There are three types of income:
EARNED INCOME
This includes income derived, generally, from a job or some form or labor. In its most common form, it is income from a paycheck. It is also the highest-taxed income, so it is the hardest income with which to build wealth. When you say to a child, "Get a good job" you are advising them to work for earned income.
PASSIVE INCOME
This is income that is, generally, derived from real estate. It can also be income derived from royalties from patents or license agreements. In approximately 80% of passive income scenarios, the income is from real estate. There are many tax advantages afforded with real estate investments.
PORTFOLIO INCOME
This income is generally derived from paper assets such as stocks, bonds and mutual funds. Portfolio income is, by far, the most popular form of investment income simply because paper assets are so much easier to manage and maintain than other types of investments.
By Robert T. Kiyosaki
http://www.richdad.com/
