Cadence Hart

Let me explain the three types of income...

 

(a) Earned Income
(b) Portfolio Income
(c) Recurring Residual Income or Passive Income

 

Earned income is income you earn through 100% of your effort. You get this income through working for someone else (employment) or working for yourself (self-employment). Your earnings is proportional to the number of hours you put in. To increase your earned income, you need to put in more hours or upgrade your skill. This is the most common way of earning income but its downside is, once you stop working, you stop making money.

Portfolio income is obtained by selling an investment at a higher price than the amount you paid for it. Examples are real estate trading, trading paper assets, etc. The common downsides of this income type is you often need money to make money, it needs a good bit of knowledge or expertise to pull off, and it is often taxed heavily by the government --- almost equivalent to earned income.

Recurring Residual income or Passive income is income you earn from buying assets or assets you created. Now, how do we define assets? Accountants define assets as something you own but this is not how we define it here. Assets that produce passive income are "something that pays you". For example, buying a house and renting it out produces passive income. Owning a business AND applying the concept of leveraging produces passive income (this is what i meant by earning 1% of other people's efforts). Examples of businesses that apply leveraging are Affiliate Marketing and network marketing.

 

The benefits of passive income are (a) it is recurring, (b) it has favorable tax treatment, (c) it is often low risk because the return on investment can easily be determined and it can be acquired through borrowed money, (d) and most importantly, if you stop working, you still make money. You even earn money while you sleep.

 

Did you know that this is how millionaires are made? They buy assets to produce passive income. So they work less and earn more.

Makes sense? So... the goal is to build multiple income streams!

 

Let's discuss futher at http://www.facebook.com/pages/Your-Plan-B-Multiple-Income-Streams/239058202211.

 

 

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Cadence Hart

If a thing is humanly possible, consider it to be within your reach.

For privacy purposes, I only give out my real name to business associates and personal acquaintances. 

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