The Tom Richardson.com

The Magic of Residual Income

There are basically two types of income, linear income and residual income.

First let's compare linear income to residual income.

So what exactly is residual income? In this article we will define what it is, why you want it, and how to earn it.

What is linear income?

Linear income is how most people earn their income by trading time for money. Imagine a tap that only flows when it is open, when it is turned off the flow immediatley stops.

Working by the hour at a specific hourly wage, no work no pay
Earning a commission on each sale such as a car salesperson then having to find another customer and sell another car

What is residual income?

Residual income is earned from a system that continues to generate income even after you have stopped working on it.

The royalties paid to an author on each book sale
The royalties paid to actors everytime someone watches one of their movies
The royalties paid to musicians everytime someone buys their music
The commission paid to a salesperson everytime a customer's monthly subscription renews

Why do you want residual income?

Imagine if you had a business where you make a sale once and your customer loved your product so much that they put the product on a monthly autoship. Imagine you're getting paid every month for many years from the effort of that one sale.

Imagine working part time for 3 to 4 years and building up a business that paid you $10,000 a month or more whether you are working or not. That is what residual income can do for you.

Now that you have an understanding of the difference between linear and residual income which one would you prefer?