What You Should Know About Linear And Passive Income

There is nothing more demoralizing than a small but adequate income

-Edmund Wilson

Several years ago two friends graduated from the same college.  They studied both studied medicine and rose to the height of their career.

However, one of them was a millionaire the other one was comfortable and made a living

One the two doctors retired early, had more time to travel and do volunteer work for his local causes.  The other doctor did not feel comfortable retiring early.

He took fewer holidays because he could not afford to live his practice for too long.

Have you ever wondered why some people made more money even when they worked less?  What made the lifestyle of these two doctors different?

The answer lies in the income they earned.

You see one of them earned passive income and the other earned linear income.

The kind of money you earn can make the difference between living like a millionaire and having to worry about money.

This article will show you   different category of income, the benefits of earning these income and let you decide which one is better

What is linear income?

Linear income also called active income is money you earn for your effort.  In order words linear income is money you earn when you show up at work.  Almost all employed or self-employed persons earn linear income.  Employees of government, doctors, lawyers, artisans, teacher earn linear income.  If they do not attend to their clients, they are not paid.

The benefit of earning money this way is that you earn money every month as long as you show up for work.

What is passive income?

Passive income is an income you receive on a regular basis, with little effort required to maintain it.  .  Passive income, also known as residual income, is a stream of income that you can earn many times.

Here are several sources of passive income:

  • Royalty income Do you know that singers are paid royalties every time their songs plays on radio or on television, regardless of how long ago they sang it?  This is a form of royalty income.  Think of any other form of intellectual property (any work you do that comes from your creative effort).  You earn money as long as you want.
  • Dividends Are money paid out by a corporation to its shareholder members.  You earn money because you are an owner of the company.
  • Rental income-You can also earn income when you invest in a property that you rented out to people.
  • Interest income-These are income you earn as Interests from savings and fixed deposits.
  • Website income-You can earn money from owning a business on the web.  Properly done a website will continue to earn you money regardless of the time of the day.  Your clients can buy your products and services online at any time because the whole transaction is automatic.

 Which is better linear Income or Passive Income?

Before you decide .let, us go back to these two doctor friends

One had a millionaire lifestyle because he owned several single and multifamily rental properties, owned equity in many privately held companies.  I addition he earned dividends from stocks, earned income from certificate of deposits and royalty income from his books and a proprietary process that is licensed for cosmetic surgery.  The other doctor practices in the suburban area of a large city owns a big house, earns nearly all his income from his practice.  He a retirement account and mutual funds …he is hoping the stock market conditions will improve so he can retire early

So, would you rather earn linear income or passive income?  You decide…. as for me, I would rather earn passive income

To your success

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