What’s the Best Type of Income?

What is the best type of income one can earn?

What's the best type of income thumbnailSo just what is the best type of income one can earn? There are certainly a lot of ways to make money. They can all be put into one of several categories, however.

One type of income is known as active or linear income; for example, hourly wages or a salary. What does this type of income mean? With active income, we get paid for work we do. Seems pretty straight forward. With an hourly wage job, if we work for 40 hours in one week, we get paid for those 40 hours of work. The down side, of course, is if we don’t work we don’t get paid.

Yet another kind is sales commissions. With sales commissions, the salesperson receives a percentage of the sale price of an item or service. This is usually a one-time payment for one transaction. In order to continue receiving commissions, the salesperson has to continue generating sales transactions. In order to increase his or her income, the salesperson must not only keep the same volume of sales from one month the next but increase that volume. One downside to sales commissions is that when employers downsize or tighten their proverbial belt, they may increase sales quotas while decreasing the rate of commission, requiring the salesperson to sell more just to retain the same level of income.

A similar type of income is returns from investments. Of course, to generate an income that provides us with any standard of living, investments require large amounts of money to be invested, especially in a time of low interest rates for consumers. For example, if a bank pays a mere one-half percent interest on invested money, then it would require According to a CNN Money article, a 65-year-old man who invests $1 million in an annuity might expect to receive about $5,660 a month for life. That’s not a bad income, but not many people have an extra $1 million around to invest. I know I don’t.

Yet another type of income is royalties, which is similar to commissions but with a distinctive difference. Royalties are paid for each sale transaction, like commissions, but they are typically on intellectual properties and entertainment products, such as songs, movies, and books. These things can sell a practically unlimited number of copies of the original work, many years after the original work is done. Royalties are still being paid to the Elvis and Michael Jackson estates years after the original songs were recorded.

If you’ve read this far, you can probably figure out for yourself which type of income you should be working to receive. In case you haven’t figured it out, in this video I explain what is undeniably the best type of income to have. It’s undeniably the best type of income one can have. In the video I explain why you should be doing everything you can to get it.

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