Active Income vs. Passive Income
Why You Need Both To Build and Protect Your Wealth
Building real wealth requires multiple streams of revenue. As a business owner or executive, your time may be limited. Creating passive income through real estate allows your money to work for you, 24 hours a day in addition to your business or your full time position.
Active Income
Income for which services have been performed. This includes wages, tips, salaries, commissions, and income from businesses in which there is material participation.
Translation: If you are an employee and lose your job or are unable to perform the duties of your position, your income will also be lost.
Passive Income
Income received on a regular basis with little effort required to maintain it.
Types of Passive Income: Any type of property income, business ownership not requiring direct involvement, interest from a bank account, royalties from books or intellectual property, pensions.