Core Differences Between Residual Income and Passive Income.

[Etini]

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.

 

[Mika]

There is a thin line that divides passive income and residual income, some income can be passive income and residual income in the same time. By definition, passive income is something that you generate without a lot of ongoing work, for instance, renting your property is passive income. Residual income is an income that you generate after working on it for a long time. If you receive a pension, it is a residual income, likewise, if you receive your insured money, it is residual income.

 

[btaliat]

These two terms are wrongly used. I do wonder why some people will see working on a paid to post websites as passive income. In passive income, you don't need to work before you earn. In fact, you earn while you sleep. Those that are earning in dividens or bloggers can be seeing as passive earners; another example will be crypto traders.

Residual unlike passive, you work for it and the money may come even after you have stopped working. Examples are royalty that may be given to artiste for their creative contents. I stand to be corrected.