Different Types of Income

Whoa..

It's been 5 months huh!

Missed me? =D

I've been going through a lot of personal things lately and I've learnt a whole lot more about myself during that time.

Anyway, let's get started eh?

There are 3 main types of income, which are:

1. Earned or Working Income
2. Residual Income
3. Passive Income

I will talk use the term 'leverage' as we move along. If you're not familiar with the it, please feel free to read up my previous post on leverage: Secrets Of The Rich - Leverage

So, what are they about?

1. Earned or Working Income

Everyone of you should be familiar with this. It is the type of income where you mainly trade your time for money, like jobs and most freelance work. Simply put - if you stop working, so does your income.

This is the type of income with the least amount of leverage.

2. Residual Income

This form of income is commonly mistaken to be the same as 'Passive Income', which it isn't. How does this differ from Working Income? Residual Income has more leverage...meaning: you do not have to put in as much time and effort to receive this form of income.

Some examples are MLM/Network Marketing, Internet Marketing, Businesses of all sorts.

3. Passive Income

This is the holy grail of all who wants to be rich. Why? As it's name suggests, this is money earned without being active (or with minimal supervision). What's the point of being rich when you don't have the time to spend it? It's money that comes in whether you're drinking coconuts in Hawaii or busy painting your latest WW2 models at your summer home.

Most incomes of this sort are from investments, like dividends from stocks and businesses , rentals from properties, as well as intellectual property like patents, copyrights and trademarks that you own, where money is paid to you whenever someone uses your trademarked name or your pantented invention.

Also, if done right, Internet Marketing and MLMs are forms of passive income as well. You will know when that happens because money comes in, without interruption, even when you aren't around.

So, what kind of income do you have?