The Two Types of Income

There are 2 types of income, active income and passive income.

Active income is what we earn in exchange for a job or task we accomplish, our salary is the prime example of active income.  Since active income depends on a job we accomplish we cannot earn money if we don’t work for it.

Passive income on the other hand is money generated from an investment or a business.  Passive income keeps cash flowing even if you don’t do a job or a task, it’s what Robert Kiyosaki calls money working hard for you, not you working hard for money.

In stock investing, you can earn passive income through dividends and also by stock appreciation.  In the cost averaging strategy we are using, the average earnings from the companies invest in generate passive income for us.  It’s letting are hard earned money work for us.

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