Do the work once, get paid over and over again. That is what residual passive income is all about. It’s the royalties that authors, song writers, and performers get paid. It’s the continuing income stream to which some financial brokers have access, and it’s more.
Last time (in Part One of Digging into Residual Passive Income), I covered careers (achievable and creative) that provide an opportunity to earn residual income. In today’s post, you will hear about ways to obtain residual income outside of a career.
Invest to earn income and dividends.
This one isn’t quick or easy, I’ve only accomplished it after a lifetime of work and savings. You can have residual income from investments in the market through dividends and interest. If you invest enough, are wise in your investment choices and lucky in the way the market runs, you can make enough from this type of residual passive income to fund retirement.
Invest directly in music royalties.
Guess what, there is a site for that (and probably an app too). You can directly bid on purchase of royalty rights in an auction at the Royalty Exchange. At this writing, the royalties (estimated at around $10K yearly) for the BMI Performance and Universal Mechanical royalties from the mega-hit “Make Up Ya Mind” on the hit TV show Fresh Prince of Bel Air are up for bid, plus you get royalties from other songs too – from Beverly Hills 90210, Melrose Place, All my Children and General Hospital if you win the auction! Performance and mechanical royalties are two of the many types of royalties explained in the How stuff works post mentioned in Part One of this series.
Invest in royalty trusts.
These investment vehicles, according to an article on eHow have the legal right to collect oil and gas reserve royalties.
“A royalty trust includes income from sales of oil and mineral rights, and also the investor’s own business capital. The trusts are used to finance for businesses operating expenses and for their cash flows. The income from royalties, after expenses, is distributed to beneficiary holder, which could be an individual or a partnership of individual investors.”
Invest in gold royalty streamers.
The Motley Fool article A Smarter Way to Invest in Gold: Royalty Streamers describes these as follows:
“Royalty streamers are classified as mining companies, but they are not miners at all. They purchase long-term royalty streams from mining companies at a fixed price. This is essentially a purchase agreement that allows the company to buy a certain amount of the commodity at a fixed price through the life of the mine.”
“Since they aren’t miners themselves and all that they do is hand miners an up-front payment in exchange for a cash flow, streaming companies have low operating costs and high profit margins. Their cash flows, adjusted for prevailing gold and silver prices, are quite predictable. Consequently, they provide compelling investments and are normally quite pricey.”
If you own land, you may have access to residual income streams through leasing programs. For example, if a cell company needs a tower in your area, they may lease your land to put up their tower, resulting in repeat income for years.
If you own land that has oil or natural gas or precious metals under it, you may have access to royalties and lease fees from the companies doing the extraction of that oil, gas or metal. If you think you are in this situation, the Oil Gas Lease site has some bountiful information on the subject, including this article on how royalties are calculated.
Maybe you have land that borders a busy street or highway, another possible leasing opportunity might be to let a billboard be raised on the site.
You bloggers are all familiar with the idea of writing an eBook and selling it – either on your own site, through Kindle or using your own affiliates. This is another way to make residual income.
My son, the web coder, is working with a buddy to build a software app (for the iPhone I think). If they succeed, they may have residual income from multiple companies buying a license to use their platform. They would get residual income every time that license was renewed.
If you crochet or knit, you might create a pattern to make something and sell the pattern. With each sale you would receive residual income.
Why I didn’t include property rentals.
Many would want to include renting out real estate as an example of residual income. I didn’t because rental property really requires consistent attention. You continue to do work on the property over it’s lifetime. It isn’t really a ‘do the work once and get income many times’ activity in my book.
Disclaimer: I am not an investment professional, insurance agent, broker or property manager. Do your research before starting or investing in any of these endeavors!
Do you have residual income? What work did you do to start that income stream?
This post has been written by Marie from FamilyMoneyValues.com. Be sure to visit her site if you’ve enjoyed this post.
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.