Understanding the Different Sources of Income: Earned, Passive, and Portfolio

Understanding the different sources of income is key to building financial stability and wealth. There are three primary types: earned, passive, and portfolio income. Earned income comes from active work, such as salaries, wages, or freelance jobs. It\'s the most common type and often requires time and effort in exchange for money. Passive income is generated with minimal ongoing effort, typically from sources like rental properties, royalties, or business investments where you\'re not actively involved daily. It allows for money to be earned even while you\'re not working. Portfolio income comes from investments such as stocks, bonds, mutual funds, or dividends. This income is tied to financial markets and requires understanding risk and return. Diversifying across these sources can increase financial security, reduce dependence on a single income stream, and help build long-term wealth. Recognizing and managing these income types is essential for personal financial growth and independence.