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Thursday, February 19, 2015

How to Convert Earned Income to Passive Income

In the area of accounting, there are three main incomes. One is earned income, second is passive income and third is portfolio income. Portfolio income is the part of passive income. So, two incomes are main one is earned income and second is passive income.

For earning active or earned income, there is the need of the person. If you will do the work, you will get earning. This is your earned income. If you will not go to job or doing your professional work, you will not get anything. This is big problem. Capacity of person is limited. These days expenses, we can not suffer due to high inflation rates and increasing of our desires.

In the book of Rich Dad and Poor Dad, Poor Dad always recommends his children, "Go to school. Take good marks and find secured job. It means he is recommending to get earned income. But rich dad recommends to get income through your earned income. So, through motivation from this book, today, I am writing, how can you convert your earned income to passive income.




Monthly Investment in Assets  

Now, you have single option. You live for eating food and for paying expenses of your daily needs. You have to reduce your all expenses and make a solid plan for investment of your monthly earned income.


1. Short-Term Plan 

In short term, you can invest money in RD or bank's saving account. You should invest your money in learning books. With this, you will get great ideas.

2. Medium Term Plan

When you have some money like Rs. 1,00,000, you can invest it in Fixed deposit of bank. You can also invest in share market but for this learning is must. Otherwise, do not be fool. Best is to invest in your business's employee and machine. You can write any book and send it to publisher and get royalty on each book's sale or production.

3. Long Period Plan

When you have Rs. 10,00,000 or more, you can invest it in land and building. You can invest in organic plantation. With this, you can get organic food for you and your children. You should invest in donation, with this, you will get blessing and good wishes in long run.

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