Linear Income and Passive Income.
On this page, you will:
- learn the difference between linear income and passive income.
- learn why you should build passive income.
- learn the different types of passive income available for you.
What is linear income?
When you trade your time for money, you are earning a linear income. When you stop working, you stop earning. You have to continue to work to continue earning income. Examples of linear income are salaries, wages, commission, contract jobs.
What is passive income?
Passive income is what you earn when you are not actively involved in producing that income. In other words, passive income is money you earn that doesn't need much of your time and effort. Most passive income however, requires you to invest some time or money in the beginning. Then you sit back and watch your income grow.
Benefits of passive income
- Builds your net worth.
When you work for linear income, you are helping your boss to become rich. When you work for passive income, you are heling yourself to become rich. Which do you fancy? - Financial independence.
When you stop working, your passive income streams still earn money for you. Your income is not solely dependent on a job or working. - Freedom of time.
Your get to spend more time with your family. You choose when you want to work since passive income doesn't require much effort on your part. Unlike linear income whereby your time is tied down 9-5. - Unlimited potential earnings.
You can multiply your earnings by multiplying your passive income streams. However, with linear income, you can't multiply your income because your income is limited by the number of hours you work in a day.
Next page : Types of passive income