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Passive Income Opportunity vs. Residual Income Opportunity

You've heard about how internet marketing can bring in passive income. Meanwhile, you've heard others say that it is a great way of generating residual income. Does that make passive income and residual income the same? Or do both of these terms signify different things?

Passive Income

Passive income is defined as income that can be generated despite the fact that the person earning it isn't actively involved. In simpler terms, passive income doesn't require that you spend your efforts in order to make it. A very tempting and exciting idea for anyone! All you have to do is make a few business investments, and relax while others work on getting you your profits.

Some examples of passive income include rent from properties, dividends and interests of stocks and bonds, and pensions. However, in the virtual world, passive income can be accumulated differently. For example, you can invest some cash in making your website search engine friendly. This way, you won't have to market your products, and instead rely on search engines to lead potential customers to you.

Pay per Click is also another way of generating passive income. Through PPC, you will pay advertisers to vigorously market what you have to offer. Though you will have to part with a small share of your profits, you will still be able to have just enough to allow you with a semi-luxurious lifestyle. Similarly, setting up your own affiliate program will ensure you of considerable amounts which require very little work on your end.

Residual Income

The concept of residual income contradicts that of passive income. Whereas the latter doesn't involve any work, residual income requires it. By definition, residual income consists of recurring payments which are received after an initial effort had been made. For example, had you written and published a book, you can enjoy the royalties you will get whenever someone uses your material. Essentially, just start working on something and let the profits flow.

Taking the previous examples, if you decide to work on the optimizing your website for search engines, your effort will eventually pay up later on. Affiliate programs are also a good example of residual income. An internet marketer will be paid commissions whenever his articles or websites lead internet shoppers to a retailer's website.

The Verdict

After you had reviewed the definitions of both passive income and residual income, you will definitely deduce that they are completely different. But, the income types are both linked. You see, you can start off with residual income and end up with passive income. Here's an example:

You had put all your efforts into creating software that teaches alphabets to toddlers. Whenever someone downloads the program, you will be getting residual income. However, had you sold that program to a software development company, you will be getting royalties from that company on a regular basis. Thus, you will be earning passive income.

So, Which One's Better?

Well, if you're planning to do everything yourself, both will be a necessity for you. However, which of these is better depends on what you are willing to offer. If you can provide the efforts to make something rather than its finances, residual income will be a better option. On the other hand, if you don't have the time or skills necessary to start something, yet have a healthy bank account, then passive income may seem more feasible.

Whether you're opting for the passive income opportunity or the residual income opportunity, you will be earning a lot of money while working less. And this is due to each process being automated, you hardly need to spend much time or effort at all.

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