09/07/2025
Income generally comes in three types :-
1. Active Income
2. Passive Income
3. Portfolio Income
1. Active Income :
Active income refers to earnings you make directly through your time and effort. For example: doing a job, running a business, or any work where your income depends on how much time you give.
For instance, if you run a shop, you earn as long as the shop is open and you're there. If you don’t show up, you don’t earn.
This type of income feels easy and quick for most people. It is the most familiar form of earning, and most people chase after active income like doing a job and getting a monthly salary, or running a small business.
However, active income is limited. Because no matter who you are a doctor, engineer, or actor you are bound by time. A human can work a maximum of 10–12 hours a day, not more.
So, active income alone is not enough to build long-term wealth.
2. Passive Income :
Passive income refers to income that keeps coming even when you're not actively working. You could be sleeping or doing something else the income continues.
People who create passive income streams often become wealthy. That’s because passive income tends to grow over time and doesn’t stop.
For example, if you rent out a house, you receive rent every month without actively managing the property. Other examples include writing a book, running a YouTube channel, earning through a website, monetizing a Facebook or Instagram page, creating an online course, affiliate marketing, or CPA (Cost Per Action) marketing.
Starting passive income isn’t easy. It often requires time, effort, and sometimes money in the beginning. For example, you may not earn anything from a new YouTube channel for the first few months. But once your videos become popular, income flows in steadily.
Because of the initial effort and delay in returns, most people are not interested in passive income and stick to active income.
However, those with passive income rarely face financial issues, because their earnings never stop.
So if you want to succeed in life, start saving from your active income and use it to create passive income sources.
3. Portfolio Income :
Portfolio income is the income generated from investments.
People with money often invest in various places to earn more without needing to work hard.
For example, you can invest in the stock market or mutual funds. Or you can invest in a business and earn returns without being directly involved.
Wealthy individuals often focus on this type of income. Because money kept in banks loses value over time due to inflation. But when invested in the stock market, real estate, crypto, mutual funds, or strong businesses, that money can grow helping you become rich.
Those who ignore portfolio income may simply not realize how much wealth can be built through investments.
Are you stuck in the 20-80 system?
If you’re not interested in passive or portfolio income, you might be stuck in the 20-80 trap.
According to this system:
20% of people become rich
80% remain poor all their lives
The top 20% own the majority of the world’s wealth.
So, no matter what profession you're in, try to start a passive income stream.
If you depend only on active income, your earning potential will always be limited.
And without passive or portfolio income, you’ll likely end up in the 80% group who struggle financially throughout life.
Take Action Today:
Start planning to grow your income.
Save from your active income and use that to create passive or portfolio income.
This will secure your future and give you the path to become truly wealthy.
To succeed and become rich in life, don’t rely only on active income focus on passive and portfolio income too.
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