The 7 Best Ways to Make Residual Income in 2023
Learn about residual income and how a little hard work now can pay dividends in the future
Achieving residual income is the pinnacle of financial freedom.
Residual income can help you achieve your financial goals. It’s a great way to make money, but it takes time and effort to start. Once you do, however, it can be a great source of passive income.
Check out the best ways to make residual income on this list.
There are many ways to make residual income, and besides the ones on this list, you can also check out affiliate income, online income, or starting a small business.
What is Residual Income?
Residual income is defined as an ongoing income that comes in even when you are not actively working. This can come from things such as investments, real estate, and business ownership. It is the opposite of active income, which is money earned through things like a job or side hustle.
Residual Income and Net Income
Residual income refers to the net income that comes from doing a lot of initial work and then generating money for you with no additional work. There is usually a lot of time involved, additional resources, and even additional debt to eventually make a personal residual income.
Most residual income calculations involve operating income minus the minimum required return times the operating assets. That equals your net income and residual income.
Residual Income and Discretionary Income
Residual income is the same as discretionary income. Discretionary income is just money you can spend at your discretion.
The standard way that people build personal finance is they trade time for money. This means that they are actively working to generate personal finance.
Making a personal residual income is when you create a positive net income after doing upfront work and then sit back and collect the net income.
Instead of working harder, residual income lets you work smarter!
What’s the Difference Between Passive Income and Residual Income?
Many people think that residual income and passive income are the same things. To some extent, passive income and residual income are the same things. People think the two terms are related mainly because most people make a residual income while earning passively.
Passive income is money earned with little to no effort. Residual income keeps coming in even when you’re not working.
There are two key differences between passive and residual income:
- Passive income requires some level of ongoing work, such as writing a book or managing a blog.
- Residual income doesn’t require any ongoing work once it’s been set up.
The main idea is that residual income accounts for the expenses created by passive income streams.
Most residual income calculations involve operating income minus the minimum required return times the operating assets. That equals your residual income.
How Can You Make Residual Income to Improve Your Personal Finance?
There are many ways to make residual income. Some require more work than others, but all have the potential to provide you with extra money each month.
There are three main types of residual income: corporate finance, personal residual income, and online residual income.
Corporate Finance
Corporate finance residual income is how profit is calculated in the world of corporate finance. Companies calculate their equity valuation by subtracting the opportunity costs of their capital from the annual operating profit. Once this is done, you can use residual income to estimate the intrinsic value of its shares. The company can then be valued based on the sum of its book value and the current value of its anticipated future residuals.
Personal Residual Income
You can make personal financial residual income to improve your credit. Banks and other financial institutions use your residual income finances to determine whether to give you a loan. If you make enough net income from your residual income, you are in good financial standing for a loan.
Online Residual Income
If you have an online business, your residual income will come from the profit you make selling your products and services after you have invested equity capital, time, and effort to get it up and running. With many online businesses, there is usually very little work to be done to keep generating income. This is why residual income is often referred to as passive income.
The 7 Best Ways to Make Residual Income
In this blog post, we will explore seven of the best ways to make residual income in 2022: starting a dropshipping store, renting your property, creating an app, becoming an Instagram influencer, selling digital products on Etsy, publishing a book, and crowdfunding real estate.
What Are the Best Ways to Make Residual Income?
One of the best things you can do for your own personal finance or corporate finance situation is to find a way to generate residual income.
Starting a Dropshipping Store
Dropshipping is a business model in which you sell products without carrying any inventory. When a customer orders in your store, the supplier ships the product directly to the customer’s door using a fulfillment service. Dropshipping can be a great way to make a residual income because you can start an online business with little upfront investment.
Before starting a dropshipping store, there are several things to consider, such as finding suppliers, how much equity capital you have, building a website, the present value of your store versus the future value, and marketing your store. You’ll also need to decide what type of products you want to sell.
You can use directories like Oberlo or contact manufacturers directly to find suppliers. Once you have suppliers lined up, you’ll need to create a website and design it in a way that is appealing to customers. After your store is up and running, you’ll need to invest time and money into marketing it so people can find it.
If run the right way, you can start earning residual income and making a net operating profit within months. However, you may incur monthly debts until you build a following.
Pros:
- Low startup cost
- No need to carry inventory
- It can be run from anywhere in the world
Cons:
- Requires time and effort to get started
- Competition is high and, therefore, tough to make an economic profit
- Requires ongoing marketing efforts
Best Websites to Check Out:
- Shopify
- Oberlo
- Modalyst
- Doba
- Inventory Source
- Wholesale Central
- DSers-AliExpress Dropshipping
- Spocket
- SaleHoo
- Wholesale2b
Renting Your Property
If you own a property, such as a house, condo, or apartment, renting it out each month could be one of the best residual income ideas.
Renting your property is a great way to make residual income without doing any work.
There are a few things to consider before renting your property, such as finding tenants, setting the rent price, and dealing with repairs. You’ll also need to ensure your property is up to code and meets all safety standards.
To find tenants, you can use websites like Zillow or Craigslist. Once you have tenants lined up, you’ll need to set a competitive rent price. And finally, you’ll need to be prepared to deal with any repairs that come up during the tenancy.
Pros:
- Getting rental income is a great way to earn money, get rid of monthly debts and empty, unused space
- Not a lot of other expenses
- It can be a long-term investment
- Potentially high return on investment
Cons:
- Requires an upfront investment
- Dealing with tenants can be time-consuming and stressful
- Unexpected repairs can be costly
Best Websites to Check Out:
Creating an App
If you have a great idea for an app, you can create it and earn residual income from the sales. This is a great way to make money if you have coding skills or know someone who does.
To create an app, you’ll need to develop an idea, design it, build it, and launch it. You’ll also need to market your app so people can find it. And finally, you’ll need to manage any updates and customer support issues.
Many app ideas are available, including games, personal finance, etc. Once you create the app, no other work is involved, and your net income after expenses will be your residual income as long as people keep buying your app.
Pros:
- It can be a long-term investment
- Potentially high return on investment
- Residual income can continue for a long time
Cons:
- Requires a possibly large equity capital upfront investment
- Coding skills or access to someone with coding skills is required
- Requires ongoing marketing efforts
Best Websites to Check Out:
Becoming an Instagram Influencer
If you love taking pictures and are active on social media, you can become an Instagram influencer and make residual income from sponsored posts. This is a great way to make residual income if you have a large following.
Before becoming an Instagram influencer, there are a few things to consider, such as building your following, working with brands, and managing your time. You’ll also need to be prepared to deal with negative comments and haters.
To build your following, you’ll need to post high-quality content regularly and engage with other users. Once you have a large enough following, you can start working with brands that will pay you to post about their products.
And finally, you’ll need to manage your time to balance being an influencer with your other commitments.
Pros:
- It can be fun and creative
- Flexible hours
- You can make a lot of money if you get enough followers
Cons:
- Can be time-consuming
- Requires a large following
- Brands can be picky about who they work with
- Takes a long time to build a following
Best Websites to Check Out:
Selling Digital Products on Etsy
If you’re creative and crafty, you can sell digital products on Etsy and make residual income. This is a great way to make money if you have design skills or know someone who does.
To sell digital products on Etsy, you’ll need to create an account, design your products, and list them for sale. You’ll also need to market your products so people can find them.
And finally, you’ll need to manage any customer support issues.
Pros:
- It can be fun and creative
- Flexible hours, remote working,
- Once you’ve created digital files, you can sell multiple copies of it
- You can make a good net profit because there are low monthly expenses
- A great way of building wealth and obtaining financial freedom
Cons:
- Can be time-consuming
- Requires design skills or access to someone with design skills
Best Websites to Check Out:
Publishing a Book
You can publish a book and earn residual income from the sales of your book if you have great writing skills. This is a great way to make money if you have writing skills or know someone who does.
You’ll need to write, edit, design the cover, and format the interior to publish a book. You’ll also need to find a printer and distribute your book. And finally, you’ll need to market your book so people can find it.
Pros:
- A great way to make residual income
- It can be a long-term investment
- Potentially high return on investment
Cons:
- Requires an upfront investment and possibly healthy personal finance to tide you over until your book sells
- Writing skills or access to someone with writing skills is required
- Requires ongoing marketing efforts
Best Websites to Check Out:
- Grammarly
- Hemingway Editor
- Reedsy
- Wattpad
- Writer’s Digest
- The Write Practice
- Medium
- FictionPress
- Amazon eBook Selling
Crowdfunding Real Estate
If you have money to invest, you can crowdfund real estate and make residual income from the rent. This is a great way to make money if you have extra cash and are willing to take on some risk. Real estate, in general, is a great way to make residual income.
To crowdfund real estate, you’ll need to find a platform, choose a property, and invest your money. You’ll also need to manage the property and deal with any repairs that come up. And finally, you’ll need to find tenants and collect rent.
Pros:
- It can be a fantastic source of residual income
- It can be a long-term investment
- Potentially high return on investment
- Has great intrinsic value and could provide a solid economic profit
Cons:
- Requires an upfront investment
- Real estate investing requires solid initial financial health
Best Websites to Check Out:
Wrap Up
There you have it!
These are seven of the best ways to make residual income in 2023.
While everyone loves the idea of making residual income, not everyone has the fortitude to do the work required to get it up and running. The initial work can be daunting but worth it in the end.
However, if you have the drive to do the work to earn residual income and just need some ideas to get going, this list should help you. Take one of these ideas, make some good financial decisions, and with a little effort, you can make residual income.
So what are you waiting for? Start today!
