ABC International has invested $1 million in the assets assigned to its Idaho subsidiary. As an investment center, the facility is judged based on its return on invested funds. The subsidiary must meet an annual return on investment target of 12%. In its most recent accounting period, Idaho has generated net income of $180,000. The return can be measured in two ways:
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.
I truly believe generating $10,000 a year online can be done by anybody who is willing to dedicate at least two years to their online endeavors. Here is a snapshot of what a real blogger makes through his website and because of his website. Roughly $150,000 a year is semi-passive income followed by another $186,000 a year in active income found through his site. Check out my guide on how to start your own blog here.
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.
You can’t start charging right off the bat without your audience knowing anything about the value you offer (though you could still indirectly earn money from them with the right ads). “The best way to go in terms of a long-term passive income business [is] delivering value and information for free, and therefore establishing expertise, knowledge and trust with your audience,” says Flynn.
Large corporations often use a higher rate than the risk-free interest rate when calculating the residual value of individual departments or an entire firm. They often called this rate the required rate of return or minimum acceptable rate of return. There are various ways of calculating such a rate, but the main reason it is almost always higher than the rates offered by certificates of deposit is the higher risk involved in a business. After all, investing money in even the safest corporation involves some risk of never again seeing part or all of your money again, whereas a bank deposit is government guaranteed and virtually fail-proof. Therefore, businesses consider themselves to be adding economic value only if they can surpass a higher benchmark than the risk-free interest rate offered by banks.
P2P lending started in San Francisco with Lending Club in mid-2000. The idea of peer-to-peer lending is to disintermediate banks and help denied borrowers get loans at potentially lower rates compared to the rates of larger financial institutions. What was once a very nascent industry has now grown into a multi-billion dollar business with full regulation.

Do you know the importance of “Residual income”? Let this sink in for a moment or two; The average millionaire has at last three streams of income and I can guarantee one of them is residual income. But, what’s the big deal? Well, this is capitalism we are talking about. It only really matters if you’re perhaps an entrepreneur and pondering the thoughts of truly making it big. Even if you’re simply trying to make a few extra bucks online, monthly recurring (residual) income is definitely the way to go. Check it out!
My esteemed marketing colleagues initially balked at the idea of creating products that generate royalties, so I can understand how creating something from nothing might be daunting for those who aren’t even in creative roles. However, realize there is this enormous world out there of photographers, bloggers, artists, and podcasters who are making a passive income thanks to the Internet.
Residual income is the best model for money generation. Once you master and build up one avenue, you can devote your time and money into another avenue. Eventually you start reaping the benefits of multiple residual income avenues. Enabling you to have complete financial and time freedom. I recommend to all people to build these types of asset models as they can greatly improve their life.
I live in NYC where I never thought buying rental property would be possible, but am looking into buying rental property in the Midwest where it cash flows and have someone manage it for me (turnkey real estate investing I guess some would call it). I agree with what Mike said about leverage and tax advantages, but I’m still a newbie to real estate investing so I can’t so how it will go. I have a very small amount in P2P…I’m at around 6.3% It’s okay but I don’t know how liquid it is and it still is relatively new…I’d prefer investing in the stock market.
5. Resource pages: Regardless of your niche, your readers are likely interested in the products and services you use to do whatever it is you are trying to teach them to do. Let’s say you share amateur photography tips. Your readers probably want to know what kind of camera and lenses you use, your preferred editing software, where you learn new skills, products you have created, and more.
I’ve built several businesses since 2008 using one or more of these models. I’ve been featured in magazines and articles across the globe, and since I started my journey I’ve generated over $5M in earnings from these businesses. All of my income and expenses for those businesses dating back to October 2008 have been tracked publicly on SPI.com. You can see 10 years of income reports here.
However, until we get another reset in valuations (I’m calculating a 40% to 50% correction is justified ), I’ve moved largely to the sidelines. Beginning in July 2013, I began slowly reducing equity exposure and am now sitting firm at 40% with the balance in various forms of 5 yr cd’s and short duration bonds. This is down from over 60% when I ramped up to take advantage of the March 2009 lows.
The residual income approach offers both positives and negatives when compared to the more often used dividend discount and DCF methods. On the plus side, residual income models make use of data readily available from a firm's financial statements and can be used well with firms who do not pay dividends or do not generate positive free cash flow. Most importantly, as we discussed earlier, residual income models look at the economic profitability of a firm rather than just its accounting profitability. The biggest drawback of the residual income method is the fact that it relies so heavily on forward-looking estimates of a firm's financial statements, leaving forecasts vulnerable to psychological biases or historic misrepresentation of a firms financial statements.
Well written piece, but I question the core premise. Why the fascination with maximizing “income” (passive or otherwise). Shouldn’t the goal simply be to maximize long-term after tax growth of your entire portfolio? If this takes the form of dividend paying stocks, so be it. But what if small caps are poised to outperform? What if you want to take Buffet’s or Bogle’s advice and just buy a broad market index like the S&P 500, (no matter what the dividend because you’ll just have it automatically reinvested to avoid the transaction fees).
Companies use the return on investment, or ROI, ratio as a method to measure the rate of return of a company's capital investments. ROI gives companies a means to compare the effectiveness and profitability of any number of investments. Residual income measures the net income an investment earns beyond the lowest return on its operational assets. Each of these measurements enables company management to determine the profit potential of investments in capital improvement, proposed projects or potential acquisitions.
Well written piece, but I question the core premise. Why the fascination with maximizing “income” (passive or otherwise). Shouldn’t the goal simply be to maximize long-term after tax growth of your entire portfolio? If this takes the form of dividend paying stocks, so be it. But what if small caps are poised to outperform? What if you want to take Buffet’s or Bogle’s advice and just buy a broad market index like the S&P 500, (no matter what the dividend because you’ll just have it automatically reinvested to avoid the transaction fees).
More cheerleader rah rah programmed nonsense. Again, no statistical evidence to prove this is true, no statistical evidence to prove the “education” from MLM has any value whatsoever (spoiler alert it has no value as it is just brainwashing propaganda), and it has been repeatedly found that your effort in MLM does not reflect your level of success as it is a near mathematical certainty that you will fail.

If you’re worried about launching a new product, and think you might need some feedback to make it really good, Flynn recommends “pre-selling” an idea — for instance, offering a limited number of spots or seats into, say, a course you create and giving the test group specialized attention so you can see how to improve the content. Once it’s revised (or, if it’s software, once all the bugs are removed), you could open it up to your whole audience.
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).
Wouldn’t it be nice to earn money while not working? That money is called residual, or recurring, income. It's what can happen after you put a lot of time, effort and sometimes money into a job to continue to get paid for the work months or years after it's done. (Salary jobs are part of linear income. This income is directly related to the number of hours you work. If you work 40 hours, you get paid for 40 hours of work.) Once you set up your business to earn residual income, you continue to make money while doing other things – maybe even starting a new business to generate more residual income!
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.
The reason I consider dividends artificial and believe they don’t matter is because you can just as easily reinvest your dividends. If a stock is worth $100/share, I don’t care if it issues a $1/share dividend or if the share price instead increases to $101/share – either way, I have the same amount of money, because there’s no difference to my net worth whether I take the dividend or sell part of a stock.
One of the best things about blogging is the ability to earn around the clock. We all long for the day when we can stop trading our time for money. This is truly when the glass ceiling is broken. If you are exchanging hours for income, you are eventually going to run out of hours. When you start generating residual income, you can still earn money even when you aren’t actively working.
Whether you take a “distribution” (aka free-cash-flow) in the form of a dividend, interest payment, capital gain, maturing ladder of a CD, etc, you are still taking the same amount of cash out of your portfolio. Don’t fall for the trap of sub optimizing your overall portfolio’s performance because your chasing some unimportant trait called “income”.
Start an affiliate marketing website: This passive income model works for individuals who already own a bog or website. Here, your business goal is to contact companies and offer to tout their products and services, usually for a fee or a commission, based on the number of page views you get. Studies show that more people spend time online and less watching TV or reading the newspaper. Take advantage of that leverage and earn income from the tens of thousands of companies who want to reach an audience - maybe your audience. Either reach out to companies directly or go through a site like ClickBank, which offers affiliate marketing opportunities.

P2P lending started in San Francisco with Lending Club in mid-2000. The idea of peer-to-peer lending is to disintermediate banks and help denied borrowers get loans at potentially lower rates compared to the rates of larger financial institutions. What was once a very nascent industry has now grown into a multi-billion dollar business with full regulation.
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.
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