| Part of learning to become financially
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| | payments that you receive from the assets
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| free is to begin to understand that there
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| | you have created. These payments usually
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| are three different types of income. They
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| | come monthly, and require little or no
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| are: capital gains, passive income, and
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| | work for you to receive them. Some types
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| earned income. They are the three types
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| | of assets that produce passive income are
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| of ways to make money, and are very easy
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| | rental properties, dividend stocks, and
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| to understand.
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| | businesses. Assets that produce passive
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| Capital Gains - When you buy a stock, and
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| | income continue to do so until the asset
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| sell it for a higher price, you have made
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| | is liquidated (sold). Passive income is
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| a capital gain. If you buy a house and
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| | what makes a person rich. If a person has
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| then later sell it for a profit, you have
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| | more than enough passive income to cover
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| made a capital gain. If you buy an
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| | his or her expenses, that person is rich.
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| antique at a low price and then sell it
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| | Earned Income - Earned income is the
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| for a nice profit, you have made a
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| | primary source of income for most
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| capital gain. Capital gains are not
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| | American's today. Any type of job that
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| passive income. They are a one-time
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| | pays an hourly wage, pays earned income.
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| payment that you receive from an
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| | People who rely only on earned income,
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| investment because your investment has
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| | pay the most taxes. Federal, State,
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| increased in value. Investing for Capital
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| | Unemployment, Social Security, and
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| Gains is great because you can keep your
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| | Medicare taxes are all deducted from a
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| money moving, instead of just letting it
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| | persons paycheck. With passive income and
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| sit in the bank. The government loves to
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| | capital gains, the types of taxes you pay
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| tax capital gains, especially if you
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| | (if you have to pay any at all) depend on
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| bought and sold your investment in less
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| | your investment. Earned income is not
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| than one year. Lets say you buy a stock,
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| | necessarily a bad thing. Having a job or
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| and the stock doubles in price during the
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| | career is a great way to earn the capital
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| week so you decide to sell it. You've
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| | required in order to create assets.
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| made a nice capital gain, but the
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| | Almost everyone who starts his or her own
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| government could take as much as 35% on
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| | journey to financial freedom begins with
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| that capital gain, depending where you
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| | earned income. Relying solely on earned
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| are in the income-tax bracket. If you
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| | income should be temporary. In America
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| hold onto your investment for a year or
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| | today, many people rely on earned income
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| more, the government rewards you with a
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| | alone, and saving most their earned
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| more favorable capital gains tax rate.
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| | income for many years until they retire.
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| Passive Income - Passive income is
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