1. Earned Income
The first type of income is the most common: earned income. As I mentioned earlier, this is income that you receive in exchange for doing work for someone else. When you first start out on your financial journey, this is the only type of income that you’ll be able to earn. You will have to trade your time for money. Examples Examples of earned income include:
2. Capital Gains Income The next type of income that you can earn is called capital gains income. This is income you receive from selling an investment for more than the amount you paid for it (this is also sometimes called “portfolio income”). The formula to calculate capital gains is simple: Examples The most classic example of capital gains income is buying a stock for a certain price and selling it at a later date for a higher price. For example, suppose you buy $1,000 worth of shares in a stock index fund that eventually appreciate in price to $1,500. If you decide to sell those shares, you will have earned $500 in capital gains income. Whenever you sell an asset for more than the price you bought it at, you will receive capital gains income. Some other examples of assets you might sell include bonds, precious metals and real estate. 3. Passive Income The final type of income that you can earn is called passive income. This is income that you earn from owning assets that requires no work on your part. Examples There are tons of different examples of assets that you could own to generate passive income. Check out this list of 19 different income-generating assets that can invest in if you’re looking for some ideas. Some of the more common examples include: Dividend-paying stocks: When a company generates profits, they can decide to reinvest those profits back into the business to grow it further or they can pay out some of the profits in the form of dividends to investors. When you invest in a stock (or stock index fund) that pays dividends, you can receive a dividend payment every three months. ABOUT Anthony Norman, Swedish national born in 1974 is a serial entrepreneur mainly focusing in fintech, blockchain technology and IT. I have got 15 years of experience in financial market. What I am good at, and the reason why I’m here, is getting the right people, businesses and great ideas in a room together. So it is essential that you should benefit from the high growth offered by mid- and small-caps while enjoying the stability offered by the large caps.
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AuthorWrite something about yourself. No need to be fancy, just an overview. Archives
April 2022
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