What Is Royalty Income And Why You Should Learn More About It

Do you have a great idea that you’re sitting on, something completely new and unique? If so, royalty income may be an additional source of income for you.

What Is Royalty Income?

  • Royalty income is a form of inactive income produced through creating or designing something new and unique, and charging a fee for individuals and organizations to utilize it.
  • Individuals who receive royalty income are essentially selling their novel ideas and products to others, and they are able to do so due to the concept of intellectual property.
  • Intellectual property is simply a set of intangibles that are legally safeguarded by a company from outside use or implementation without consent.

What Is An Example Of Royalty Income?

  • A common example of royalty income is when authors receive money from their publisher for the right to distribute the author’s work.
  • Another example is when songwriters produce copyrighted music, and anyone who wants to play the song in public or for commercial use must pay a fee in the form of a royalty.
  • There are numerous other examples, especially in the way of business. If you have a unique idea, you can capitalize on royalty income through leveraging your distinct product or service.

What Are The Pros Of Royalty Income?

  • You can be compensated inactively for your previous work and efforts for the rest of your life, with, in many cases no limits to the amount of capital you can accumulate.

What Are The Cons of Royalty Income?

  • In some cases, there may be complex legal stipulations, and you’ll likely require the assistance of a legal team.
  • There is always the chance that someone else could come out with a better product or idea that diminishes the demand for your product or idea.

Bloom Investment Counsel, Inc. is a well-established Toronto-based independent, privately-owned boutique investment management firm providing customized, actively managed, Canadian and U.S. dividend-paying portfolios for wealthy individuals, family offices, foundations, corporations, institutions and trusts.

Founded in 1985, Bloom has experience in managing in excess of $2.5B in assets over the years. We believe that generating independent cash flow is central to the success of our clients’ portfolios because it provides capital for the present day, if needed, while continuing to preserve and build wealth for the future.

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This content is provided for general informational purposes only and does not constitute financial, investment, tax, legal or accounting advice nor does it constitute an offer or solicitation to buy or sell any securities referred to. Individual circumstances and current events are critical to sound investment planning; anyone wishing to act on this content should consult with his or her financial partner or advisor.

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