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What are residual income investments?There has been a lot of talk lately about residual income investments.It is important that you understand what residual income investments are, and the difference between residual income investments and passive income investments. What is residual income?
Residual income investments are the investments that are made with residual income.Residual income can come from investments; investment income is one of the primary sources of residual income.Thus you have low capital; one particularly attractive residual income investment would be an investment that does not require a large sum of money up front.A long-term investment can yield residual income that can then be reinvested in either the same long-term investment, or another long term investment/ Passive income is different from residual income.Residual income is generated through the efforts made by the investor at one point in time.Passive income is generated by very little or no effort by the investor. In order to understand how both passive income and residual income can be generated by an investment, let's look at real estate investing.Real estate investing can generate both passive income and residual income.If you wish to generate residual income through your real estate investment, then you will purchase a property and then sell it again with owner financing, rather than financing through a commercial lender such as a bank.This means that you will be the one receiving the monthly principal from the buyer along with interest payments.You agree to carry the contract.The monthly payments received are your residual income. In order to generate passive income from real estate investment, an option is to purchase trust deeds.What are trust deeds?Essentially, trust deeds are simply private mortgage loans.You do not actually participate in managing the mortgage or the account; instead, your simply receive money from your initial purchase. What about sales, rather than real estate?Sales can generate residual income by signing up with a sales company that allows you to make money based on the sales made by people who are under you in the company organization.In other words, each member of a sales team receives a commission for each sale made.The head of the sales team makes a small commission for each sale made by members of the team.An example of this type of income is that commission made by heads of summer dish network teams or pest control or alarm system teams. In terms of tax issues, passive income can be generated from business, but cannot be generated from any active participation in the company, cannot be generated from any interest, any dividends, or any capital gains. Residual income investments are any investments that are made with the residual income gained from investments such as real estate. Residual income investments take more time and involvement than passive income investments, and also take longer to really begin to show the benefits.Both residual income investments and passive income investments generate a number of different benefits, such as flexibility and the security of a long-term investment.However, if you want short-term investments that will generate money that can be accessed on short notice, then you should avoid basing all of your investment strategies on residual income investments or passive income investments. |
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