There are basically Three types of income and four ways of generating money ,sounds strange isn't !
First let's see
First let's see
Types of Income
- Active Income
- Passive Income
- Portfolio Income
Active Income
This is the income for which you actively work. You work for it and get paid.Your Job or contract comes under this .You are basically providing your service & time for money ,which is used by other people in return for money.You only make money for the time you work ,when you are not working you are not making money.
Examples:- Job ,Businesses with proper involvement (if not full involved in the process,it will come under passive income) ,Side Hustle(tutions/teaching someone ,bug bounty hunting(if you don't know click here)
Passive Income
This is the income in which your involvement in the process is not much required.You work on something(say a blog or a business) and once it reached to a certain level(growth) you starts making money and your involvement is less required.You make money even without working for it everyday,but you have to grow it first!. Also you have to maintain it .
Examples:- Blog , YouTube channel, a Business runs by other for you ,writing a book(if successful it will generate passive income for a long time), Online stores
Portfolio Income
This is the income from investment ,including dividends ,interests ,royalties and capital gains.You invest in something and with time it values rises so does your investment value
Examples:-You Bought a stock of a company for 1$ a share and after 6 month sold it for 9$,Dividends from your investments
This is all about types of incomes .Now let's see
Ways of Generating Income
There are four ways of generating income as shown in figure
Employee
Self Employed
Business Owner
Investor
Let's see each of them in detail
Employee :-
A person who works for a company or organization or government and receives a salary is considered a Employee. He/She has a job and most of the time it's a full time(means no time left for other works)
You have a job which pays your bills
Examples: Engineers working for a company , doctors for hospital , teachers
Self Employed:-
A person who works for himself or in simple words he own his job. He/She doesn't have a boss and works according to their comfort(even from a home )
Examples:Doctor who started his own clinic ,general stores owner who runs their own shop
Business Owner
A person who created a system which generates money for him.It can be anything from selling a burger (MacDonald) to sending stuff into space (spaceX )
Examples:Founder of Amazon -Jeff Bezos, CEO of SpaceX & Tesla-Elon Musk
Investor:
A person who invest in something and with time it's value increases ,this generates most of the wealth
Examples: Warren Buffet
So what's the Best Quadrant to Operate?
Honestly every quadrant has it own advantages and disadvantages which will be discussed in a another post (here).But you think of operating in more then two quadrants !.Starting from and then moving to another while keeping other one working . This will generate a stable income and also help you become Financially Independent .
For Better Understanding Refer books
Comments
Post a Comment