Passive Income and Earned Income Explained

Published on December 1, 2020

Popular high defination online streaming highly rated small business ideas, best passive income, and Example of Passive Income, Passive Income and Earned Income Explained.

I want to break down passive income and earned income and why you can’t have one without the other.

  1. Defining Earn Income
  • When I was growing up, my teachers and my parents always broke it down like this, “ the only way to make money is by working for it”, you work and you use the money to buy the things you like.
  • Before I move on, when I first heard this, it felt like the only income-producing thing in society was myself.

So here and Example:
– I went to college, to get a degree, to qualify for a job that will pay enough money to live the lifestyle that I wanted.
– And while I was in college, I also got several jobs and made earned income, to also live the type of life that I wanted.
– So if you noticed, it’s like the type of job you have determines your earned income, which then determines your lifestyle.

In a nutshell: earn an income is a money you have to work for, where you are the focus of producing the money.

  1. Defining Passive income
  • Most people think it’s the polar opposite but in a way it is and in a way it’s not.

For example:
– The most popular definition is, passive income is money you get to make while you sleep because it doesn’t require you to do an activity since your money is doing all work.
– But some people think also, that passive income is you getting paid for an activity you did recurring over time.

So here’s what I think:
– For passive income, it requires a lot less ongoing work, than it would take to get traditional earned income
– But…usually it requires a lot of upfront work.

Let me explain:
– Investing into stocks gives you passive income: called dividend: but to invest the original money you had to put in a lot of work, to get to a point where that dividend income is sufficient to take care of you.
– Or for example Royalty Income: making something and get paid for it over time. A lot of upfront work but not a lot of ongoing work
– And the same goes for making a course.

  1. Why you can’t have one with the other
  • SO that’s why if you ask me, you can’t really have passive income, without earned income in the beginning to fund those investments that take less time maintenance.
  • And that’s Is why 99% of people that know anything about finance, always say, keep your main job while you trying to create more passive income

TO put it into simple words:
– Your earned income provides the capital, to invest in passive income activities

Unless: you win the lottery or something, then you should give me a call

  1. A plan to have them both work together
  • But seriously by this point, you should have a solid idea of what passive income and earned income are.
  • But here’s a plan on how to use them both to make extra money.

Very Symbol:
– Don’t spend all of your earned income for that lifestyle, keep a minimum of 10% of all the money you make
– And then invest that money into passive income assets,

Some examples:
– Stocks, Business or even real estate
– But make sure you’re returning is great than 7% a year.

  1. How I’m doing it
  • Which is exactly what I do

Steps:
1. I had a job, I saved some money and started a business
2. Used the money from the business to invest into stocks, and back into the business
3. Now this year, I’ll also invest in real estate

But if their one thing you take from this video: that passive income will sometimes require work to maintain, just not as much work as traditional earned income.

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Example of Passive Income

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But with time, this little organization endeavor can be quite rewarding indeed. This might need the most up-front work out of all the passive income ideas, however it can likewise be the most rewarding.

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Property. This is among the most apparent passive income sources. However, it depends how you buy genuine estate to see whether it’s truly a passive income source. The abundant invest for money circulation. That’s more passive. Once and that residential or commercial property offers them a paycheck each month no matter what, that suggests they invest in genuine estate. They do not care so much if the market is high or low, they simply want their regular monthly check. The middle or typical class person invests for capital gains. That suggests they buy low and sell high. However this that kind of income is not passive; it’s active. Once, that’s the same thing as selling an item. It’s not on going. It’s difficult to accumulate steady wealth that way.

The web enables you to reach millions of individuals all over the world with the push of a button. This opens substantial opportunities for you. Where to begin nevertheless can be quite a challenge. First of all you should be looking for what works. Its easy to fall for those products guaranteeing big dollars in just a few days however I recommend beginning off in opportunities that teach the fundamentals of structure passive income streams online. Without at least the fundamentals under your belt, how can you expect to understand the more complex ways of creating passive income streams.

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The culture of today states we should look like supermodels, while remaining inactive and stagnating in our way of lives. This might be challenging to believe, however that’s the way life is, and practically everyone desires to be great looking.

Focus mainly on supplying solid details to your readers. In order to get sales, your credibility needs to be high and this can just be achieved by producing a quality advisory blog. If a reader is impressed by your suggestions, they are even more most likely to acquire any product you might promote.

I would love for that to be my day job. But to arrive, I am going to require to develop these passive income streams in order to smooth over any low income areas. That way I can remain completely focused on the big tasks.

You then gather commissions from your staff member’ sales, along with your own. The web provides systems like this that are ripe for passive income. May this aid you reach that road like numerous others.

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