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 Why Residual Income

An introduction to an informative and factual blog post to be titled "Why Residual Income".

The idea of residual income was popularized in the early 1900s by Chester Arthur Clement, Garfield's Secretary of the Interior. Presented by Clement as a sustainable alternative to slow growth rates and limited opportunity during the Great Depression, residual income is still a hugely popular concept in modern society. The premise is that each time an individual invests their money into a project or fundraiser, they'll receive ongoing payments long after the initial investment has been made. This type of investment can come from purchases like stocks or land sales, basically anything which generates cash flows periodically over a long period of time.

The concept of residual income is not necessarily a new one in the history of capitalism. Back in the early days of capitalism, when companies were often controlled by a single person or a small group, they were responsible for all expenses and revenues. As long as they could manage to generate enough revenues to cover their expenses, the business would continue to grow and expand. There was no need for investors or managers outside the organization to invest in new projects or sales; everything was covered by the original revenue stream from existing sources. It's only recently that we've started needing additional funding sources outside the initial structure of our businesses; not through selling stock but through sales of revenue streams generated by those businesses after their initial investment has been made.

The best way to explain residual income is by using a simple example. Let's say you own a small candy shop, and the business does fairly well. You've got loyal customers, steady cash flow, and there are no outside investment sources for the moment. On top of that, you're also able to cover all your expenses adequately, so you have little reason to expand your business outside of your city.

However, as time goes on and you begin making more money through sales at your candy store, you decide that it would be beneficial to expand after all. So, you decide to purchase a van for delivering candy to new locations. Not only are you able to cover your initial expenses on the candy-delivery van, but it's also generating enough revenue that you're able to make more than enough money to cover your expenses and reduce the loan on the van every month.

You realize that not only is it profitable for you at this point, but it's also contributing positively outside of your shop with its additional sales. You've invested in expanding out into a new service by purchasing the candy-delivery vehicle and that investment is producing returns long after its initial costs are paid for. As time goes by, just about everything in life has an opportunity cost. In order to take advantage of that opportunity, a decision has to be made; the extra revenue and sales are going to have to come from something, and that something is a lot more work!

Take this as an example if you will. Let's say after getting your van up and running, you realize that your candy sales are so profitable that rather than reinvesting in your own business, you start buying out neighboring candy stores. You realize that by doing so, you'll be able to double down on any profits generated in the transaction.

On one hand, this is great because all of the profits from those businesses will be shared with other owners at a later date. But on the other hand, if you want to get a profit from those sales, you'll have to keep the business up and running. That means producing top-notch products, throwing out of the old ones that are past their expiration dates, managing employees effectively and efficiently and making inventory purchases on time. If you don't do all these things, not only will you not earn a profit from your sale, but you'll also be damaging your own personal brand as well. It's all about how you go about handling the residual income; it's all about choosing the best way to reinvest that capital into a true business investment rather than just another expansion of your original product line.

It's not always easy to recognize the differences between investing in a new revenue stream and simply expanding your operations. It gets even more complicated when there are several stakeholders involved or you're working with larger amounts of capital. The key is to stay true to your original business plan and make sure that you have a long-term strategy in place for your overall growth. Residual income is definitely an effective marketing strategy, but it has to be taken a step further and turned into something truly sustainable.

If you'd like more information about taking advantage of residual income, check out this video:

http://www.youtube.com/watch?v=hortJWGtSx0

A common misconception is that residual income can be generated all the time. While a business can generate profits every so often, it's very important to recognize that profits aren't always the best thing to reinvest in something new. Sometimes it's best to prioritize growth and development rather than leave your business in a state of inertia or stagnation. A solid short-term and long-term business strategy should always be followed at all times, with no exceptions.

The main difference between the two concepts of residual income is that a profit generated from reselling existing service or product will eventually decrease over time as the original principle behind the resell is lost. A residual income, on the other hand, can always be generated so long as a company generates a profit.

Residual income is investment income that comes from cash flow that continues to be generated after the work has been done.

Residual income is earned by most individuals in the world and it's used to expand the wealth of an individual or business. It's a tool that can be used to secure one's financial future and life style.

Another way to generate residual income from your business or your products is by using affiliate marketing or network marketing programs. Companies such as Amazon.com, and other networks create marketing opportunities for you by allowing you to create a page on their website. This page is then connected to other people's pages or optimized knowledge sites or even shopping sites. You are generating revenue when the visitor clicks on your own content or buy a product from any of the other people in your network. All of the extra traffic and sales create residual income streams for you.

The harder you work, the more money there is to be made in anything, including residual income. As an example, "Doing-it-yourself TV repair" is a great idea if you can do it and know how. Otherwise, you'll find yourself stuck doing it all by yourself and not making very much money. The key is to work hard and learn from your mistakes.

The residual income is created by the way an individual or business uses money in relation to their existing net worth in the financial market in order to increase their net worth or wealth over a period of time.

Conclusion

"In real estate investing, residual income is the income received as the result of an investment that normally would not continue to generate such income."

Residual income is beneficial to a person's financial status, because it has been proven to provide a high level of productivity. Residual income is also beneficial in the sense that it creates more business opportunities and provides an opportunity for individuals to expand their business into new territories, further diversify and grow their business, and create new revenue streams for their business.

Residual Income can be seen as the long term type of investment, because it offers you many benefits such as making you more money over a longer period of time compared with short-term investments.