Examples of Residual Income - Understanding Residual IncomeExamples of Residual Income - Understanding Residual Income We are all familiar with the concept of a linear income where people trade their time for money, i.e. earn a wage or salary. The downfall of this type of income is that if you stop working, you stop earning money. Residual or passive income on the other hand is the complete opposite and is essentially the receipt of regular payments for very minimal active involvement and effort. Understanding the power of residual income and knowing how to build such an income stream, will ultimately enable you to achieve financial independence and allow you to enjoy greater time freedom and choice. Not surprisingly Warren Buffet, the 2nd richest man in the world, grasped this concept from a very early age. By the time he was 15 he was reaping income from 3 pinball machines. All he had to do was leave the pinball machines in different shops and then every month collect the cash inserted in them. This is a perfect example of residual income as Buffett generated a consistent cash flow each month for very little effort. Other common examples of residual income are probably popping into your head by now; royalties from a patent, rent from property and the interest and dividend income received from owning shares and bonds. However there are also other powerful mediums that you may not have considered. MLM: Join a multi level marketing company Multi level marketing companies market their products and services directly to consumers and potential distributors through relationship referrals and word of moth marketing. Residual income is generated by the ongoing sales to loyal customers in your network marketing organization. Your customer base and 'downline' will continue to consume the product/service because (1) they like the product and/or (2) to remain eligible to receive compensation benefits from the company themselves Affiliate marketing An affiliate is simply someone who refers/promotes products &/or services and is paid a commission on any sales resulting from that referral. As an affiliate all you need to do is the marketing, because the company has done all the research development etc to engineer their product. You earn residual income in a similar fashion to network marketing. Although not as conventional as shares, bonds and property, MLM and affiliate marketing are definitely appealing as the start up costs are generally quite low and might even be free with respect to affiliating marketing. Such low price points opens up the opportunity for those who are not in position to invest large amounts of money to begin developing a residual income stream. If at this stage if you are wondering, "What do I look for in an MLM or affiliate program" It doesn't actually matter which MLM company or affiliate program that you join. Provided they are legitimate, most companies have good products and compensation plans. However whether you are successful in your choice of investment depends on how well you can market your opportunity to the right people. Without a doubt, these days the quickest, fastest and cheapest way to promote your opportunity to global numbers is through the internet. Learning the right internet marketing skills will be a sure fire way to set you on the path to success. Of course I'm not saying that building a residual income is easy. It certainly isn't, it requires hard work, determination and drive. However once you set it up, you can sit back and watch your wealth grow. With all the spare time you have on your hands you can further increase your net worth by setting up multiple residual income streams. There's nothing wrong with earning a linear income, however ask yourself whether you'd rather be at the mercy of a cold-hearted corporation (as we have witnessed amidst the GFC) or whether you'd rather dictate your life and how you live it? Marilee Pham is a senior coach working in a powerful team looking to make a positive impact in peoples lives. To learn more about internet marketing, enter a supportive relationship and see the possibilities that exist for you visit this link Article Source: http://EzineArticles.com/?expert=Marilee_Pham
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