The concept it simple. Residual Income means you are getting paid multiple times for a single sale. Let's take an example. Let's say you sell hosting services for websites as an affiliate. In this case you might earn a fee when someone purchases the hosting plan through your recommended link. That's regular income. But if that affiliate program pays you a percentage of the sale that takes place every single month that that person holds the hosting account, you are getting paid multiple times for one purchase. That is residual income. It's really just a fancy word for "recurring income".

The beauty of residual income is that it is often passive. If you are only making money when you work, your income is limited by how much time and energy you have to dedicate to the job. Then you have residual income where a little bit of work can keep paying off week after week, month after month and year after year. This means you can take on other products and create multiple streams of income. Or you can take a vacation with you family and know that time is not being wasted, rather you are making money even while you fish or ski or play basketball.

The other major benefit if residual income is it can act as the world's best retirement plan. You can create retirement goals for yourself such as if I can just sell 1200 hosting accounts I can retire. This might work because each hosting account pays out $10 per month which works out to 10,000 per month on a residual basis.

One profession that became very popular because of residual income was that of the insurance salesman. There was a time when every other person you met was an insurance salesman. The draw was that they would be earning a hefty monthly income from a policy that they sold years ago.

So in short, residual income is a way you can make more money than would ever be possible for being paid for your own efforts. The good news is you can accomplish the same thing on the Internet. You can sell hosting as an affiliate and Clickbank.com now offers many products that offer a residual commission.