Types of Income - II

-
In continuation to previous post

Business income:

The type of income in which you trade people for money. Wait, that's human trafficking right!!!!. 

That's not what I meant. Income is obtained by employing people and trading their skills/expertise to make money. This is best source of income. And all the wealthy people fall under this category. You can't find 9-5 employee owing a Lamborghini unless you are a CEO of a multi billion dollar company.

Advantages:

Best source of income.
You will have team of specialised people working for you to make money
Best scalable type of income
You can start small and build an empire. Example Microsoft. All the capital that ever went in the company was 5000 dollars.

Disadvantages:

You should be ready to take risk
It takes time to build a brand. Apple didn't start out as an apple what it is today. A trillion dollar market cap and most valuable company in the world

Royalty income:

The income earned by creativity comes under this category. For example you write an ebook, someone reads it, you will get a share of profit in it. Scientists who invent a technology have patents on their name, each product that uses their technology, patent right cost go to them.
J.K. Rowling is an author of Harry potter which made her multi-millionaire through books, movie and merchandise

Advantages:

This type of income is purely out of passion and creativity
This is recursive income
This type of income has no bottleneck.

Disadvantages:

You have to be creative/follow scientific approach which is not everyone's cup of tea


Comments

Post a Comment

Popular posts from this blog

Evolution of Money - Barter system

-
Image
As Humans have evolved over time, Money we transact in exchange of goods or service is also evolved. We will see in detail why was there need to go other system. Barter System: Barter System was in use as early as 6000 BC introduced by Mesopotamia and it was improved by Babylonian's. Bartering is trading services or goods with another person when there is no money involved. If you ever traded 'abc' object in return of 'xyz' object, you have bartered. Advantages: You dont need money to barter. you do not have to part with material items. Instead, you can offer a service in exchange for an item It is flexible. Anything can be traded for anything.  Disadvantages: The desired item only has the value in this medium of exchange. For example, you desired to have apple, you will transact only with the person who is willing to exchange apple. Item exchanged is not quantifiable. Example: 10 apples cant be traded for a single sheep/goat. It was long tedious process...
Read more

How much you should earn for every 100 rupees you spend

-
Image
You might be wondering what is this article about. Common sense says that we need to earn 100 rupees to spend 100 rupees. This is not the case and banks and government trying their best to hide this from us. Remember, you will not keep everything you earn. This is not as straight forward as it seems. Let us know about this with a tasty example 😉. Imagine we need to buy an Ice cream which is of 100 rupees. Let the gst on that ice cream be 18%. So now the total cost of ice cream is 118 rupees. Let us imagine that we fall under 20% Income tax bracket. So for every 100 rupees you earn you will only keep 80 rupees of it and rest 20% will be deducted as Income tax. 100 rs x 80% = 80 rs Remaining amount = 118 rs - 80 rs = 38 rs For the remaining amount we need to divide by 80 and multiply by 100(because 100 after tax is equivalent to 80) which will result in 47.5 Now add this to initial 100 rs So there it is for you. To spend 100 rs you need to earn 147.5 rs
Read more

Types of Income - I

-
Image
There are different types of income. Each income has it own advantages and disadvantages. We will go through each one of them, understand them and know what should be our best pick. 1. Earned income 90% of world population falls under this category. In this type of income you trade money for your time. Advantages: You will get steady paycheck. Your Income will depend on how much value you bring to employed organisation. There will be no risk of your capital. Disadvantages: This income is not scalable. Sure you can increase your expertise and earn more, but you got only 24 hours a day. This income is safe till you are employed. If you got fired, you will lose the income. This form of income is taxable highest. Hence your Gross Income will be less than your Net Income 2. Portfolio income: In this type of income, money makes you money. Income from stocks, bonds, Mutual fund, fixed deposits comes under this category. Only capital growth is considered in this type of income. Advantages:...
Read more