Home > Financial Planning, Fort Worth Wealth Management, Retirement > Wealth Management Topic: Types of Income

Wealth Management Topic: Types of Income

October 22nd, 2010

Wealth ManagmentIncome can be divided into three categories: active income, portfolio income and passive income. The earliest type of income you’re likely to experience is active income. Active income is the money you earn by working a job. Portfolio income is money you make through investments, such as stocks, bonds, mutual funds and precious metals. Your earnings or losses in this case are tied to the increases or decreases in the value of the particular investment. Passive income is money you earn without working or residual money generated from work performed in the past. Sources of passive income include stock dividends, real estate rentals, royalties and interest.

If you are thinking about retiring some day, portfolio income and passive income probably seem attractive to you. With proper financial planning, you can turn your active income into both portfolio income and passive income. Ultimately, you want to phase out the active income and make sure you have enough of the other two types of income to sustain a comfortable lifestyle. A successful retirement is the result of careful financial planning. For information about wealth management and retirement planning, contact a qualified Fort Worth wealth management advisor.

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