What's The Difference Between Active Income and Passive or Residual Income? – (2024)

Successful entrepreneurs should always be lookingfor ways to create passive/residual income so I thought I would explain the difference between Active Income and Passive or Residual Income.

Passive/Residual Income is doing the work once andgetting paid for it over and over again.

Active Income is getting paid for the work you continue to perform.

I have found that many people view Passive Income and Residual Income as the same and in many instances they are. In fact, I have seen articles that said another name for passive income is residual income.

Just as a reference, investopedia refers to residual income as “the amount of income that an individual has after all personal debts, including the mortgage, have been paid.”

I have not found that definition used by many others so, for the purpose of this article, I will be using passive/residual income aspect.

There are many ways to create passive/residual income andif you are on the internet to make money, passive/residual incomeshould be your number one goal.

With passive/residual income not only do you receive continuous money fromyour work (for instance, if I never touch this websiteagain, it will continue to make money for me) butyou also are receiving your freedom.

Now, let’s distinguish the difference Passive/Residual Income andActive Income.

ACTIVE INCOME

Active Income, according to investopedia, “it is incomefor which services have been performed. This includes wages,tips, salaries, commissions and income from businesses inwhich there is material participation.”

It is any type of income stream that is generated inexchange for your time or effort.The moment you stopputting in time or effort, the income comes to a halt.

Active income comes as a direct result of our efforts.

This is when we work for one hour and get paid a certain amount for that hour of work. This can be seen in wages, salaries, and self-employed service providers like lawyers or doctors.

You haveto consistently work hard to earn an active income.

The bestexample of active income is having a typical job. If you havea job, you work a certain number of hours at the workplace andin exchange for a paycheck for that number of hours spent at theworkplace.

If you no longer work for that job you immediatelylose that income stream.

PASSIVE/RESIDUAL INCOME

Passive/Residual Income is an income received on a regular basis,with little effort required to maintain it.

With passive/residual income, once you’ve invested your time andefforts and found ways to create passive income, your job isdone.

When this is done online, the income generated by theautomated systems that you’ve set up will produce a consistentpassive/residual income for you without any real-time presence.

You will continue to receive income for the rest of your life,even while you eat, sleep and travel the world.

“If it’s not residual income then don’t do it, because
it takes you to slavery, not to freedom.”– T. Harv Eker

While there are many ways to create passive income, I amonly going to address two… one online and one traditional.

Creating Passive/Residual Income Online

Affiliate Marketing is one of the simplest ways to createpassive/residual income. Itgives you the ability to earn a commissionby promoting the product of others.

Affiliate Marketing is one of the best ways to get startedonline because you don’t have to worry about creating yourown product, sales letter, or dealing with customer support.

Your only job is getting people to your website, or possibly acompany website depending on where the information aboutthe product or service is located.

It’s really simple with our 3-step system because we:

1. Blog Daily
2. Tell Others
3. Get Paid

Creating Passive/Residual Income Offline.

Investing in real estate is anotherway to create passive income.

Many people agree that real estate investing is one ofthe most common ways that people become wealthy.

When you purchase real estate such as houses, apartment buildings,office space, retail space, or whatever, you earn incomerenting out this property.

You will also make money from the appreciation, assumingthat real estate prices rise while you own the property.

The goal when renting a property, is to create a positivecashflow, meaning that your monthly rents exceeds yourmortgages, upkeep, property taxes, and any other expensesand still leave you with some money left over.

As you paydown the mortgages you will gradually own more equity inthe property which enables you to borrow against this equityto fund more investments, or you can sell it and cash out.

I wanted to add real estate investments as one of theways to create passive income but I would also like topoint out that as with most start up businesses, cash isalmost needed on the front-end and with real estate it canbe a lot of cash depending on the equity you have in otherproperty (such as your home) or your line of credit.

With all of that said, if you want to get started in yourown businessand establish ways to create passive/residual income,affiliate marketing is a good choice.

In fact, you can click here to get started right now.

You will have theproducts to promote and earn a substantial commission.

You will have your blog set up within a matter of minutes so you can start promoting these products.

We have everything you need to help get you startedwithout having to create or host your own website.

You do not have tocreate your own products.

Everything is already done for you.

Go ahead and get started here and be on your way to creating passive/residual income. It’s the only thing you need.

DISCOVER HOW TO WORK SMARTER. NOT HARDER!

CLICK HERE NOW and let’s get you started building a “passive residual income” for freedom from financial stress and worry while enjoying life with health, happiness and success in life and take your business to a whole new level.