Jasmine
VIP Contributor
Income can be classified into three basic types:
Earned
Portfolio (capital gains)
Passive
If you get a job, that is earned income. If you are an accountant in a firm, or a content writer working independently, you are making earned income. Earned income is mostly active income. While it is easy to make this income, you should not depend on earned income because the moment you stop working, your income source will also stop.
If you buy something and the sell back for some profit that’s portfolio income, or capital gains. This kind of income comes from investment or business. You need capital gains because that’s how you can build your wealth. You can build portfolio income if you start saving your earned income and being investing in the market.
Passive income means you make money from the investment or something you have done in the past. Let’s say you wrote a book, you will receive passive income as long as your books are sold. If you invested in real estate and receive rental income that is passive income.
Earned
Portfolio (capital gains)
Passive
If you get a job, that is earned income. If you are an accountant in a firm, or a content writer working independently, you are making earned income. Earned income is mostly active income. While it is easy to make this income, you should not depend on earned income because the moment you stop working, your income source will also stop.
If you buy something and the sell back for some profit that’s portfolio income, or capital gains. This kind of income comes from investment or business. You need capital gains because that’s how you can build your wealth. You can build portfolio income if you start saving your earned income and being investing in the market.
Passive income means you make money from the investment or something you have done in the past. Let’s say you wrote a book, you will receive passive income as long as your books are sold. If you invested in real estate and receive rental income that is passive income.