The Three Types of Income
December 26, 2013
Today is a bit formal and informative post for you guys. I recently bumped bumped into a post regarding the three types of income a person will get on his entire lifetime that i wanted to share to you all. On the end prt is my own notes and i will also share what type of income i am getting now.
The first type of income is the ACTIVE INCOME. Active income refers to income that a person works for. It is the salary one gets for working in an office, doing a freelance job or creative a paid service for others. One earns an active income based on the amount of time worked for and the quality of work delivered. You may increase your active income by getting a second job or a sideline as well as increasing the quality of work you provide to your boss. Active income for business owners will mean the money that the business is getting. It is the profits of the company and shall then serve as your capital for your nest business ventures.
PORTFOLIO INCOME is the income that you get when you invest on something that brings a higher amount than the price you paid for. These are the type of income you get when you invest in stock markets, mutual funds, insurances and other kinds of investments that gives a higher profit for you. Getting a stable portfolio income requires accurate financial management being hands on to how you value your money.
The third type of income is the PASSIVE INCOME which defines the money you get even without you working for it. Examples of passive income includes the rental income you get from a establishment you own, the advertisement earnings that your blog generates or the amount you get when you buy and sell a product. Passive income are higher forms of income for it acts in a multi-level way meaning it is the money that is working for you and not you working for the money.
Out of the three types of income I do believe that I am still in the ACTIVE INCOME mark. I work on my daily job as well as my hosting sidelines as part of what I earn for a living. The online business I own won’t function without further capital invested so I do know it is still not counted as a PASSIVE INCOME. Meanwhile, I failed to invest in a mutual fund which is something I have been aiming to do so over the past years that I’ve been financially educated so I still have no PORTFOLIO INCOME.
Knowing this three types of income enable one to determine the things that he or she must commit to do so that there will be a higher money or profit to be gained. It is also nice to know these types to serve as inspiration as an ordinary citizen.
I am hoping you learned something. Please do follow me by email located in the top right section of my blog so you will be updated and you can freely receive emails from me regarding financial management.
Izza of SavingsPinay promotes financial literacy for the young and young at heart by providing insights and tips on budgeting, saving, investing and online entrepreneurship. Aside from this blog she also writes at www.izzaglinofull.com, a beauty and lifestyle blog for frugal Pinays and manages, www.izzagevents.com, a wedding and event business since 2011. For inquiries, topic suggestions or future collaborations email her at firstname.lastname@example.org