Differences between Earned, Portfolio and Passive income.

Differences between Earned, Portfolio and Passive income.

Hey, my friend, today I'm going to talk about three different styles of income, or types of income and how does that benefit when you're paying the taxes, or just as different styles. Welcome to Wealthy Wednesday.

So number one is the earned income. Earned income is your salary. You give your time, and your skill and you get a salary. You pay most taxes on that. Then you have a portfolio income, which is fix-and-flip, rental property, you have a real estate portfolio and you have that income. And number three is the passive income. That is lenders, they pay the least amount of taxes. So let's talk about it. 

Now, let's talk about the earned income. Earned income is you are working a job and you get the money. So either your employer taking the tax out and paying it to the tax department or whatever way, or you're getting a 1099 and you're paying your taxes. So on the earned  income, you pay the most amount of taxes, especially if it's a job because taxes are already taken out anyway, can do nothing on that. So got to be mindful to that because the people have earned income pay most taxes. 

Number two is the portfolio. Now someone has multiple rental properties or doing a fix and flip business, they pay lesser taxes because you have an opportunity to show the expenses. Because it's a business, you show the expenses and pay taxes on the net profit. So over here you have expenses to show. So you pay comparatively fewer taxes than the earned income.

And the number three is the passive income. In that, there is no time involved. Either you are lending money or there are different kinds of way you can make passive income. But again, passive income is very good because you make money most of the time without spending any time. Either you set up a system or you are lending money. It could be different ways, but this is the income you do when you are sleeping. So this is the best way to earn money. You can also earn portfolio, and the passive a little bit this portion with that percentage. But definitely, passive income is the best way to make your fortune.

Hopefully, this information is going to help you. If you want more information, I have a financial adviser, I can connect you with them about different things, or as for the real estate part, I can share my knowledge with you. Reach me out. Shawn Bhakta from Remax Presidential, South Florida Home Finder Team. I'm glad to help.

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