Have you ever thought of what will happen to you when you are no longer earning salary as a worker or when you are no longer active( owing to lack of physical strength or age) in managing the business that brings food to your table? You want to know? It is either you live on meagre pension, depend on family and live in penury or you live on your residual income, cruise around the world on luxury yacht and live happily with your family.
If you wish to live a comfortable live after years of active work, you have to invest on residual income during your active years before you are retired from your paid work or before you get too old to manage and administer your own business.
What is residual income?
Passive or residual income is the regular earning from a business or investment that requires a little effort to manage.
The owner of the business does not need to involve fully in the activities of the business, yet he will be earning income.
Now, I want to discuss three ways you can generate residual income through your investment or intellectual skill.
1) Property rental: If you buy or build office building, homes, mall, shops, event centre, etc. or you have a piece of land for commercial purpose (renting it out) you will earn income for renting out the properties. It is a continuous process that has low risk and requires a little effort from you. The income you earn from property rental is known as Rent.
(Photo credit: jmzmanagement.com)
Also, if you have natural resources on your land, you may allow oil or mining company to drill on it and they pay you royalties for working on your land. In Nigeria, mobile network operators erect their network mast on suitable site to create coverage and they pay handsomely to the owner of the location they find suitable for the mast erection.
Equipment/heavy-duty machines, automobile, Furniture, etc. are other types of properties you could rent out to earn residual income.
2) Intellectual property: This is the legal right that protects your creative ideas or innovation from being used by other people. The legal right you have on a book you wrote or CD you produced is known as Copyright, while the right you have on the invention you made is referred to as Patent. There is government regulatory bodies that administer these rights, it is your duty to find out in your locality about how to protect your intellectual idea.
If you have legal protection (copyright/patent) on your written books, produced CD, or invented gadget, you may transfer the right to a company which will agree to giving you percentage payment on each copy of the material sold in the future. The income you earn on transferring the right of your intellectual property is known as Royalty.
Note: You may also write, publish and market your book by yourself; same principle applies to your invention.
3) Website: There are many ways you can make residual income from your website, but there are two major ways I consider the best in making passive income from your website.
Firstly, selling of products (physical or e-product) online. You may sell your own goods like computers, home appliances and other physical products on your site, and you may also market other people/company’s product on your website to earn a commission. E-products like software, online logo & design, e-book, photo, music(downloadable products) are also product you could market and sell on your website to earn passive income.
Secondly, creating original, informative and educative content in the area of your interest and posting it on your website (Blogging) is another source that can generate residual income for you.
The content in your post will attract people and this will generate traffic to your website. When the traffic on your website is high and you display Google Adsense or Bing Ads on your website to promote other people’s product, you could be paid for writing about your passion. Yes, you can earn passive income for allowing advertizement placed on your website.
Blogging requires your effort though, but you may hire people to write content for your post.
Some online services can also generate passive income for you. Example is Freelance jobs, directory service and bookings like: Hotel reservation, e-ticketing, service booking, etc. You could be earning commission according to the percentage of customers that booked through your website.
(Photo credit: guardian.co.uk)
On a last note, I am signing out with one of my favourite quotes:
“We can’t say we are rich until when our bones are lazy and weak; and residual income continues to grow”
If you have any question on how to invest on ventures that will earn you residual income or how to start a new business, please do not hesitate to fill the form below. Better still, follow me on Twitter or like my Facebook page.
He is an entrepreneur, writer, barber and interior designer. Abiodun discusses and writes about entrepreneurship, leadership, business and economy.
He has interest in luxury, art, fashion, travel and technology.
Abiodun is passionate about sport, particularly football (soccer) and boxing.