What is Residual Income?

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Residual income is the income earned through assets. It is also known as passive income since you need not be actively engaged in activities while you earn some income. Once you have set up income-generating assets by making an initial investment, you can continue to earn income regularly with no efforts.

Thus, you are not required to be present at the time of income generation in case of residual income as the income accrues itself once the initial investment is done. Some of the examples of residual income include royalty, rental income, dividend, interest, and so on.