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You have residual income or disposable income when you have paid off all your bills, be they related to your mortgage, various loans like house loans, credit card dues, college/school fees, insurance premia, and so on. If you still have some money left in your bank account or wallet, you are said to have ‘disposable’ or ‘residual’ income. Start turning your disposable income into a residual income business!

Letting the residual income remain in the bank is generally the safest. But the interest it earns in the bank is considerably low. The only good thing is safety for your money. If you are the type who would like to see that your additional, or residual income, to earn its keep, there are ways of doing that.

Today, you have a wide choice in the stock market, the mutual funds, forex markets, pension funds, investments in derivatives, etc, operating in the local market, and in markets overseas. The financial system worldwide is more interlinked than ever before, and most overseas markets today permit trading in their countries’ stock markets, subject to certain conditions, of course.

To make your residual income work for you, you have to put in additional work. It is just not enough to leave it to your banker or investment broker. You need to keep a constant watch on how the market - in whichever market you have invested in - is moving. Normally your usual newspaper would have a business page, which would give you insights into how the markets are moving.

If you have invested in a particular company, watch how that company is faring in the market. Don’t go just by a day’s quote. Watch out for the company’s performance being reported in the press. In stock markets, the long term position needs to be looked into. If at a point of time you feel that you have made enough, you can get out of it by selling that stock. Same hold goods for the mutual funds as well.

In the forex market, if you are allowed to play, remember that you are a small player. The giants who move the markets are the Governments of the various nations. The best way would be to join a group of investors and take a long or short position. There are proprietary software that is available that allows you to auto-pilot your stakes in the trading. To take advantage, you need first to put in small amounts and see how you work with it. Take a lesson from one of the traders. Or, better still, buy a book that would help you understand how the currency market works. While the gains can be high, the stakes of loss are higher. Take care when you enter this arena.

The forex market is now another area where individual investors are now allowed. Check your country’s rules and regulations. There is big money to be made. Of course, you too have to put in a minimum amount. Check how much is required for you to start. If you have it, well, there are a lot of players, and a lot of software that allows you to play the market. To learn forex trade, Investing in a good book would be useful. Take the help of a forex trader known to you or your friends. You are a small time player in this market. The market movers are governments, the banks and the MNCs.

Don’t hurry or get carried away. Your signpost should be safety first, profits next, and losses the last. Work with a pro. Get an investment counselor to draw up a budget. Safeguard your savings first! Be conservative. Always understate your income and overestimate your expenses. That’s the accountant’s golden rule for estimating a budget.