What are the Three types of Income?

Many clients and people I randomly talk to always share with me the reasons why they cannot  start building Wealth.  One of the responses I always get is “My Income is not High Enough.” My response to them is always “What Income is not High Enough?”  These individuals are not aware that there 3 types of Income, which are Earned, Passive and Portfolio.  Most people are only aware of Earned Income, which is what they are referring to when they are complaining about their income is not high enough.  Here is the definition of the three types of Income:

• Earned Income – income you receive from your job or place of employment

• Passive Income – income you receive from royalties, real estate, intellectual properties

• Portfolio Income – income you receive from mutual funds, dividends, investments.

Earned income is income that you have to work for it does not work for you.  If you want to establish streams of income that can work for you and you not work for the income.  It’s important to work towards building Passive and Portfolio income.