5 Proven Passive and Residual Income Ideas

There are many misconceptions out there as it pertains to creating residual income streams. Again, this is usually because someone with bad intentions is taking advantage of others by selling them a pipe dream. Or, it’s because people don’t have a clear understanding of how residual income works. Here are a few of the most common misconceptions as it pertains to different residual income opportunities. This will help you separate fact from fiction. If you’re ever approached with a specific opportunity, this list will also help you discover red flags.

One of the most common misconceptions as it pertains to passive and residual income is that it’s easy and requires little effort – if any effort at all. This is false. All residual income opportunities will require at least some work upfront in order for it to create income.

This is also false. The most poignant example of this misconception can be found in multi-level marketing companies. While some MLM companies may be a good residual income model, many of them are not.

Similar to the misconception about not having to work, there’s also a misconception about how long it takes to earn residual income. Contrary to what someone may try to sell you, creating residual income is not a get-rich-quick scheme. If someone tries to tell you that you can earn money quickly, they are probably trying to take advantage of you.

If someone cannot clearly explain to how to create residual income with the opportunity they are presenting you with, then it’s probably a sham. Additionally, you’ll always want to find reviews of any residual income opportunity you are presented with. If you can’t find a significant online presence or they’ve been flagged as a scam, then you need to pass.

When you get to our list of best residual income opportunities, you’ll notice that there are many different kinds of ways to make residual income. We want to keep you from getting overwhelmed so we’re addressing the notion of choosing a residual income model before getting into the different opportunities. The model you choose will depend on your lifestyle and personal preference. For example, if you hate real estate, then renting properties in an effort to make residual income may not work for you. Instead, you may want to look at an online residual income business opportunity like blogging. Keep this in mind as you review our list of best residual income ideas.

Below you’ll find our list of best residual income opportunities. Our criteria consists of successful examples from personal experience and proven models. These are also based on residual income opportunities that have the least amount of scandal associated with them For example, although they are considered a residual income model and some people do have success with them, you will not find multi-level marketing companies on the list because people historically lose money on this sort of residual income opportunity. In fact, data shows that 90 percent of MLM participants have left the company within five years. So instead, we’re focusing on tried and true methods with higher chances of success.

Real estate investing is a common residual income business. In basic terms, you buy properties, renovate them if necessary and then rent them out. Those monthly rent checks make up your monthly residual income.
Pros: Real estate has a history of being a solid investment.
Cons: Tenants can be a pain and renovations require a lot of work. Your overhead may also be high and renovations can be costly.
Alternative: Real Estate crowdfunding allows you to invest in real estate and receive residual income without having to actually buy property. Click here to read our guide on the best real estate crowdfunding sites.

There are several ways to earn residual income with a blog. The two most common forms include earning residual income through ad revenue and affiliate sales. With ad revenue, you’d join a network like Google Adsense which then pays you based on how many add impressions and clicks you receive. Affiliate sales refer to recommending other people’s products and then making a commission if someone purchases the product through your link. Pros: Low cost. Cons: You would need a lot of traffic in order for this to succeed. It’s also a slow build so patience is a prerequisite.

Another way to create residual income is to create your own info products. Let’s go back to that consultant example we used earlier to really drive this point home. Let’s say you’re a business consultant who works with small business owners on a one-on-one business. You could scale your business and create streams of passive residual income by creating your own info products. Some examples of info products include publishing books, creating digital courses, selling audio lectures and selling worksheets. The possibilities are really endless here! Pros: If you’re selling online then it’s typically low cost. It’s also easily scalable. Cons: It takes time to create these things. You also need an audience to sell to.

There are several ways to create residual income by investing in different securities in the stock market. For example, you could invest into exchange traded funds which would allow you to hold stock across various companies. Each month you receive dividends which you could either cash out or reinvest back into the ETF. ETFs aren’t the only way to invest in the stock market. You also have bonds, foreign markets, stocks and mutual funds just to name a few. What you decided to invest in depends on your financial goals. Just make sure to consult a professional before making any decisions. Pros: Solid return over time. The U.S. stock market has averaged annual returns of 7 to 8 percent. Cons: You either need a lot of time or a lot of money to really make this work.

Another way to earn residual income is through distributions. What this means is you’ve invested in a company that you don’t actively participate in. Depending on the business, you’ll receive distribution checks quarterly or annually. When you get your check just depends on the corporate decision makers. Pros: This option probably requires the least effort on your part. Cons: You may need a lot of money. Additionally, since it’s more hands off you really need to do your research and trust the company.

Residual income is definitely within reach for anyone who wants to create this sort of wealth in their lives. Don’t let misconceptions and misinformation keep you from trying some of the proven ways of creating residual income.