Josh and Joshette's this post is a special post. The reason why is because today is the six year anniversary of me getting let go from my job at a fortune 500 company. But back then I thought everything was going to be alright because I was building "residual income". Why did I put residual income in quotations, read on to find out.
What is Residual Income? You may know it by another name, Passive Income. For those of you who still don't really know what it is, it's a form of income that is constantly generated without any input of the user. Now that I've explained it like that, a light bulb just went off in your head. You've seen Youtube ads or videos talking about the power of generating money while you sleep. Sounds good right but maybe to good to be true. That's what we are about to find out.
The easiest way to create residual income is with money. How can you use money to create residual income? You can purchase stocks that offer dividends. According to Urban Dictionary, dividend is defined as payment that companies make to owners of their stock. In normal terms companies pay you to own their stocks, they can pay monthly, quarterly, semi annually or annually. Not all companies offer dividends and if they do it’s usually only a small percentage. So in other words to make a livable income through dividends is to have hundreds of thousands of dollars in these types of stock. Let’s say you do have that much in stocks do you truly have residual income? Nope because the businesses you invested in could go under aka out of business. The chances are low for bigger companies but there is always a chance, which means you can not truly have residual income through stocks.
Another way to use money to build residual income with money is through real estate. When I say real estate I’m not talking about owning your own house. You need to have your properties working for you, basically you need to have a tenant. If you own a single family house you can make decent money but only if you have your mortgage fully paid off. To make real money in real estate you need to look into commercial real estate. No I’m not talking about skyscrapers and office buildings there are other forms of commercial real estate. Any apartment complex that has over eight units is considered commercial real estate. Even with a mortgage if you have two or more apartment complexes you can make livable income. So is this a the way to a true passive income? Nope because if you don’t have any tenants that means you have no income.
The final way to make residual income that has been proven throughout the ages is to create. This requires almost no money just some hard thinking. You can invent a product or you can make a movie or even an app, look at how much flappy birds made. In my case I wrote a book, which means whenever someone buys my book I get paid. This is how many celebrities make money, trough royalties. You make money every single time some one views your content or downloads your app. Sounds like the perfect setup for residual income. That is true but there is a famous saying that says no one product lasts forever. Look at the beeper or the palm pilot, they were great products but they are no longer around. Same with songs and movies, eventually people won’t be consuming your content as much. You will still have income just not as much. So it isn’t a real residual income because eventually the money will dry up. That’s why your favorite author, singer and or actor is constantly producing new content.
If you made it this far you probably realized an ongoing theme. There is no such thing as residual income that will pay you for the rest of your life. Don’t get me wrong, I love passive income but everyone portrays it as some amazing secret that will pay you forever. It can pay you for many years like an annuity but as you read, it is not guaranteed. Why did I take two days out of my life to write this post? I wanted to share my knowledge from going to classes and seminars to hear the secret to “Residual Income”. There is no secret to make money you have to work hard and provide something of value. Even if you own a Mc Donalds if no one comes in you will not make money. Or if one day all of your employees quit you have no income. So if anyone offers you a way to make passive income that will pay you and your family for the rest of your life; Be Wary!