The 7 Different Types of Income
We think of income usually as just our salary. But there are lots of different ways you can earn income—without trading your time for money.
We hear people say that investing is risky. But you know what’s riskier?! Relying on one money tree to provide your livelihood. Why not plant a few?
Many women join Factora thinking their W-2s are the most solid, safe sources of income in the world. That’s not true. Companies fail. CEOs quit. Departments get spun off. Projects get canned. All. The. time. And as we’ve recently learned...global pandemics happen too.
“Never depend on a single income. Make an investment to create a second source.”
— Warren Buffet
By diversifying your income (instead of only counting on that J-O-B) you become far less susceptible to risk. So how do you do this? By focusing on a few types of income and diversifying in smart ways. That way, all your eggs aren’t in one basket.
Here are the 7 types of income:
Earned Income
Money you work for via a W-2, 1099, or W-9 Job.
Profit Income
Money you earn passively by earning profit from goods or services.
Interest Income
Money earned in interest.
Dividend Income
Money earned from shares of a company.
Rental Income
Money earned from renting out a property.
Capital Gains
Money earned from selling an asset.
Royalty Income
Money earned by letting someone use your products, ideas, or processes.
Which one could you add today? You have options when thinking about creating another stream. You could:
Increase your earned income (read: earn more at your current job or add a side hustle gig)
Create profit income (read: invest in a business or start your own)
Diversify your portfolio (read: invest more in stocks, bonds, real estate, etc)
Factora women are constantly working on building out their income streams in order to diversify their income and safe proof their financial future. You can too.
Keep Learning With Us
Get even more insights with our weekly podcast, Coffee & Coin, hosted by our Founder & CEO, Allegra Moet Brantly.
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