The Worst Way To Make Money Legally!

No, it’s not what you think! How do you make your money?

There are 3 primary ways to make money:

  • Earned income
  • Passive income
  • Dividend/Portfolio income

While earned income is the most popular, it’s also the WORST way to make money.

Listen here as I break down the 3 ways to make money and why earned income is the worst:

#1. Earned Income

Earned income is just that: income that’s earned. With earned income, a person is paid for hours worked, either per hour or by salary. While this is the quickest way to make money it can also be the most perilous: if you don’t work, you don’t get paid.

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Relying on earned income can also be a problem for 4 reasons:

  • A person is too ill to work
  • A person may want to work but can’t find a job
  • The job you have doesn’t pay a livable wage
  • A person can be too old to work

In each situation, a person could be in dire straights because they need money but simply can’t get the work they desperately need.

Pros:

  • Money received from earned income can be received within 2 weeks or less.
  • Pay is constant, allowing people to budget accordingly.

Cons: The ability to increase pay is dependent on bosses

  • Pay raises can be few and far between
  • Job could be lost at any moment
  • A person may want to work but unable to
  • Highest taxed form of income

#2. Passive Income

Passive income is money you make while you sleep. You don’t have to actively work to receive passive income. This money can be made while sleeping, on vacation, or even retired. There are many ways to make passive income:

  • Own rental property
  • Write books
  • Own vending machines
  • Create online courses
  • Monetize a website, YouTube or social media page

Vending machines are a great way to generate passive income.

The average millionaire has at least 7 streams of passive income. This way, if one income stream is lagging, others can pick up the slack. Another benefit of passive income is it can allow you time to do things you truly enjoy, such as spending quality time with family, going on vacations, or not having to worry about how you will make money.

Pros:

  • Amount of money to make is unlimited
  • No cap on earnings potential
  • Doesn’t require daily maintenance (must monitor to ensure still working properly)
  • Can set up multiple streams of passive income
  • Can be passed down to heirs
  • Lower tax rate than earned income
Rental property is an excellent way to generate passive income.
Rental property is an excellent way to generate passive income.

Cons:

  • Can take years to set up
  • No guarantee they will become profitable

Option #3. Portfolio/Dividend Income

The third way to generate revenue is thorough portfolio (dividend) income. When purchasing shares of an investment that pays a dividend or interest, you can receive passive income. Top portfolio income investments include the following:

  • Stocks
  • Bonds
  • Mutual funds
  • REITS

Many of these investments pay dividends either monthly quarterly or annually.

Pros:

  • Dividends will come on scheduled dates
  • Dividends from stocks and mutual funds can be sent directly to shareholder or reinvested back into investment
  • Taxed at lower rate than earned income

Cons:

  • Will need a large amount of shares to receive sizeable dividends
  • Company could cease offering dividends
  • Past performance doesn’t guarantee future results

Click HERE for more information on DRIP programs

Call To Action

How do you make your money? is it primarily through earned income, or do you have passive income streams established. Knowledge is power. The educational system places most emphasis on earning income, but its critical to know about the other income generating options.

There are many ways to generate revenue. Pick up a copy of my book Invest For Success: Millionaire Wealth Strategies Not Taught in School. Available in paperback, eBook and audible formats.

At what age should kids be taught about the three income types, business and entrepreneurship? Pick up a copy of my Best Seller Planting Seeds: The Children’s Guide to Entrepreneurship. Available on Amazon in English, French and Spanish editions.

Learn more great strategies in our online course Tired of the 9-5? How to Retire Early With Passive Income. Now on Udemy.

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