Earned Income vs. Passive Income

Distinguishing the difference between Earned Income and Passive Income will have a huge impact on how one can create time and money freedom. For you to have a clear understanding I laid out a few examples:

In REAL ESTATE.

Earned Income:
1. When you buy and sell real estate as a real estate dealer.
2. When you sell real estate information to real estate buyers by being an agent or a real estate broker. Also, when you are an employee of a real estate company.
3. When you are a property developer. You build and sell or renovate and sell.

Passive Income.
1. When you have rental properties such as apartments and condominiums or what we called "income generating real estate" where every month you get rental income.
2. If you are a share holder or a part owner of a huge real estate company that maybe is engaged in real estate marketing, management and development and you are getting dividends from your shares as a part owner.
3. You are a joint venture (JV) partner of a huge real estate project and you are getting profits based on the partnership agreement. This case happens if you are a land owner and you choose JV instead of selling your land outright for a profit to real estate developers.

In INVESTMENTS

Earned Income:
1. If you are a fund manager you are being paid salary. If you will not report to work you will not get paid.
2. If you are stocks or forex trader and you have to stick your eyes on the computer all the time to watch the market graphs up and down and take advantage of the bear and bulls. You have to decide in any given moment if you are going to buy and sell.
3. If you are a professional that caters to clients. Such as accountants and registered financial planners. You got to report to your clients and do your tasks in order to get paid.

Passive Income.
1. You are a shareholder of an Investment Company. Where you make money from you dividends.
2. You own treasury bills and bonds, that gives fixed interest income returns regardless of market forces.
3. You cleverly use options to leverage on other peoples investment vehicles.


In BUSINESSES

Earned Income.
1 You own a business with less than 500 employees and you got to make sure that you are present in the operation of your business.
2 You are a retailer that caters to retail customers or supplier for other businesses. You got to make sure that you always get the contract.
3 You are a manager, vice president or employee of somebody elses company. Most employee think that they own the company that they worked for.

Passive Income.
1 You own a franchise and you are the franchisor. You get royalty income from your franchises.
2 You own shares of a huge business and you get dividends and profit sharing.
3 You own a vending machine or a business with no or minimal overhead expenses and profits just keep coming in.

What I mentioned above are just few examples I learned as an entrepreneur for 10 years. Passive Income is simply your money working for you or your business system working for you. It is all about systemization and leverage. If you like to learn more on how to create passive income and learn the secrets of leverage and the power of exponents we invite you to invest your time to study and be part of the CA2020 Business School and be part of the our Business Community Core Team.

For your wealth and abundance!