The 3 TYPES OF INCOME Explained | How To BUILD INCOME LIKE THE RICH

In this video I explain exactly what the three different types of income are and how you can build up each of the three income streams in your own life so that you never have to rely on a job to pay the mortgage again!

Feel free to jump to different sections using these timestamps:

0:00 Introduction
0:39 Three Types of Income
3:32 Build Earned Income
4:58 Build Portfolio Income
6:53 Build Passive Income
9:14 Summary

As promised, here is the link to my video explaining everything you need to know about INDEX FUNDS: https://youtu.be/VPB1BJmDCw0

If you’re interested in checking out the gear I used to put this video together, I’ve included some links below:

Camera: https://amzn.to/2L4RO2T
Microphone: https://amzn.to/3bx4E57
Lighting: https://amzn.to/3rI2THK
MacBook: https://amzn.to/3pBbZ7j

#1 – EARNED INCOME
Earned Income is income you receive in exchange for the time that you spend working (i.e. your pay-check).

Earned income is limited because it is a trade of time for money, and as there are only 24 hours available to trade in any given day, there is limit to the number of hours that you can trade for money.

#2 – PORTFOLIO INCOME
Portfolio income is income that is generated from investments in the form of dividends, interest, and capital gains.

DIVIDENDS occur when you purchase shares in a company and, if that company turns a profit, it can choose to pay a portion of the profits out to its' shareholders as a dividend.

INTEREST can be earned when you have your money in a savings account which pays you an agreed amount of interest, or as the holder of a bond which pays a coupon to the bond holder.

CAPITAL GAINS are earned when you buy and sell investments at a profit, so if you buy a stock for £50 and sell it for £60, you've created a £10 capital gain.

#3 – PASSIVE INCOME
Passive income is income that is generated from things like a property or business that you have an ownership interest in, but you are not actively involved in the running of.

One of the more popular methods of earning passive income is the owning and leasing of property. If you had a flat that rented out for £1,000 per month and your monthly expenses for the property came to £700, you would have a passive income of £300 every month without having to lift a finger!

HOW TO BUILD UP THE THREE INCOME STREAMS:

EARNED INCOME is easy to earn and doesn't take any money to get started with.

Whilst earned income does have a ceiling to it, educated individuals such as doctors and lawyers can earn significant amounts of money from earned income.

If you want to increase the amount of earned income you receive, your options are to either work for more hours or to increase your value to the marketplace by learning a new skill so that your rate of pay increases.

PORTFOLIO INCOME is an income source that you can build up through saving and investing the money that you generate through earned income or any other income source.

Portfolio income is becoming more and more accessible these days with the rise of online, zero commission brokerages which anybody can set up and begin investing with small sums of money.

If you're new to investing, an option that many retail investors favour is index funds because they give investors the opportunity to invest in a basket of underlying stocks in the companies that make up a market index like the S&P500. There are bond index funds available too.

Index funds can give you access to a well diversified selection of stocks or bonds within one simple investment. Feel free to check out the video that I linked to higher up in the description which covers everything you need to know about index funds.

PASSIVE INCOME is the holy grail of income sources, but it's also the one that takes the most effort to establish.

The key to generating passive income is to SEPARATE TIME FROM MONEY.

Take this video for example. In total, this video will take me about 8 to 10 hours to complete. That may seem like a lot for such a short video, however once it's uploaded to YouTube it'll stay there indefinitely and I won't need to do anything else with it.

One day in the future, if enough people watch and enjoy this video and others like it, YouTube may give me the option to monetise the channel, at which point this video could start to generate a small amount of money through ad revenue every time somebody watches it.

The same principle is true for things like books or music – once they have been created, the author or musician receives passive income in the future every-time a copy of that book or song is sold.

I really hope you found this video helpful, and if you did please be sure to give it a like and subscribe to the channel for more videos! Thanks so much for watching!!

*I may earn a referral bonus or affiliate commission through some of the links that appear in this video description. The offers referred to are correct at the time of posting but do be aware that some offers may no longer be available.

Видео The 3 TYPES OF INCOME Explained | How To BUILD INCOME LIKE THE RICH канала Ryan Gibson