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Updated October 15, 2019 3:06 PM PT

Residual Income

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Make money and get paid even after the upfront work is done. Learn how residual (or passive) income works. Here are 10 good investment ideas to build it.

People often think of residual, or passive income, as "making money while you sleep." But it's not quite that easy. Every method requires some effort and time before (and even after) the money starts rolling in.

To start, you'll need to figure out how much work you want to put in.

Less Work

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Here's a list of great ways to make residual income with almost no effort at all.

High-Yield Savings Accounts

Many savings accounts at traditional banks offer less than 0.10% interest. But online savings accounts offer higher interest rates—which can equal out to over 20 times more accumulated interest per year.

Get Started
CIT Bank, Discover, and HSBC are just a few of the companies that offer online accounts with high interest rates.

  • CIT requires a minimum deposit of $100 as well as a deposit of $100 per month.

  • HSBC only requires a $1 deposit to get started.

  • Discover has no minimum deposit.

None of the three accounts charges monthly service fees.

Read our full list of the best online savings accounts and their associated fees here.

Credit Card Rewards

A good credit card can earn you both cash back and rewards for the shopping you do every day. Even small amounts of money back on each purchase will grow over time.

Check the perks included with your credit card to take full advantage of any money or free stuff you may have waiting for you.

Get Started
Both the Chase Freedom and Chase Freedom Unlimited cards offer cash back with no annual fees.

Citi Double Cash card also has no fee and earns cash back twice with every purchase made.

Check out our full list of credit rewards cards here.

Investing in Real Estate

Investing in real estate doesn't just mean becoming a landlord anymore. Real estate platforms allow backers to buy shares or crowdfund projects, the profits of which are then distributed back to the investors.

In general, real estate investments have longer holding periods than stocks, some for years at a time. They can be a great long-term investment to diversify a portfolio, but they do require patience.

Here's are some options:

Most programs work similarly to stocks in that investors buy percentages of debt or equity investments. Both types of investments include projects with varying levels of risk and possible returns.

Some real estate crowdfunding programs only allow investors who are "accredited" by the Securities and Exchange Commission, meaning they have a minimum net worth of $1 million or have made at least $200,000 per year for the last two years.

Services like RealtyMogul, PeerStreet, and Fundrise are some of the most popular real estate crowdfunding sites.

  • RealtyMogul
    This platform requires a $1,000 minimum for most investments, which can be in debt or equity.

    Fees vary by investment, but are often a percentage of the total balance.

    Nonaccredited investors can only invest in REITs, with minimums of $1,000 or $5,000 depending on the "tier" of the investment.

  • PeerStreet
    This platform allows consumers to invest in debt by purchasing shares of loans. Only accredited investors can use the program.

    A $1,000 minimum is required to begin investing through PeerStreet, which is accompanied by service fees that vary between 0.25% and 1% per each investment.

    One of the perks of investing solely in debt is that the returns typically come more quickly than equity—in PeerStreet's case, between 6 and 24 months.

  • Fundrise
    This platform lets users invest in electronic Real Estate Investment Trusts (eREITs). These are companies that manage real estate properties.

    Fundrise requires a minimum investment of $500 and shareholders get paid in quarterly dividends as well as when the properties appreciate.

It's important to note eREITs are not publicly traded. For those looking to frequently shift investments, this may be a disadvantage, since they are not easily exchangeable for cash.

This may not bother you if you're looking to make longer-term investments.

Investing in REITs
Those seeking a quick turnaround on real estate investments will likely find Real Estate Investment Trusts (REITs) well-suited to their needs.

REITs work similarly to exchange-traded funds (ETFs). They both contain a variety of investments within a set portfolio. But ETFs trade in stocks and bonds, whereas every investment within an REIT is commercial real estate.

Investing in Stocks

Investing in stocks can generate money for both long-term and immediate use. You can choose to invest toward general savings or focus on specific long-term goals like retirement.

Even with "low-risk" investments, stocks involve some level of risk. Never invest money you aren't prepared to lose.

There are three main methods for investing in the stock market:

Using a Robo Advisor
A "robo advisor" takes the decision-making out of investing, which can be good for new and hands-off investors.

Robo advisor programs begin by determining your risk tolerance level based on your age and long-term goals. The algorithm then creates a portfolio of recommended investments and invests your deposited money.

Investors may have the option to alter their suggested portfolios, depending on the specific robo advisor. Once money is invested, the programs automatically rebalance portfolios and reinvest profits.

Get Started
Apps like M1 Finance, Betterment, and Wealthfront are just a few of the programs that invest their users' money automatically.

  • M1 is free to use but requires a $100 minimum deposit.

  • Wealthfront requires a $500 minimum deposit and charges fees equaling 0.25% of an account's balance every year.

  • Betterment has no minimum requirement but also charges an annual 0.25% of an account's total balance in fees.

Investing on Your Own
Free trading programs allow users to choose their own individual investments to build a portfolio. This requires time and research, which makes the option slightly less passive than using a robo investor.

Most free services are fairly basic, so fees are low. This may feel user-friendly to new investors, while experienced investors may find most programs too basic for their needs.

Get Started
Robinhood and Firstrade both offer commission-free stock and ETF trades without using the service of a stockbroker.

Both services are completely free to use, with Robinhood offering the option for a premium account that costs between $6 and $200 per month.

Using a broker
Experienced investors seeking independence and advanced tools typically gravitate toward online brokerage services.

Brokers often charge a per-trade fee and sometimes a percentage of each trade. However, those fees allow the platforms to offer market research that help knowledgeable traders make the best decisions.

While these brokerages are hosted primarily online, some do offer the ability to trade through a human broker for an additional fee.

Get Started
Services like TD Ameritrade, Ally Invest, and Fidelity charge commission fees for most of their trades but give access to advisors, advanced trading platforms, and market data.

  • TD Ameritrade's flat $0 per-trade fee gives investors access to its advanced, user-friendly trading platform.

  • Ally Invest charges $0 per-trade for both stocks and ETFs, an additional $0.50 per options contract trade, and $9.95 for mutual funds. The online-only bank's trading platform shows research data, customizable charts, and more tools at no additional cost.

  • Fidelity also charges a $0 per-trade fee but offers free trades for certain mutual funds and over 350 Fidelity-created ETFs. The trading platform offers market insights and tools, but only users who make 36 or more trades within 12 months can access all the features.

Lending Your Money

Peer-to-peer lending works similarly to real estate loan investing. Investors buy shares of loans with repayment plans that range between months and years.

As borrowers pay those loans back, typically on a month-to-month basis, investors receive their portions of the payments.

Most peer-to-peer lending programs allow investors to choose the loans they finance based on the predicted risk of default. Loans with a higher risk level often provide higher returns.

Every loan, regardless of its associated risk level, has a chance of defaulting and, therefore, losing your money. Most peer-to-peer lending services work to collect delinquent loans, but may charge investors additional fees as they do so.

Get Started
Two of the most notable peer-to-peer lending services are Lending Club and Prosper. Both services are only available in select U.S. states. They often carry with them specific requirements in order to start investing.

  • Lending Club is available in Washington, D.C., and every state except Alaska, New Mexico, North Carolina, Pennsylvania, and Ohio. In most states, investors are required to have a net worth and gross income of at least $70,000. Check your state's requirements here.

    The service offers the option to invest in 36- or 60-month loans, and charges a 1% fee of every payment a borrower makes.

  • Prosper is available to investors in 30 states and Washington, D.C. Most states require Prosper investors to have a gross income and net worth of at least $80,000. Check your state's requirements here.

    The platform provides investment options for both 3- and 5-year loans and charges investors 1% of the outstanding principal of a loan before distributing payment.

Get paid for what you already do

Some companies will pay you in the form of gift cards, credits or even plain cash just to do things, including:

  • Surf the web
  • Take surveys
  • Buy groceries

The return is typically pretty low for the time you are committing. And many places don't allow you to cash out until you've accumulated a certain number of cents or points. Very active days of participating can equal out to less than a dollar, depending on the service.

InboxDollars rewards its customers in money they can cash out at $30, while SwagBucks pays in giftcards. Ibotta takes a slightly different approach by allowing users to photos of their grocery receipts and delivering cash back based on that week's offers.

Some Work

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These methods involve personal commitment. But they can offer consistent residual income payoffs.

Hosting Vacation Rentals

Even if your home city isn't a huge tourist town, renting out your spare room or guesthouse to travelers is one of the easiest ways to create a steady stream of residual income.

Before you start hosting, you'll need to:

  1. Make sure you have permission to host from both your landlord and your city. Oftentimes, this will entail buying extra vacation rental insurance and potentially paying more to your landlord in exchange for the added risk of allowing strangers into the space.

  2. Choose a website to advertise your property. Each hosting site varies slightly in its fees and policies. Make sure to thoroughly research each before listing your space online.

  3. List your property online. Take clear, honest photos and make sure you create both a title and description that will be enticing to travelers. Try to model your listing after the type of rental you would want to book.

You'll also need to maintain your property as guests come and go. This may mean buying items like toiletries and handling minor repairs (or hiring someone else to do so).

Get Started
Airbnb is probably the most well-known vacation rental site. Other services include VRBO, HomeAway, and All of these vacation rental sites charge an owner fee:

Airbnb's is lowest, charging 3% of each booking.

HomeAway and VRBO offer a per-booking fee option of 5% or a yearly subscription of $499, both of which charge an additional 3% credit card fee on each booking. has the highest fees, charging a 15% booking fee and a 3% credit card fee for each stay, but offers the lowest guest service fee, keeping the total cost lower for guests.

Selling Goods Online

Any design you can create can be yours—and everyone else's—by selling merchandise online.

Here are two simple ways to begin:

Selling Through a Host Website
A platform with an established user base can be good for new sellers who have no online following.

Consumers search for goods on the platform and can purchase from one of many merchants, making sales fairly competitive.

This free traffic comes with fees, however. New sellers may have to pay both monthly fees equal to percentages of their total sales as well as charges to list individual products.

Get Started
The two most popular sites are Etsy and CafePress.

  • Etsy sellers create and ship their own inventory. The service charges a $0.20 fee to list a product and additional $0.20 fees to both auto-renew a listing and sell multiple quantities of a product at once. Etsy also charges a 5% transaction fee, a 3% plus $0.25 payment processing fee, and a 5% shipping cost fee for every item sold.

  • CafePress does the manufacturing and shipping for you. The site pays sellers only the marked-up price of an object and keeps the base price. There are no monthly fees, but your per-item profit may be less than if you made, sold, and shipped the product on your own.

Only sell only your own work. A lawsuit can cost much more than any profit you've made.

Selling Through Your Own Website
If you have a large online presence with followers who would buy your brand of products, you have a built-in buyer base.

Individually listing your store helps establish and maintain brand loyalty and allows your site to rank higher in search results. Depending on the items you're selling, this can be a huge advantage in an oversaturated market.

Get Started
Sites like Shopify use drop shipping, which outsources the production of your products to a separate manufacturer—meaning you don't have to worry about managing your own inventory.

The service lets sellers start with their site and domain name for a flat monthly fee ranging from $29 to $299 based on the chosen tier level.

Keep an eye on monthly fees.
Services that charge monthly percentage fee of total profits may seem cheaper than setting up your own store with a flat monthly rate. But the fees can add up. Take stock of your costs every month so you'll know when it's time to switch selling platforms.

Most Work

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Putting a decent amount of work into establishing a residual income is one of the most common ways to have a steady stream of money.

Though some of these ideas may seem out of reach, they are both achievable and profitable with the right amount of passion and effort.

Become a Landlord

While finding (and keeping) tenants can cause headaches, owning property can create one of the most secure streams of residual income.

As a landlord, the responsibilities of purchasing and renting out a property, maintenance, and any other issues will fall to you. Taking care of these things requires time and resources, in addition to the money spent on owning the actual property.

But owning and renting also lets you continue building. Profits from one property can fund a down payment on the next. This allows you to grow your income stream of income by simply letting it accumulate month after month.

Refer to this list of rental property tax deductions from Spark Rental to maximize your residual income earned.

Get Started
You'll need to hire a real estate attorney to familiarize yourself with rental laws in your city and to assist when drafting documents.

When your property is ready to rent, you'll have to list it. Online sites may charge listing fees.

You'll also need show to show the property to potential tenants, as well as vet the ones you choose. Once a tenant has moved in, you'll have to collect rent, manage repairs, and keep meticulous records for your own taxes.

Create Content

As long as content is online, it has the potential to earn its creator money, even when an audience can access it for free.

You'll need a following to turn a consistent profit, so marketing is essential. This may mean marketing yourself, a website, a YouTube channel, or other content-creation medium.

Here are some of ways to create content that can make you money:

Publish an E-book
E-book topics can range from cookbooks to "how-to's," depending on your area of expertise. Just make sure that you have something compelling enough to say to make people sit down and read.

Once your book is written and a cover designed, getting it online is as simple as one upload.

However, selling a successful e-book comes down to making it known, whether through your personal or brand social media channels, a business partnership, or other means.

Get Started
Amazon Kindle Direct is one of the simplest self-publishing services.

Once an e-book is published on the service, a writer can choose to earn 35% or 70% of royalties from the book.

If a writer chooses the 70% option, Amazon will also charge digital delivery fees for each book sold, which are typically $0.06.

Create an Online Course
If you're enough of an expert in a topic to write an e-book, you can go even further and make an online course.

Online courses are typically hosted via a learning site with an already established user base. The teacher arranges a combination of written materials and videos intended to give students a thorough understanding of a subject.

Depending on the subject, you may be able to create a full course once and then leave it online indefinitely. You'll make money as students purchase it.

If you create a course in a constantly evolving field like medicine, you'll need to add new information to keep it current.

Get Started
Websites such as Teachable and Udemy host educational courses and have known audiences looking for new content.

  • Teachable charges a monthly fee ranging from $29 to $399 per month, depending on the chosen tier level. The lowest tier level also charges a 5% fee per each transaction.

  • Udemy is free to begin but does collect a portion of a teacher's profits. These fees can range from 3% of the total price when a student uses an instructor's coupon to 50% of the total price when a student buys a course organically through the either a Udemy promotion or the site's search function.

Become a Blogger or YouTuber
What may sound like a fun hobby actually requires a huge amount of work. Often, this means putting more and more money into the venture.

The same goes for creating YouTube videos. While uploading to the site is free, monetizing videos either with YouTube or Google AdSense can only be done after they reach a certain amount of views. In other words, you'll need to hustle to find and build an audience.

Monetizing your blog can be a confusing process if you don't already know about affiliate marketing. This article from Young Retiree explains each step you'll need to take to start making money off of your online presence.

Get Started
To create a successful blog, you'll need to:

  • Find an underserved niche
    Think about the type of content you're confident in creating. To make it marketable, narrow down your audience to the people who would want to consume that content.

  • Purchase and maintain a website
    You'll need to both buy a domain name and a hosting service to create your own site. Depending on the independence you'd like to have over the site, you can choose a hosting platform with user-friendly creation tools or one that allows you to build from the ground up.

    Another profitable creative outlet is podcasting - if you do it right. One of the most important ways to get sponsors for your podcast is having a professional-quality sound. This article from Produce Like A Pro outlines how to make your cheap home recording studio, which is perfect for podcasting.

  • Build a brand
    The most important part of having your own blog is getting people to read it. One of the most successful ways to gain readers is to advertise on social media via both paid ads and your own presence, often requiring multiple, strategic posts a day.

With YouTube, you won't need to buy and host a website. But you'll need to edit your videos and maintain your profile page, both of which will take time and potentially money.

Bottom Line

Whether you're hoping for a stream of income that grows untouched or plan to develop a project in your free time, residual income can boost your income.

Start by deciding how much time—and money—you want to invest. There's no time better than the present to start building a stream of steady residual income.

Disclaimer: Opinions expressed here are author's alone. Please support CreditDonkey on our mission to help you make savvy decisions. Our free online service is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content.

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved or otherwise endorsed by any card issuer. This site may be compensated through the Advertiser's affiliate programs.

Disclaimer: The information for the Chase Freedom and Citi® Double Cash Card has been collected independently by CreditDonkey. The card details on this page have not been reviewed or provided by the card issuer.

TD Ameritrade has not influenced the content of CreditDonkey. CreditDonkey may earn compensation for accounts opened at TD Ameritrade.

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CreditDonkey is a stock broker comparison website. We publish data-driven analysis to help you save money & make savvy decisions.

Editorial Note: Any opinions, analyses, reviews or recommendations expressed on this page are those of the author's alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.

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