As most of you are already aware, freelancers/independent contractors are just on the outside of the cusp for retirement options. Many freelancers/independent contractors have to invest in their own medical insurance and generally don’t have a 401k or pension to fall back on when they retire. This is where royalties and residuals play a very important role in compensating for that or even becoming a supplemental income in addition to a pre-existing pension.
The sooner a freelancer/independent contractor starts thinking about their retirement, the easier the transition will be later. Don’t wait until the last minute, projects/contracts come and go, however, royalties and residuals are forever. Start building it up now in your spare time.
Getting Started With Royalties And Residuals
Like with anything new to someone, there is going to be a lot of research required to educate oneself in the niche area they want to build their royalties and residuals in. This is going to be different for everyone since we all have different skill sets and passions. I suggest you stick with the method that comes the closest or is an exact match with what you enjoy already, that way it’s 10x easier to build it up without it feeling like work.
Let’s get started by pointing out a few essential research tips.
- Search: Start with Google, Bing, or whatever your favorite search engine is. I generally recommend Google. Let’s first learn more about both; residuals and royalties.
- Royalties: Using your search engine, search for the term “Royalties”, one of the definitions you’ll find is: “A sum of money paid to a patentee for the use of a patent or to an author or composer for each copy of a book sold or for each public performance of a work. “ – Royalties are also paid to photographers and designers every time one of their photos or designs are used. Don’t stop researching there though, now enter terms related to your passion for seeing if there are royalties available in that industry. (Example: search term “Author Royalties” or “Personality Royalties”)
- Residuals: Now let’s do the same thing, but for the term “Residuals”. One of the definitions you’ll find is: “A royalty paid to a performer, writer, etc., for a repeat of a play, television show, etc. “. Great! So know we know that residuals are just like royalties in most cases, they just seem to outline different niche fields of skill sets in the official definitions. Don’t stop researching there though, now enter terms related to your passion for seeing if there are residuals available in that industry. (Example: search term “Author Residuals” or “Personality Residuals”)
- Compile a list of all the companies that offer royalties/residuals in the niche field you love.
The Selection Process
Now that you have the basic research done and a list to reference, it’s time to dig your heels in the ground firmly and start with the first one on your list, working your way down. You’re going to be doing some testing for the next 30 to 60 days with each one on the list to identify the one that works best for you. For the best results, test one at a time, not all at once.
When testing is done, don’t rule out keeping more than one residual/royalties source. It’s never a good idea to put all your eggs in one basket. If the basket falls, all your eggs break. Diversify and build on the top 2 or 3.
It’s important that you stay consistent. Repetition is crucial when it comes to building up your residuals/royalties. Maybe start with a schedule like the following:
- Mon. – Complete 1
- Tue. – Complete 1
- Wen. – Complete 1
- Thur. – Complete 1
- Fri. – Complete 1
- Sat. – Off
- Sun. – Off
Be sure to mark that on your calendar next to your desk or set a reminder alert on your smartphone or computer. Once you get the hang of it, you can increase the daily projects to complete for more of a rapid building experience.
What I do for residuals/royalties
As another example, I want to point out just a couple of the things I do for royalties and residuals (Sorry, I can’t reveal them all). As a designer and brand manager, my skill-sets lean towards copyright protected design elements (E.g. Comics, Statements, Punch-lines, etc.). With this in mind, I generally upload some of my copyright protected designs to stock and merchandising sites such as, but not limited to:
- Zazzle – (Photography and design elements sold on products. E.g. Mugs, Shirts, Postcards, etc.)
- SecondLife – (3D Virtual reality products sold online and in a virtual store)
- DepositPhotos – (Photography and design element stock templates)
Every time a sale is made, I receive a % (Normally 10% to 25%) of every sale which is cashed out at the end of each month automatically. As the copyright holder of all my designs (That I did not sell the copyrights to), I am entitled to royalies every time someone purchases anything with my design on it (Just like a music artist gets a % every time their song plays in a movie, tv show, or the radio in some cases).
Whether you are a new freelancer with no retirement plan or already retired with a pension and looking for supplemental income, you should take your retirement income seriously. Way too many people wait until the last minute to consider their retirement options and find themselves struggling as they reach retirement age. Don’t let that be you! Get started building your future early.
Happy business building everyone!
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