Different Types of Income
Basically there are 2 different types of income, although some states that there are 3 and some even states that there are 4 or more types. But for simplicity, we will just stick with 2 basic types of income, active income and the passive income.
Active Income
Active income is the income that you have to personally work for in order to obtain the income. For example a job, if you work you get paid, if you don’t work, you don’t get paid. This is the kind of income that needs your involvement and you have to trade your time for it.
Passive Income
Passive income is the income that will come in whether you work or not. Examples of passive income are royalties, rental collections, bank interest, dividends and etc. Usually these incomes will come in freely every month for the rest of your life if you could sustain it. For instance, say you have $100,000 sitting in the bank earning an interest of 7% p.a. If you can sustain it for twenty years or more in the bank account, you will be earning $7000.00 every year or $583.33 every month for that whole twenty years or more tenure. Isn’t that wonderful?
Now that you know there are two different types of income, which type do you prefer to have? You know it so, go ahead and make your own money.
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