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Residual Income

Candlefocus Editor
Residual income is a form of income that continues to be generated without the need for continuous effort or maintenance. It refers to the amount of money that comes in after paying all the costs of capital, and any other variable costs involved in keeping a business running. This form of income is often seen as a desirable source of revenue for entrepreneurs, as it does not require continual input of time, energy, or resources. It can help serve as a financial buffer for businesses, as it is seen as a form of income that can be depended on without fail.

While traditional forms of income rely on the hourly rate of wages or a set salary, residual income relies on investments to generate on an ongoing basis. There are two primary types of residual income: personal and corporate.

Personal residual income is not generated through hourly wages, but rather requires an initial investment of either money or time. This type of income usually refers to earnings from real estate investments, stocks, bonds, royalty payments and other business opportunities. Not only can personal residual income help generate financial stability, it can also be used to supplement other streams of income. Typically, it takes a certain amount of initial investment to start generating passive income, but if maintained properly, this income can last throughout the individual’s life.

In comparison, corporate residual income is the leftover income after all the costs of capital and related costs have been paid for. This seeks to increase corporate value by reducing or eliminating the expenses associated with running the business. For businesses, corporate residual income is a viable option as it can bring additional income on an ongoing basis without requiring any additional effort, input or resources.

Overall, residual income serves as a valuable asset for businesses of all sizes. It brings in a constant stream of income, which can be used to increase the value of the business, provide financial stability, and supplement other streams of income. Residual income can be a great source of dependable income, but to be successful, it requires a certain amount of initial investment and effort.

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