when we work for one hour and get paid a certain amount for that hour of work. This can be seen in wages, salaries, and self-employed service providers like lawyers or doctors.

You have to consistently work hard to earn an active income.  

The best example of active income is having a typical job.  If you have a job, you work a certain number of hours at the workplace and in exchange for a paycheck for that number of hours spent at the workplace.

If you no longer work for that job you immediately lose that income stream.

 

What's The Difference Between Active Income and Passive or Residual Income?

 

PASSIVE/RESIDUAL INCOME

 

Passive/Residual Income is an income received on a regular basis, with little effort required to maintain it.

With passive/residual income, once you’ve invested your time and efforts and found ways  to create passive income, your job is done.  

When this is done online, the income generated by the automated systems that you’ve set up will produce a consistent passive/residual income for you without any real-time presence.  

You will continue to receive income for the rest of your life, even while you eat, sleep and travel the world.

 

         “If it’s not residual income then don’t do it, because
      it takes you to slavery, not to freedom.” – T. Harv Eker

 

While there are many ways to create passive income, I am only going to address two… one online and one traditional.

 

 Creating Passive/Residual Income Online

 

Affiliate Marketing is one of the simplest ways to create passive/residual income.  It gives you the ability to earn a commission by promoting the product of others.

 Affiliate Marketing is one of the best ways to get started online because you don’t have to worry about creating your own product, sales letter, or dealing with customer support.  

Your only job is getting people to your website, or possibly a company website depending on where the information about the product or service is located.

It’s really simple with our 3-step system because we:

1.  Blog Daily
2.  Tell Others
3.  Get Paid

 

Viral Blogging System

 

Creating Passive/Residual Income Offline. 

 

Investing in real estate is another way to create passive income.

 

Many people agree that real estate investing is one of the most common ways that people become wealthy.

 

When you purchase real estate such as houses, apartment buildings,office space, retail space, or whatever, you earn income renting out this property.

 

You will also make money from the appreciation, assuming that real estate prices rise while you own the property.

 

The goal when renting a property, is to create a positive cashflow, meaning that your monthly rents exceeds your mortgages, upkeep, property taxes, and any other expenses and still leave you with some money left over.

 

As you pay down the mortgages you will gradually own more equity in the property which enables you to borrow against this equity to fund more investments, or you can sell it and cash out.

 

Real Estate Investment

 

I wanted to add real estate investments as one of the ways to create passive income but I would also like to point out that as with most start up businesses, cash is almost needed on the front-end and with real estate it can be a lot of cash depending on the equity you have in other property (such as your home) or your line of credit.

 

With all of that said, if you want to get started in your own business and establish ways to create passive/residual income, affiliate marketing is a good choice.

 

In fact, you can click here to get started right now.

 

You will have the products to promote and earn a substantial commission.

You will have your blog set up within a matter of minutes so you can start promoting these products.  

We have everything you need to  help get you started without having to create or host your own website. 

You do not have to create your own products.

Everything is already done for you.

 

Go ahead and get started here and be on your way to creating passive/residual income.  It’s the only thing you need.

 

DISCOVER HOW TO WORK SMARTER. NOT HARDER!

 

CLICK HERE NOW and let’s get you started building a “passive residual income” for freedom from financial stress and worry while enjoying life with health, happiness and success in life and take your business to a whole new level.

4 Replies to “What's The Difference Between Active Income and Passive or Residual Income?”

  1. This is a very good post explaining the difference between active and passive income, there are so many ways to get passive income these days, especially the way you recommend, it doesn’t make sense NOT to do it . thanks for sharing..

    1. Thanks Keith. Glad you enjoyed the post. I agree…it doesn’t make sense not to go for the passive income. So many people are use to the “paycheck” and that prevents them from trying anything else. Thanks for your comments.

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