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Why Residual Income
by Daegan Smith
Published on this site: January 9th, 2006 - See
more articles from this month
Why it’s better to have residual income and not solely
depend on paycheck income? Residual income by definition is
income earned by an individual that are generally coming from
his assets at hand. It allows a person not to worry anymore
spending 8 hours a day in the office working as his personal
assets are now earning money for him.
The current practice for people in earning a living is by
getting a job and work either on an hour or annual basis.
They have salaries or paychecks that they receive usually
on a monthly basis and this allows them to buy the things
they want, travel to places they want to travel or simply
buy anything that their paychecks allows them to buy but the
happy story ends where the money has been spent already and
people have to continuously report back for work and continue
on with their current jobs again and again. Their paychecks
do arrive again and again but so does the effort for them
to continue working for that hard-earned money.
People can aspire for higher salaries by getting promoted
in their current companies or they can opt to aspire for higher
paying salaries with other companies. They can get a higher
education, maybe an MBA degree and be assigned to higher management
positions like a supervisor or a manager in a company. Their salaries become higher and their lifestyles
can become higher too. Still, at the end of the day, they
still have to report for work the next day, get more worries
and pressure from work as they still have to continuously
work their way on a daily basis in order for them continuously
enjoy the paychecks they are receiving that will allow them
enjoy and sustain the lifestyle that they want to enjoy.
This is technically the rat race and it’s a cycle in
most people’s lives that goes on and on. The cycle of
coming to work doesn’t end. This is because people will
always have obligations to pay the bills, to put the food
on the table and to simply enjoy a good weekend doesn’t end too.
So how will it be possible for anybody to get out of the rat
race of working 8 hours a day? How will it be possible to
simply just have the money that can sustain the lifestyle
one would like to have and go on with life with the expectations
of still being able to receive continuous income in the bank?
The answer basically lies with being able to create wealth
for oneself not solely on the basis of becoming an employee
and receive a paycheck continuously but simply by being able
to have income coming in the bank without necessarily working
for it on an hourly basis.
This is what we call residual income. Residual income, also
what we call passive income generates income for a person
thru his assets. These assets can be in a form of real-estate
properties that returns rental income. Shares of stock in
a blue chip company that consistently returns back dividends
is also a way to earn residual income. This is also true for
mutual fund shares that consistently return earnings to the
fund owners from the funds’ investments.
The process of switching from a lifestyle funded by earned
income from a job to a lifestyle funded by residual income
generated from a person’s established assets will be
the challenge for anybody who’s currently tied up in
the rat race cycle. Being able to save enough money or capitalize
on a person’s talents and skills in order to bring in
income consistently without him returning back to work for
good is the process towards financial independence.
People who have capitalized on their talents and skills and
have settled down towards financial independence are those
who have maximized their residual income potential. Songwriters
for example may only need to write just a few songs that will
make it big on the MTV or Billboard charts that will consistently sell out record sales for a lifetime will have residual income
by earning royalties for every song they wrote that is played
in the radio or sold in record stores.
Entrepreneurs or successful businessmen that started their
business and capitalized on their business ideas that have
taken off towards success can expect consistent profits from
their businesses. They’ll just need to hire effective
managers and people that will continue to run their businesses
for them and they can just expect their businesses to grow
and receive profits from their business operations.
Why residual income is better than all sources of income?
Its because it allows anybody who has initially capitalized
on his efforts to plant his seeds on business ideas, artistic
talents, or investment strategies regardless of his family
background, education, age, or even career background. Residual
income allows financial stability and freedom without the
need to be back at the office the next working day again and
simply enjoy the free time to devote it on their love ones
or on the things that they’ve always wanted to do in
life.
Daegan Smith is the leader of the fastest growing team
of successful home business enterpernuers on the net. Find
out how we're creating financial freedom all across the globe
and how to get in on the action free
http://www.comlev.net
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