Etini
Valued Contributor
Residual Income and Passive Income seems to so many people to be the same thing but they basically are not. The two kinds of income emphasizes making money with limited and minimal efforts. But there are sharp differences between the two. These are:
1) Growth of The Income Base: Residual income often has potential for growth right from the start while passive income doesn't offer a real significant growth in the capacity of the income unless a conscious effort is made to increase it's capacity.
2) Stability of income potential: Residual income is self repeating and has a higher capacity to be more sustainable. Passive income generally depends on a market to gauge the yield that would come from it.
Example of passive Income is renting out a spare room in your house.
Example of residual income is writing a course and hosting it on platforms like Udemy.
They both require initial efforts to set it up. The book would keep producing money as long as the course remains relevant. It's yield is not static. The income from the room rental is static and only undergoes slight increases within a defined time frame.
Ultimately, one needs the two kinds of income to be financially free.
1) Growth of The Income Base: Residual income often has potential for growth right from the start while passive income doesn't offer a real significant growth in the capacity of the income unless a conscious effort is made to increase it's capacity.
2) Stability of income potential: Residual income is self repeating and has a higher capacity to be more sustainable. Passive income generally depends on a market to gauge the yield that would come from it.
Example of passive Income is renting out a spare room in your house.
Example of residual income is writing a course and hosting it on platforms like Udemy.
They both require initial efforts to set it up. The book would keep producing money as long as the course remains relevant. It's yield is not static. The income from the room rental is static and only undergoes slight increases within a defined time frame.
Ultimately, one needs the two kinds of income to be financially free.