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Different Income Sources

By Jacklyn | March 15, 2007

Let us take a look at the different types of income. They are:

1. Earned Income – obtain from working for someone or a company.

2. Passive Income – income generated from business.

3. Portfolio Income – income generated from investments in paper assets.

Earned Income comes from having a job in a company or in someone else’s business. You get paid for your time and services rendered. And in most of the cases, workers work just hard enough not to get fired and employers pay just enough for workers not to quit.

This indicates that the income an employee can generate from working for an employer is limited. There is the possibility that an employee may devote extra effort thinking the employer will pay him/her more. It is a rare possibility particularly when business is difficult, but possible.

And even if it happens, it is still limited. Whatever additional profit gained by the employer as a result of the employee’s extra effort, the emoployer will get the bigger “slice of the pie”. You are, in fact, making someone else rich through your added effort. Don’t think I’m discouraging this. It is a good act. I’m just stating a fact. It’s likely that you will be telling yourself mentally: “Hey, that’s not fair.” Fair or not, that’s the way life is, when you work for money.

Earned Income is a safe way to generate an income. There is not much thinking to do. Except for a few high paying, high profile jobs, your work is mostly concentrated on a few things where you keep repeating the same functions. Unconsciously, this discourages creativity, so boredom starts to set in.

It is because of this boredom that getting to work every morning is such a drag and you keep on looking forward to weekends, holidays and vacations.

Unless you really love what you do without consideration to the income it generates, or unless you are highly paid, or unless there is a lot more to learn in your job or unless financial security is of no importance to you, there is no reason for you to stay long in the “rat race”.

The earlier it is to get out of the trap, the better chances you will attain financial success.

Passive Income or Residual Income is generated from businesses. You can sell products, offer services, or a combination thereof. Examples are buying/selling real estate, trading merchandise as in wholesaling and retailing, franchising, network marketing, internet marketing, etc… In many cases, you need not be physically present in your place of business. The list is endless as long as you do what you love to do.

The beauty of going into your own business is that you work for yourself, not for someone else. You enrich your own life, not someone else. Your time is disciplined but more flexible because you can make your own schedule.

Portfolio Income, just like passive income, is making money work for you. Portfolio Income is generated from paper assets because literally, they are businesses that revolve on papers.

It is in Portfolio Income where financial knowledge is of vital importance. Your financial intelligence will either unmake or make you rich.

Secrets of Self-Made MillionaireListening to Adam Khoo’s audio program on Secret of Self-Made Millionaire changed my mindset on wealth and wealth creation. I would encourage anyone to read or listen to this program if he/she wants to achieve financial success!

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Topics: General, Personal Development, Wealth Creation | 5 Comments »

5 Responses to “Different Income Sources”

  1. Calvin Says:
    March 15th, 2007 at 10:20 pm

    Hi Jacklyn,

    coincidentally, it was also after reading Adam’s Secrets of Self-Made Millionaires that my mindsets about wealth were changed completely. Most importantly, it has managed to lift me out of my comfort zone and take massive action to realizing my dreams and goals. So all the best towards your IM success!



  2. Stuart Says:
    March 16th, 2007 at 1:07 am

    Hey Jacklyn, this is a very good post! I just want people to know that it’s not how much you earn, but how well you *keep* what you earn that matters the MOST.

  3. Henry AY Says:
    March 24th, 2007 at 12:15 am

    The secret to become wealthy is to leverage on people. It is never to exploit others to our advantage but it is to bring out the best in people so that excellence results are achieved and able to become monetised. This is exactly what successful business is about. This secret must be accompanied with our passion so as to drive our actions through multiple of learning experiences in order to reach our ultimate success.

  4. Sam Chan Says:
    May 24th, 2007 at 11:38 am

    Hi Jacklyn,

    I had also read the “Secret of Self-Made Millionaire” by Adam and inspired by it. However, I only came to understand better about the three types of income after listening from Robert Kiyosaki Audio Book.

    Indeed, everybody will be eventually focusing more about Passive and Portfolio income to come out of the “rat race”.

    Thanks for the post.

  5. Jacklyn Says:
    May 25th, 2007 at 4:54 am

    Hi Sam,

    Thanks for being here. I went through these 2 programs too. And that’s why I’m in the nerwork marketing business and now coming into internet marketing arena.

    Well, I believe that “Success starts with the correct choice”. Then – goals, stretegy, knowledge, empowering state of emotions and financial intelligence are all key factors to determine our success.

    Glad to know that you are also passionate about self improvement. Please do contribute great ideas for our readers here… Thanks!