What Is Residual Income? 12 Simple Ideas to Build It Now

residual income - image of couple on vacation

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Residual income is money that is earned on a recurring basis, typically as the result of a single original action.

Unlike an hourly wage, which is based solely on the number of hours worked, residual income streams provide ongoing payments through an initial investment of time, money, or both. Once the initial investment, product, or service is made, the income earned is generally passive and continuous in nature.

In essence, building residual income allows you to do something once and get paid for it over and over again. Pretty sweet, right — especially when we are in the middle of a pandemic?

Creating residual income streams is one of the best investments you can make. They provide an enormous boost to your net worth and are essential for building real long-term wealth. Heck, I’ve built over a dozen of my own. If this sounds like a good idea to you, here are twelve simple ways to make residual income right away!

1) Invest in Stocks and Bonds

Image of woman in kayak

Don’t let the term “investing” scare you. One of the best ways to make passive income is to start investing beyond your retirement accounts. If you’re a newbie, investing may seem complicated, but these days it’s easier than ever to get started.

There are dozens of companies that can help you start investing, and several of them do most of the work for you! Many platforms allow you to decide how much you want to invest each month and select the amount of risk you’re comfortable with. Then, the program picks the investment mix for you.

If you’d rather be more hands on, there are plenty of options for that too. Most online brokerage accounts allow you to purchase individual stocks, bonds, and ETFs. Some, like M1 Finance, offer a bit of both!

To top it off, you can get started investing for practically nothing. From $0 commissions to $10 bonds, here are a few of our favorite spots to start investing right away:

  • M1 Finance – If you’re looking for relatively quick returns, investing in dividend stocks may do the trick. M1 Finance is effectively a hybrid between a DIY platform and a robo advisor. So, you can pick the individual stocks or ETFs you prefer, then the system automates the process for you. Plus, with $0 commissions, trading stocks with M1 is ridiculously cheap! Get started here | M1 Finance review
  • Worthy Bonds – With Worthy Bonds, you’ll earn a 5% return on bonds that cost just $10 apiece. (Yes, you read that right.) The company then uses that money to help fund small businesses. Invest as much or as little as you like and cash out at any time. It’s that easy! Get started here | Worthy Bonds review
  • Personal Capital – Track your investments and cash flow for FREE with Personal Capital. From the dashboard, you can track your savings, investments, spending, and more. We also love their free retirement calculator and investment fee analyzer, both of which come in super handy. They also provide advisory services for a fee. Get started here | Personal Capital review

2) Become a Landlord

Residual income streams are a great way to make extra money and build wealth. With some up front work, you can build passive income that may last for years to come. Try these 11 residual income ideas to begin boosting your net worth today!

I love investing in real estate. In fact, outside of our original work-sponsored retirement accounts, real estate was the very first investment Holly and I ever made.

Personally, I love our real estate investments for two main reasons. First, they provide a steady source of residual income that’s hard to beat. No matter what the markets do, there will always be renters needing a place to live.

By becoming landlords, we have a (relatively) reliable source of income that we can use to finance our lifestyle, pay for our kids’ college, and fund our retirement. Although we have had a few bad renters, we still believe being a landlord is one of the easiest ways to make money.

Additionally, the thing I love about real estate investing is that the property is tangible. It isn’t just paper money or a number in some bank’s database. It is real, and – for me – buildings and land will always hold some sort of value.

At this time, we own two single-family units and have plans to buy one or two more. That’s how much we believe in real estate.

Roofstock is a platform that makes it easy to buy, sell, and manage single-family rental homes across the United States. If you’re looking to invest in more than one property, you’ll also find a number of property portfolios available. The properties are located in more than 70 U.S. markets, and the platform can also help match you to a property manager.

Learn more about Roofstock here >>

3) Invest in Real Estate Without Becoming a Landlord

Residual income streams are a great way to make extra money and build wealth. With some up-front work, you can build passive income that may last for years to come. Try these 12 residual income ideas to begin boosting your net worth today!

Want to invest in real estate but don’t want to pony up for a down payment or deal with maintenance and tenants?

No problem.

You can still gain exposure to real estate investing without owning or managing properties directly. In fact, you don’t even need to be a millionaire to do it. Here are three options:

  • Fundrise – With a minimum investment of just $500, investors of all types can make crowdfunded real estate investments through Fundrise. This means you get the benefits of being a landlord without having to deal with owning or managing the properties yourself. Get started here | Fundrise review
  • Groundfloor – This option helps you earn residual income through investing in real estate loans rather than the property itself. By helping fund the loans, you’ll earn a percentage of the interest rate charged to the borrower. Most loans are short-term, generally offering 12 to 18 month terms. With a minimum investment of just $10, this is a super cheap way to get started in real estate. Get started here
  • PeerStreet – Here is another option that allows you to invest in real estate debt. With Peerstreet, however, you must be an accredited investor to join the platform. This makes it a bit more difficult for middle income investors to get started. Learn more here

4) Invest in Retirement Accounts

Residual income streams are a great way to make extra money and build wealth. With some up front work, you can build passive income that may last for years to come. Try these 11 residual income ideas to begin boosting your net worth today!

If retirement is a goal of yours (and who doesn’t want to retire someday?!?), it’s important to start investing now. In fact, funding your retirement accounts should be at the top of your list. While these accounts won’t help your immediate situation, by stashing cash now, the residual income they create should help propel you through your golden years.

To make the most of your retirement funds, be sure to invest at least enough to meet your company match. That is free money that can potentially have a big impact on your future nest egg. Additionally, experts generally suggest you save at least 10% to 15% of your annual income in tax-advantaged retirement accounts (like a 401(k), IRA, etc.).

Just because you have a 401(k) through work, however, doesn’t mean you can just shove money in and forget about it. Yes, your employer may offer the program, but they are not likely to be actively managing it. What’s worse, you may be stuck in a program with ridiculously high fees and not know it.

Remember, Personal Capital offers a free tool to analyze your investment fees. (Yep, the analysis is FREE.) They’ll comb through your investments, uncover any unnecessary fees, and show you how much those fees cost you over time. From there, you can decide whether to continue dumping all of your retirement money into your 401(k) or whether you should open a low-cost IRA in addition to your work-sponsored account.

For those who wish to open an IRA but still want their investments to be managed automatically, a robo advisor like Betterment may be a good fit. After completing an initial questionnaire, this program will automatically invest your money based on things like your risk tolerance and time horizon. They’ll even rebalance your portfolio when necessary – all automatically, of course!

5) High-Yield Savings Accounts

residual income - image of putting money in piggy bank

In my opinion, savings accounts get a bad rap. Sure, you don’t want to stick all of your money into a savings account and hope it grows. That’s a terrible investment strategy that’s akin to sticking your money under your mattress. With that said, putting some money into a savings account still has its place.

Keeping money in a savings account allows you to earmark money for specific goals. It keeps it separate from the money you use to pay bills, and you still have easy access to it when you need it.

Savings accounts are a particularly good place to save for short-term financial goals. I’m talking about things like saving for a new car, putting money away for vacation, or using it for an emergency fund.

Interest rates at most traditional banks are still embarrassingly low, however, the best online savings accounts offer considerably higher rates. Plus, you’ll still get the FDIC protections you’d find at a brick and mortar bank.

Currently, our favorite option is the CIT Bank Savings Connect account. This account combines the power of a high-yield savings account and and eChecking account. It currently earns up to 4.65% APY when you make $200 in deposits into the accounts each month. Learn more here.

6) Vacation Rentals and RV Rentals

Residual income streams are a great way to make extra money and build wealth. With some up front work, you can build passive income that may last for years to come. Try these 11 residual income ideas to begin boosting your net worth today!

If you live in a large city or area that attracts tourists, renting out a room in your house or apartment is a great option for building residual income. It’s even better if you have an entire apartment or house you can make available. To top it off, it’s an almost completely passive income idea.

So, who is the type of person who would rent out your space? I’m glad you asked!

We love traveling and rent out spaces all the time. In fact, before the pandemic hit, we traveled about once a month to places all around the globe. As frequent travelers, we generally prefer staying in a comfortable house or apartment – especially if we’re traveling with the kids.

Keep in mind, you may also be able to rent out your apartment, house, or room to travelers who are in town for an event. For instance, rather than staying in a stuffy hotel, business travelers may wish to rent an apartment for a few nights. Concert goers and sports fans may also look for places to stay near the venue. The options are almost endless.

Airbnb is the perfect spot to list your space. Here, you’ll find thousands of guests searching for places just like yours. (We’ve booked through here several times.) Of course, you’ll earn a fee for each completed stay. Bonuses and rewards are also available and can really build up over time.

VRBO is another potential income source. While there is certainly some overlap, you’ll find another whole group of guests searching for vacation rentals here. It never hurts to list your property on both!

If you own an RV, you can also make money renting it out. Outdoorsy is the largest peer-to-peer RV rental marketplace in the world. When you’re not using it, why not make some extra cash to help pay for that big beast?

7) Start a Blog

Residual income streams are a great way to make extra money and build wealth. With some up front work, you can build passive income that may last for years to come. Try these 11 residual income ideas to begin boosting your net worth today!

Blogging is a great way to work at home and build residual income. In fact, Holly and I have been able to make enough money from blogging that it’s now our full-time careers.

Starting a blog is super cheap and fairly easy. For less than $10 a month in expenses, you can easily get your blog up and running. I mean, how many hobbies do you have that cost that little AND give you the chance to make money on the side?

For help getting started, check out our 6-step guide to starting a blog!

Now, don’t get me wrong. Blogging may be a good way to make residual income, but that doesn’t mean it’s easy. It’s not particularly passive either.

To create a successful blog, one that actually makes money, it takes time and a lot of hard work. However, once you learn how to make real money, blogging can provide some significant side income.

So, how do blogs make money?

Bloggers generally make money either through products/services that they sell or through advertising revenue. When it comes to advertising, bloggers typically get paid through direct ads they place on their website (think banner ads) or through affiliate marketing.

Affiliate marketing is a form of advertising in which a blogger promotes a product or service. The blogger then gets paid when a reader clicks on a link or banner and completes an action. (For instance, the reader purchases a product.) So, once you’ve written a piece, you can continue to earn residual income from that piece over and over again.

Related Article: 5 Reasons Blogging Is a Great Business Idea

8) Create an Online Course

Are you an expert in a field or have a specialized knowledge that others might want? Do you have certain skills you could teach that would benefit others? Consider creating an online course.

Online courses are all the rage right now, and they are a fantastic way to make residual income. Simply create the course once, put it online, and sell it for years to come!

Speaking from experience, I know this works.

My wife Holly is an incredible freelance writer who makes over $200K a year from writing alone. After years of answering questions individually, she decided to create a course called Earn More Writing.

In the course, she offers over 6 hours of writing tips and tricks. This provides value to students, helps keep her from answering the same questions repeatedly, and provides our family with an excellent stream of residual income.

Click here to register for our FREE writing workshop!

Now, creating an online course might sound overwhelming, but it doesn’t have to be. First, decide if you’d like to use written materials, video, or both. Outline a few modules, and get started!

To build your course, consider using an online platform like Teachable. It provides everything you need to get started, and it’s super simple to use. (We use it for our own course!) Pricing is relatively cheap, and there is even an option to host your course for free. Learn more about Teachable here.

9) Write a Book

Residual income streams are a great way to make extra money and build wealth. With some up front work, you can build passive income that may last for years to come. Try these 11 residual income ideas to begin boosting your net worth today!

Writing a book (or e-book) is a classic example of how to make residual income. Simply write the book, find somewhere to publish it, and sell it for eternity!

While getting your book published used to be a major obstacle, these days, would-be authors have several options.

If you’ve got a book you’re itching to write, you can still go with the traditional publishing route. (We published our first book using a traditional publisher.) Whether your book is fiction or non-fiction, a publisher can help get your book into print and onto shelves in both online and traditional book stores. This is still a good route, although it may take more work and be more expensive than some other options.

Amazon is also a good option if you choose to self-publish. They can help format your book so it is ready to sell. Plus, you can always list your book on their site once it is ready.

10) Own a Bank (Kind Of)

Residual income streams are a great way to make extra money and build wealth. With some up front work, you can build passive income that may last for years to come. Try these 11 residual income ideas to begin boosting your net worth today!

I’ve always wanted to own a bank, and that is what makes peer-to-peer lending one of my favorite residual income ideas.

Banks are money-making machines. It’s what they do. But, I obviously don’t have enough money to start a bank on my own.

With peer-to-peer lending, I can get exposure to the loan market by providing cash for personal and business loans. Better yet, I can spread my cash around, funding dozens of loans at the same time.

Lending Club is a popular P2P lending website that is a great place to start. Take your interest income as cash on the side, or invest your money into an IRA account. With only $1,000 needed to get started, the choice is yours!

11) Open an Online Store

Residual income streams are a great way to make extra money and build wealth. With some up front work, you can build passive income that may last for years to come. Try these 11 residual income ideas to begin boosting your net worth today!

Selling your own products through an online store is a wonderful way to make extra income. If your products are digital or only need to be created once, all the better.

Shopify makes it easy to open your online shop and start making some residual income. They have hundreds of design themes for you to choose from, plus you can even use your own custom domain name. Their intuitive process allows you to focus on creating your products, not designing a storefront.

12) Build an App

Residual income streams are a great way to make extra money and build wealth. With some up front work, you can build passive income that may last for years to come. Try these 11 residual income ideas to begin boosting your net worth today!

From laptop computers to mobile phones, apps are everywhere these days. Why not cash in and earn some residual income by making your own?

If you’ve got the skills, building an app that could potentially make you a boatload in passive income. Simply build the app, list it in either the Google Play or Apple App Store (or both), and let the residual income start rolling in.

Have an idea for an app but don’t have the tech skills to do it yourself? Hire an app developer to make it for you. Sure, it may cost you money on the front end, but you could be pulling in residual income for years to come.

Have you tried any of these residual income ideas? What are your favorites? Let us know in the comments below!

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  1. All of these are great ideas! I have yet to dip my toes into the book writing and real estate income ideas, but I hope to get to both of them within the next few years. Starting a blog is always a great thing!

    1. We love real estate! Our properties are some of the best investments we’ve ever made.

  2. THANK YOU! THIS is the sort of post that inspired me to follow Club Thrifty in the first place (not the travel/credit card rewards/etc. posts… although I understand their purpose).

    Keep ’em coming, Holly and Greg. You have a lot of followers who need your tips and advice about being thrifty more than “frugal travel.”

    I’m reading this post over and over and making notes!

  3. Real estate investing is definitely on our to-do list. I’ve wanted to be the “rent lady” forever, lol!

  4. Blogging is definitely a great way to earn additional income! So is monetizing a hobby you’re talented at. Cooking, photography, anything works. Even singing (a friend of mine managed to earn some extra cash by starting a band and booking a gig from time to time. It’s not much, but it doesn’t feel like work 🙂 )

  5. You can sell stuff online.
    Gumroad is one way to do so, and it’s pretty neat. You can create digital books and courses to sell to your amazing followers online.This is a fantastic residual income idea, as it allows you to create content once and sell it – pretty much forever.

  6. Brenda Sandoval says:

    My boyfriend and I are beginning to get into RE. We have dipped ourselves in investing in shares through etf’s. It’s a great way to begin. I would like to, however, have my own personal business, as I have a crafty side to me. I just need to find business partners to collab with.

    Great site, guys, and more so, congratulations on financial freedom!

    1. Thanks so much Brenda! I agree, starting with ETF’s is a good way to get into real estate, especially if you don’t want to deal with the hassles of being a landlord. We have 2 properties ourselves but plan to put some money into Fundrise this summer.

  7. I’m feeling inspired! I’ve been a PT for 19 years and I feel I have so much experience to offer but have been so intimated by starting a blog. I also subscribed to Michelle’s website but wasn’t sure it was for real. Is it for real? After reading this I feel like it’s time to take the plunge, I need to start a blog, I have so many ideas and even course ideas. I want to get away from the paperwork that plagues our healthcare system but not leave the field so the blog just might be the answer. I’ve been a landlord for 15 years now, great investment for sure, renters paid for the down payment of our house and should hopefully help pay for our kids college. I’d love to have one more! Thank you for the inspiration, wish me luck with my blogging!

  8. Very inspiring. Few places you can sell things online and get some money. Make a virtual business.

  9. A nice side hustle to get some extra bucks is always a must. Something to fall back on.

  10. Constance Leach says:

    I was recently appointed to chair a committee for our church (nationwide).
    Committee: Ways N Means
    Focus: TO look at ways to generate funds (on-going) and partnerships to off set our organization.
    I like the “Build Your App” concept. Can you email me more about it.

  11. Thank you so much! You have given me hope. I was recently approached by someone wanting me to signup to be an “employee” of their organization. To do this I would need to pay $34.95 and doing this would help me obtain residule income. I would then need to recruit others to go to meetings so they too could become”employees” or tell them about my website created by the company. And whatever they purchased I would get my cut from that. Is this a usual thing?!

  12. Yna Isabelle Flores says:

    Hi Greg. Awesome blog you’ve got here, I truly love it! I’m actually a freelancer and I got it through a freelance hiring site! I wanted to extend my sources and now I’m searching how. Since I’m an independent worker, passive income is one of my concerns. Then I saw this post of yours and figured “wow, maybe i really should start a youtube channel and put good content in it!” Like I can co-relate it to my freelancing career. Thanks for this Greg, keep it up and you rock!

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