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Residual Income Or Passive Income which is better

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Posted 4th February 2014 at 09:12 AM by crtr2012

Passive Income vs Residual Income




Some people say Passive Income while others say residual Income. So which is it? If you Google residual income it has this long definition that most people will fail to understand nor finish reading. When I was younger people would speak of Passive Income. Usually this would involve a business of some sort and you would need to hire people to work for you. The story went like this..



You go home watch the money come in while others do the work. That was the definition handed down to me. That made a lot of cents. But when I got in my 20's and I went to this home business multi-level marketing event, I notice how everyone stop talking about passive income and started using the phrase Residual Income. To me it sounded the same.




In my mind what I heard was

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Passive Income - You don't have to be there to make the money. Just watch it come in from your business.

Residual Income - You don't have to be there to make money it just comes in.


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So are they the same? Is passive and residual income secretly the same? In my opinion the answer to this is no. Here is why.




Let's say you post ads on the Internet for products to be bought and you get a commission when someone buys the product. After you post the ad, and more than one person makes a purchase you get a commission. This is Passive Income. You do not have to post a new ad to make a sale. In fact you were probably sitting on the beach enjoying the sunshine with sand between your toes when the second sale was made.


Residual Income is similar to passive income but a little bit different. Going back to our story, lets say you posted and Ad for someone to start a membership to a book club. Every month this person would pay their membership fee and a commission check is sent to you. Now you are getting paid multiple times on a single purchase. Residual Income allows you to get paid many times. Again you are still sitting on the beach when this customer pays their monthly book club membership fee. Therefore residual income is also passive income.



That is confusing. Sounds like double talk to me.

The great thing about residual income is it can grow extremely fast and last longer, than passive income. Passive income is still great but you cannot rely on others to take action that allow you to benefit. Where residual income can give you predictable payments over a longer period of time based on someone else taking action multiple times on one sale.




Wouldn't it be great to get a residual Income based on someone's mortgage? The banks would never allow it. But that would be the ultimate residual income to have. Getting paid every month for the next 30 years would be the way to go. I guess that is why the Banks strive to go after residual income.




Hmmmmmm if the banks and the wealthy are doing this, why is it that most people are not putting their effort towards earning a residual income. A residual income is the goal most wealthy people strive for. Its also the secret to getting financially free. Its passive and yet can be long term. If you guys want to connect with me sometime to discuss residual income more be sure be sure to check me out here


PS. I DON'T DISCRIMATE - PASSIVE INCOME OR RESIDUAL INCOME WE CAN ALL GET ALONG.
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