Residual income is really the best Way of Life. It's a steady, reliable stream of income not directly dependent on the hours you work. Successful investors enjoy such freedom. Successful book authors get paid even when they don't write. The checks just keep coming uninterrupted, even when you relax. This is much better than hourly work. Much better that salaried work. 

For those willing to take on the task of managing a property, real estate can be a powerful semi-passive income stream due to the combination of rental and principal value appreciation. But to generate passive income from real estate, you either have to rent out a room in your house, rent out your entire house and rent elsewhere (seems counterproductive), or buy a rental property. It’s important to realize that owning your primary residence means you are neutral the real estate market. Renting means you are short the real estate market, and only after buying two or more properties are you actually long real estate.
Acorns: Acorns is a great way to start investing and building wealth. As it turns out, Acorns will pay you $5 to start investing with them for as little as $1. That’s a 500% return, plus it’s probably time you started investing for your future. They even have features like round-up and found money that allows you to get free money from places you already shop at.
We’ve discussed how to get started building passive income for financial freedom in a previous post. Now I’d like to rank the various passive income streams based on risk, return, and feasibility. The rankings are somewhat subjective, but they are born from my own real life experiences attempting to generate multiple types of passive income sources over the past 16 years.
For those willing to take on the task of managing a property, real estate can be a powerful semi-passive income stream due to the combination of rental and principal value appreciation. But to generate passive income from real estate, you either have to rent out a room in your house, rent out your entire house and rent elsewhere (seems counterproductive), or buy a rental property. It’s important to realize that owning your primary residence means you are neutral the real estate market. Renting means you are short the real estate market, and only after buying two or more properties are you actually long real estate.
Here's another example. If a person owns apartments that are rented out at a profit, they earn money each month without working a specific number of hours. If the owner earns $100/month net income from each apartment, the determining factor is how many apartments they own, not how many hours they work. Therefore, they may own 1 apartment and make $100 net income each month, or they could own 500 apartments and make $50,000 ($100 per apartment) each month.
Another thing, there is nothing like the astounding proud feeling of owning a successful business. This is a feeling that no salary or pay raise can bring. Owning your own successful business will do wonders for your self-esteem and family life. Creating something from nothing will give you a sense of accomplishment that you never thought possible. As many have said before, “…nothing risked, nothing gained.”
As interest rates have been going down over the past 30 years, bond prices have continued to go up. With the 10-year yield (risk free rate) at roughly 2.55%, and the Fed Funds rate at 1.5% (two more 0.25% hikes are expected in 2018), it’s hard to see interest rates declining much further. That said, long term interest rates can stay low for a long time. Just look at Japanese interest rates, which are negative (inflation is higher than nominal interest rate).

The first form of residual income, the leftover cash after bills and expenses are paid, is important when a person is growing their savings account or is seeking a loan or financing. When getting a loan, there must be an adequate amount of residual income available to ensure a person has the money to make the loan payments each month. If there is not adequate residual income, financing or loans will not likely be approved.
As interest rates have been going down over the past 30 years, bond prices have continued to go up. With the 10-year yield (risk free rate) at roughly 2.55%, and the Fed Funds rate at 1.5% (two more 0.25% hikes are expected in 2018), it’s hard to see interest rates declining much further. That said, long term interest rates can stay low for a long time. Just look at Japanese interest rates, which are negative (inflation is higher than nominal interest rate).
Recurring monthly income can be obtained online and once the work is put in, you can continue to reap the benefits for years to come. With a simple website, branding, some decent content marketing and solid SEO, just about anyone can begin down the path of a true entrepreneur and build a foundation they are proud of and willing to share with others.
Most six-figure bloggers will tell you over 80% of their income comes from their email list. This process is that important! Through this means of communication, you can set up an autoresponder series that builds trust and promotes products – your own or affiliate – hands off. You can not only promote your latest blog posts, but also your most popular, most comprehensive and best monetized posts regardless of their age.
When withdrawing money to live on, I don’t care how many stock shares I own or what the dividends are – I care about how much MONEY I’m able to safely withdraw from my total portfolio without running out before I die. A lot of academics have analyzed total market returns based on indices and done Monte Carlo simulations of portfolios with various asset allocations, and have come up with percentages that you can have reasonable statistical confidence of being safe.
This is an important concept in personal finance because banks typically use this calculation to measure the affordability of a loan. In other words, does Jim make enough money to pay his existing bills and an additional loan payment? If Jim’s RI is high, his loan application will have a greater chance of being approved. If his RI is low, he will probably get rejected for the loan immediately.
There are many different methods to valuing a company or its stock. One could opt to use a relative valuation approach, comparing multiples and metrics of a firm in relation to other companies within its industry or sector. Another alternative would be value a firm based upon an absolute estimate, such as implementing discounted cash flow modeling or the dividend discount method, in an attempt to place an intrinsic value to said firm.
Coming from traditional employee positions, we are most familiar with linear income. If you work 40 hours per week, you get paid for 40 hours per week. And if you aren’t working, you aren’t getting paid. With residual income, you may put in a lot of unpaid hours upfront but then reap the rewards for months or years down the road. When done correctly, residual income can generate far more money than what it would if you were exchanging your time for an hourly wage.
The more residual income you can build, the better off you’ll be. In fact, it’s said that the average millionaire has 7 different streams of income. By creating passive income streams that generate money while you sleep, you’ll build wealth faster and diversify the ways you’re able to make money – which helps protect you from the loss of any one individual income stream.
The return on investment of a specific department within a company can be calculated by dividing the departmental net profits by the costs generated by that department. For example, if the sales department generates $500,000 in revenue and carries $400,000 in costs, its net profits are $100,000. The return on investment can be calculated by dividing the $100,000 in departmental profits by the $400,000 in departmental costs, which gives an ROI of 25 percent.
6. Thank you pages: When you sign up for most blogging newsletters these days you may have noticed you are often immediately directed to a thank you page that tells you to check your inbox for a confirmation link. This person has already committed to you and considers you somewhat trustworthy, so it is a great time to offer them something special to take things to the next step – a sale. Maybe you can offer a special discount on one of your paid products or secure a special discount from your favorite affiliate product related to whatever it was they just opted in for. This is often called a “tripwire.” For it to work, the offer should be inexpensive and painless. Whatever you are offering here it should be value-driven instead of a hard sell. You don’t want to run people off before you even get started. With the right tripwire, you can easily justify and offset advertising as well should you choose to run ads to your opt-in freebie at some point.
I just started out with Affiliate Marketing (idea # 8) and it is not as easy as people make out to be. For me, the hardest part so far, is learning Search Engine Optimization (SEO) and driving traffic to my website. I’m only 3 months into it, but I am confident that the site will begin to generate some incom., I have to give it 6-9 months, so we’ll see.
However, the RI-based approach is most appropriate when a firm is not paying dividends or exhibits an unpredictable dividend pattern, and / or when it has negative free cash flow many years out, but is expected to generate positive cash flow at some point in the future. Further, value is recognized earlier under the RI approach, since a large part of the stock's intrinsic value is recognized immediately – current book value per share – and residual income valuations are thus less sensitive to terminal value.[5]
Brian had found a huge need for web design in the restaurant and food truck space. After getting tired of working with client after client, he decided to turn his service-based business into a product-based one. He made his services more standardized and productized. He eliminated all his client work and created templates and products to serve that market instead. And it’s been going great for him.
Who cares, especially when very conservatively, the ultimate passive income includes a six digit or more base lease, plus an estimated additional six digits or more for rate increases and another six digits for more for various smaller and one bigger technology increase at 25 years. All four (base, rate, smaller and mega technology increases) combined, certainly could yield much more depending upon inflation, rate increases and technology increases?
Passive income can also relieve the stress of the traditional product sales scenario. As you earn an active income, you are getting your finances from once source only. In this case, what if that source itself disappears for whatever reason? What will you do? No one will have your back. Besides, putting your financial eggs all in one basket is simply not good business sense. To be successful, you need to have taken control of your own income. Build your own website and you can control your own destiny. You’ll get out exactly what you put in.
Vanguard: Vanguard has a minimum of $50,000 and a fee of 0.3%. Rebalancing is done automatically once every quarter and tax loss harvesting is done on a client-by-client basis. We included Vanguard because clients who invest between $50,000-$500,000 have access to a team of financial advisors. Those with accounts over $500,000 will have a dedicated advisor.

We’ve discussed how to get started building passive income for financial freedom in a previous post. Now I’d like to rank the various passive income streams based on risk, return, and feasibility. The rankings are somewhat subjective, but they are born from my own real life experiences attempting to generate multiple types of passive income sources over the past 16 years.


Accretion/dilution analysis Adjusted present value Associate company Business valuation Conglomerate discount Cost of capital Weighted average Discounted cash flow Economic value added Enterprise value Fairness opinion Financial modeling Free cash flow Free cash flow to equity Market value added Minority interest Modigliani–Miller theorem Net present value Pure play Real options Residual income Stock valuation Sum-of-the-parts analysis Tax shield Terminal value Valuation using multiples
In equity valuation, residual income represents an economic earnings stream and valuation method for estimating the intrinsic value of a company's common stock. The residual income valuation model values a company as the sum of book value and the present value of expected future residual income. Residual income attempts to measure economic profit, which is the profit remaining after the deduction of opportunity costs for all sources of capital.
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