Passive Income, Residual Income, What Income?

Traditionally you work you get paid, you get paid for how much you work. If you are receiving passive income, you are getting paid without needing to work for it.

I love passive income mainly because I am a lazy git. I prefer to make money whilst doing nothing. Not that I like doing nothing all day, but if the average person works say seven hours per day for £7 per hour. they will be getting paid £49 minus taxes. Wouldn’t it be great if you were still earning money whilst doing nothing. Even £1 per hour would mean an extra £24 per day. You wouldn’t complain if it was for doing nothing would you?

Passive income is best described as money you make whilst you sleep. You do nothing to keep getting it, you are passively receiving it.

Residual income is best described as money you make whilst you sleep. You do nothing to keep getting it, you are passively recieving it.

Hmm, so whats the difference between the two? lets check on wikpedia:
Passive income:

An income stream falling into this category is one where money is received usually on a regular basis, without continuing effort. This does not mean no effort at all; most passive income streams require great effort to start with.

Residual income:

Residual Income (also called Passive Income) is income earned on an ongoing basis for effort done once in the past.

So it seems they are the same, just different ways to describe the same thing. Now we know what it is, how do we get passsive income? Most types of passive income do need to be started with a large amount of effort. But once up and running should produce passive income for you.

The traditional types of passive income:

1. Income from rental property
2. Appreciation from property
3. Royalties from books / songs / software
4. Interest paid from bank deposits
5. Dividends paid from shares / stocks

These all seem to require large ammounts of investment of time and / or money.

On the internet we have many more sources of passive income which are low cost to setup but most requires much time. The internet is like property (real estate) if you have a good popular site, you can make much passive income from it. You can rent ad space on your site and your site will appreciate in value over time so you will be able to sell it at a profit.