In world of investment, a plan is very important and without it you actually go in the jungle without your maps and GPRS. The more plans, the better it is and after you have those plans firmly in place, then you can experiment and learn more exotics techniques utilizing different investment vehicles. After placed your investment plans together, there is few basic rule you need to keep in mind.
Basic Rule Number One.
The rule number one is to always know what kind of income you are working for. In market, there have three different kinds of income, Earned Income, Portfolio Income and Passive Income.
Earned Income generally derived from a job or some form of labor. On its most common form, it is income from a paycheck. It is also the highest taxed income, so it is the hardest income with which to build wealth. When you say to child, “Get a good job”, you are actually advising your child to work for earned income.
Portfolio Income actually is a from paper assets such as stocks, bonds, mutual fund, etc. Portfolio income is by far the most popular form of investment income, simply because paper assets are so much easier to manage and maintain than others.
Passive Income generally derived from real estate. It can also be income derived from royalties from patents or license agreements. Yet approximately 80% of the time, passive income is from real estate. There are many tax advantages available for real estate.